A Real Estate Guide For Buyers And Sellers
If you have never bought or sold a home before or haven’t bought one in a while you may not be aware of all the steps that go into the home buying or selling process. The process does not just start the instant you decide to sell or buy a home but instead starts out well before and requires plenty of planning and coordination with a number of different professionals. This guide to buying or selling a home will take you through the steps a seller and buyer must go through in order to buy or sell a home.
If you have never bought or sold a home before or haven’t bought one in a while you may not be aware of all the steps that go into the home buying or selling process. The process does not just start the instant you decide to sell or buy a home but instead starts out well before and requires plenty of planning and coordination with a number of different professionals. This guide to buying or selling a home will take you through the steps a seller and buyer must go through in order to buy or sell a home.
Process of Buying a Home
Mortgage and Credit
When getting ready to buy a home the process should not start with getting online and searching for homes that look nice. Instead the first step should be contacting a couple of different mortgage lenders and exploring your financial options for buying a home. Borrowing to buy a home is a long term commitment and over spending on fees or the interest rate you pay means you will be paying more money than you have too. That money can be better spent on saving for retirement, paying for your children’s college, or on up keep of the home. There is no need to spend extra money when you don’t have to. So interview a number of different mortgage lenders and find out what they are offering and what are the costs associated with their mortgage options.
When getting ready to buy a home the process should not start with getting online and searching for homes that look nice. Instead the first step should be contacting a couple of different mortgage lenders and exploring your financial options for buying a home. Borrowing to buy a home is a long term commitment and over spending on fees or the interest rate you pay means you will be paying more money than you have too. That money can be better spent on saving for retirement, paying for your children’s college, or on up keep of the home. There is no need to spend extra money when you don’t have to. So interview a number of different mortgage lenders and find out what they are offering and what are the costs associated with their mortgage options.
In addition to shopping around for mortgages you should also take a close look at your credit history. Do you have any credit report errors or negative items on your credit report? If you have errors you need to contact the credit reporting companies and ask that they remove the errors so it does not affect your borrowing ability. If there are negative items on your credit report you should discuss those items with a lender or a credit counselor to see how they affect your ability to borrow. One or two minor negative items on your report should not cause too many problems but they will reduce your credit score. Larger negative items like unpaid credit card bills, bankruptcies, collections notices and more are harder to recover from and your chances of getting a good mortgage will be more difficult. Often times minor negative items are easily dealt with by time, letting the minor negative items “age off of your credit report” by paying on time and paying all minimums and your credit score should recover. If you do have negative marks on your credit meet with a lender who has credit expertise or ask for a referral to a credit counselor so they can help guide you towards rebuilding your credit score. View Your Credit Score Here
Shopping for a mortgage and checking over your credit report should be done at least 3-4 months before you are ready to start looking for a home. In 3-4 months’ time minor negative credit items have less effect on your credit score and by going through the mortgage process ahead of time you know what price range of homes you can truly afford. It is not good practice to shop for homes that you cannot afford since your mortgage pre-approval is below those homes you looked at.
Searching For Homes
Now that you know what price of home best fits your budget through the mortgage pre-qualification process you can start the actual home search online. You can start your home search on your own without the assistance of a real estate agent, just check out one of the many local real estate listing websites in your city. Start choosing a home after you have been pre approved the use of a real estate agent but you would be advised to hire a real estate attorney to help you with the process so you don’t end up living in a new home you really don’t own. Where the homes you are interested are listed with a real estate agent it only makes sense to get an agent to help you in the process since the commissions used to pay for the buyer’s agents services will come out of the seller’s side of the transaction. By having your own real estate agent represent you, you have someone working in your best interests and not the interests of the sellers.
Now that you know what price of home best fits your budget through the mortgage pre-qualification process you can start the actual home search online. You can start your home search on your own without the assistance of a real estate agent, just check out one of the many local real estate listing websites in your city. Start choosing a home after you have been pre approved the use of a real estate agent but you would be advised to hire a real estate attorney to help you with the process so you don’t end up living in a new home you really don’t own. Where the homes you are interested are listed with a real estate agent it only makes sense to get an agent to help you in the process since the commissions used to pay for the buyer’s agents services will come out of the seller’s side of the transaction. By having your own real estate agent represent you, you have someone working in your best interests and not the interests of the sellers.
Making an Offer
Once you have settled on a home and want to make an offer you will need to follow up with the mortgage lender you chose and get a Mortgage Pre-Approval letter which basically states to the seller that you are able to borrow the amount of money stated in your offer to purchase their home. While not required a pre-approval letter is advisable since it shows the seller the seriousness of your offer and that you can afford to buy it. Most good mortgage lenders are able to get a pre-approval letter to you with a very short turnaround time.
Once you have settled on a home and want to make an offer you will need to follow up with the mortgage lender you chose and get a Mortgage Pre-Approval letter which basically states to the seller that you are able to borrow the amount of money stated in your offer to purchase their home. While not required a pre-approval letter is advisable since it shows the seller the seriousness of your offer and that you can afford to buy it. Most good mortgage lenders are able to get a pre-approval letter to you with a very short turnaround time.
Your offer will contain many of the terms and conditions that go along with the offer. The terms and conditions must be written in correctly, this is why it is a good idea to have a real estate agent to help prepare the offer or to have an attorney prepare the offer. Most real estate offers contain at least the minimum condition of the buyer being able to obtain an appropriate loan to the buy the house when borrowing is part of the offer. If you make an offer and it does not have the condition of being able to obtain a loan as part of buying the home you could still be on the hook contractually even if your loan falls through! While you may not be able to afford the home since you can’t borrow money to buy it, that does not mean the seller cannot turn around and sue you for damages. It is important to repeat, have a real estate agent or an attorney prepare the offer for you so you are not stuck being forced to buy a home or stuck having to pay the sellers damages due to incorrectly filling out the offer.
Additional requests made as part of the offer include a home inspection (including termites and radon depending on your location), lead paint inspection (depending on the age of the home), appraisal requirements, terms of occupancy, what stays with the house (i.e. fixtures, appliances, extra items…), who pays for closing costs, title work, home warranty and more. As you can see there is a lot to go wrong if the offer is not written correctly. Even if you have professionals looking over your written offer you should still read it over and make sure it has the terms you want it to have.
Other Things to Consider:1. Home Inspection Process
2. Appraisal
3. Mortgage
4. Home Warranty
2. Appraisal
3. Mortgage
4. Home Warranty
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