Buying a new home is very exciting, but can be overwhelming even to those who have bought a home previously. Below is a brief overview of what buyers can expect and hopefully help them understand the process.
1. Lender pre-approval . Before starting the search for your new home, it’s smart to contact a lender to find out what you actually pre-qualify for. This way you can look at homes that you are qualified to purchase. You may already have an idea of the price range you would like to be in but your lender can provide a solid idea of what you can afford and what they will lend. Keep in mind that when you make an offer, you will need a pre-qualification/pre-approval letter to submit with your offer.
2. Realtor. Your Realtor will help you in your search for properties that match your criteria. This is the fun part! Once you have found your Dream Home and decide to make an offer, your Realtor should do a market analysis to help determine the best price to offer. Your Realtor can also explain the different types of transactions that you may encounter such as short sales, foreclosures, and traditional sales. Your Realtor should be with you every step of the way, answering questions and making sure your transaction is going as smoothly as possible.
3. Accepted offer. Your offer has been accepted! Once your offer is accepted, a binder deposit is given so the offer now becomes a contract. The binder deposit goes into an escrow account and goes toward the purchase of your home. Typically it’s held by the title company where the closing will take place. You must apply for your loan within five days of acceptance and you now have ten days to have your future home inspected to see if there are any major issues that need to be addressed.
4. Inspection. The purpose of an inspection is to uncover any major issues that may prevent a buyer from purchasing a home or to give the seller a chance to repair. Even if the home is sold “as is” a buyer should have an inspection done. If something is discovered the seller may pay for it, but if it is an “as is” sale most likely they won’t. Foreclosures are typically “as is” but they are owned by the bank so the bank may pay for some repairs or a specific amount can be negotiated to pay for repairs. Some individual sellers will pay a specific amount toward repairs or does the repairs before closing. (Every situation is different).
5. Appraisal. The appraisal is ordered by the lender.The purpose of an appraisal is to estimate the market value of the home and to make sure it meets minimum FHA standards (if it’s an FHA loan). If all goes well, loan acceptance should take 30 to 45 days. Your lender should explain the loan process to you in detail and also find you the best interest rate and financing plan that is right for you.
6. Closing. This usually takes place 30 to 45 days after contract is accepted and is held at a title company, attorney’s office or Real Estate office. And it’s where the buyer gets the key to their new home! Your lender will give you a Good Faith Estimate of closing costs when you initially apply for the loan, but you will receive a preliminary closing statement three days prior to closing which shows your final closing costs. The majority of closing costs have to do with your loan, but even if you are paying cash, there will be some closing costs. Your lender, Realtor, and closing agent will work together as a team to get you to closing and into your new home!