Buying a Home - 101

by TheCouryTeam.com

Buying a home is likely the largest financial decision many people make in their lives. It can be intimidating and many homebuyers struggle figuring out where to even begin. There are so many things for a home buyer to consider from finances to the location to how to negotiate an offer. Wouldn’t it be nice if you just had someone to help you figure it all out? What if I told you that a professional Realtor can help guide you through the entire home buying process and you won’t have to pay a penny out of pocket for their help. Read on…

A Home Is An Investment

Investing in a home is one of the most important decisions a person can make in their lifetime. Your home is so much more than a roof over your head. Your home is where life happens and memories are made, all while building a financial foundation for your future. It can be exciting, invigorating, and at times even anxiety-provoking. Many of our previous clients just didnt know where to start.

If you are gainfully employed, make a decent wage, live within your means, and make the right choices – you CAN buy a home. There are tons of options and strategies you can use to buy your first home through banks, the Federal Housing Authority, and there are even State-specific programs like closing cost or down payment assistance. (Consult a qualified mortgage professional for more information HER E.) The one thing I believe deeply to my core is that buying a house is part of the American Dream & everyone should be able to own their own home. I wrote this article for those of you who want to buy a home, and want to understand the process a little more.

Step 1

To begin, you should start with getting a preapproval letter from a lender. This usually takes around 15-20 minutes and can be done over the phone. The mortgage broker can walk you through the entire mortgage process, offer you different options based on your situation, and can even give you a general idea of roughly what your mortgage payment will be. They can also help you understand and plan for how much you may need for a down payment and closing costs. Be sure to ask them if you qualify for programs like down payment and closing cost assistance (if they are offered in your area).

In order to begin looking at houses in person, you NEED to contact a mortgage broker and get a prequalification letter and send that to your agent as soon as possible. A prequalification letter is proof that you are qualified to get a mortgage for the house you are interested in. You need this letter to gain access to see a house, and it must be attached to any offer you submit. Most Mortgage Brokers can put one together pretty quickly for you over the phone. I have a list of preferred lenders on my site that I have worked with many times in the past that are available for you anytime and come highly recommended.

Choosing the right lender is just as important as choosing the right buyer’s agent to represent you. Click HERE to contact one of our preferred lenders.

Step 2

The second step in buying a home is determining what you NEED in your home. Buyers should consider location, commute, proximity to things related to their lifestyle, schools, bedrooms, etc. These things can help to focus your search on the criteria that meet your essential needs and budget.

Next, buyers need to think about practical WANTS. These tend to be non-essential criteria. These include luxuries like pools, acreage, water amenities, extra garages, etc. Things that the client desires but doesn’t necessarily “need”. I always encourage my clients to write this all down in a list. Doing this helps you to mentally frame the parameters of your home search.

Finally, you need to pick the price range that you are most comfortable with based on your preapproval and the estimated payment your mortgage professional quoted you. This is really determined by what you can afford. As a former Financial Planner, I always advise my clients to write down a comprehensive budget and determine their income versus expenses in detail to see where they are most comfortable and what they can afford.

Step 3

You will need to find a good Realtor to help guide you through the entire home buying process. Here is the great part for home buyers – 99% of the time, a buyer does not pay the buyer’s agent anything out of pocket for their services. Most of the time your buyers agent charges the seller’s agent their fee! It’s essentially a free consultant! This is because when you are buying a home, you don’t pay the agent a commission (most of the time). Typically where we do business, the sellers have hired the selling agent and they pay the full commission, which is usually split with the buyer’s agent.

A good buyer’s agent is so important to find because they represent you throughout the whole home buying process. (The selling or listing agent represents the seller). A Realtor can help you define your home search criteria, find the right home, schedule and take you on personal showings, help you negotiate an offer, review contracts with you, navigate you through every step of the process, and coordinate your entire transaction. Having the right Realtor on your side makes a huge difference.

My wife and I work with a lot of buyers and sellers and would love to earn your business. You can check out our reviews HERE. We have helped hundreds of previous clients to buy or sell homes. Check out homes we’ve previously sold on our site here – The Coury Team. We are licensed in MA & RI. We are passionate about helping people like you find the home of their dreams. Click here for a free Home Buyers Guide, search using our comprehensive Home Search Tool, Affordability Calculator, 1-Click Showing Reservations, Save Favorites, Blogs, and so much more!

https://www.rhodeislandrealestateforsale.com/contact?fromCms=1

Step 4

Now the fun begins! You can begin searching. In a hot market like today, if you see something you like, you have to move pretty quickly because some houses can sell in a day or two, although this fall the market appears to be slowing. Get out to see houses.

Check first to see if there is an upcoming open house. An open house is a scheduled time for interested buyers to drop in and see the house. Typically you don’t need an appointment to visit an open house. You don’t even need your agent to go to an open house – but be sure to notify the selling agent that you are working with your buyer’s agent.

At the open house, try not to tell them too much about your situation or even your impressions of the house, as they represent the seller, not you. Also, it is not advisable, in my opinion, to discuss an offer or your thoughts about buying the home with the seller’s agent. It may disadvantage you in the negotiation process. You can still be friendly, you just don’t want to give away too much information.

If the house you like isn’t having an open house, call your Agent. They can set up a private showing for you. Typically, agents like to set up several houses at a time to show you. So if you have 3 or 4 you like – send them all. I typically ask for a range of times my clients are available, and we spend a few hours seeing 2 or 3 houses together. This not only helps you, the buyer, to begin to learn about the housing market and available houses – but it also helps agents to learn about your likes and dislikes. As a Realtor we apply what we learn to our advice on future houses.

Once you’ve found a home that fits your needs, call your buyer’s agent and tell them about it. They will discuss your options and develop a plan with you to strategically position your offer for the best results. There are no guarantees, however, especially in a competitive market. The market in the past 2 years has been highly competitive for buyers – but don’t be discouraged. In recent weeks, we have personally seen the market beginning to become better for buyers but ask your agent for an overview of market conditions.

Step 5

Congratulations! You have found the home of your dreams. Now what? Your Realtor will discuss strategy with you and then draw up and help you negotiate your offer and any counteroffers. While discussing your offer you will need to explicitly state exactly what you want in the offer – including your offer price, your “good faith deposit” (a deposit you make to show how serious you are about your offer – this goes toward your down payment at closing* and makes your offer binding), choose the time limit for your offer (usually 24 hours), included items need to be stated, and any other contingencies/conditions you want to include. Your agents should explain all of these in more detail.

You should also obtain and read any seller disclosures (depending on state/local requirements). Read these disclosures carefully, as they will disclose any known issues. Do your own due diligence. Read over your offer and the contract to be sure you understand what you are signing and the information is correct – these are legally binding contracts. Discuss any questions or concerns with your Realtor.

Once you are satisfied and feel comfortable with your offer, sign it and instruct your agent to transmit it. Then you will have to wait for the seller to decide what they want to do with the offers they have received. If your offer is accepted, you will need to drop off or mail your deposit check (certified) to the appropriate party (your agent will tell you where to send it). This will make your offer a binding contract. This good faith deposit goes toward your down payment but is forfeited if you walk away from the purchase without cause.

Step 6

Once you have an accepted offer, your agent and attorney will write up and review a Purchase & Sale contract. This is also a binding contract, secured by your good faith deposit. At this point, you have to hire a closing attorney who will do your Title work and coordinate the closing. You won’t need to pay them until the day of closing, and their fees are usually included in your closing costs. Your mortgage company and attorney begin working from here.

You will also need to quickly obtain any necessary documents for your mortgage company. Submit those documents as quickly as possible to ensure you receive your Mortgage Commitment Letter in time for closing. Otherwise, this can cause BIG issues and unforeseen have consequences.

Your agent oversees & coordinates the transaction to ensure things are meeting deadlines and there aren’t any problems. They will help you negotiate any issues that occur before closing. However, it is important to note that you should make sure you choose a good lender and attorney, who are reputable and do good work. Your agent has no control over them as professionals or their work. Good agents will keep in touch with everyone involved in the transaction and update you as needed.

Step 7

Next, you will be given a list of things to do in order to close by your agent, attorney, and mortgage professional. You will likely schedule a home inspection if you haven’t waived it. Here a home inspector will perform a visual inspection of the home to try and expose any obvious issues with the house. Read the inspection report carefully and discuss any issues with your agent. Sometimes, issues can be negotiated out but not always.

As you move toward closing, make sure you have enough money for closing costs and down payment (this really should be done before making an offer). This is something your lender should communicate to you at the start of the process.

Step 8

Your Realtor should be updating you on the next steps regularly. As you get within a week or two of closing, transfer your address, call and begin the transfer of your utilities, and schedule a final walkthrough of your new home. Typically this is done the morning of closing or the day before. This walkthrough is to ensure the home is in broom swept condition and there has been no significant damage to the home since your agreement to purchase. It is important to note, normal wear and tear are typical in any house. If you arent buying a brand new home, and sometimes even if you are, there will be some issues with every home.

On closing day you should be sure to have any and all needed documents. Call your lender to ensure you are clear to close several days in advance. Make sure the lender has wired your funds and sent any needed documents to your attorney. Call your attorney a few days before to ensure they have any and all necessary funds and documents to close. You may need a government-issued photo id, proof of homeowners insurance, copies of your contracts, and your down payment check (bank check) to closing. Check with your lender and attorney to be sure you have everything you need at closing. Your closing attorney will walk you through all of the documents you need to sign, and coordinate your closing. They will complete the delivery of the deed and title transfer as well as cut checks and wire money. Save your paperwork and don’t forget to get your keys!

Welcome Home! Move in and make memories.

Check out our SITE and search for a home, learn more about the process of buying or selling, and read our blog.

*Disclosure: The opinions stated in this article are the opinions of the author only and do not represent the opinions of any other party. The contents of this blog are not meant to be interpreted as individualized advice and are not guaranteed. Please consult your tax advisor, attorney, broker, and/or financial advisor for specifics on your situation.