Section 7: 12 Steps To Buying A Home

This is a 12-step checklist and program that will make the home buying experience more rewarding and less stressful.

1.  Figure Out What You Can Afford

You know by know that the purchase of a home is a complex process.  Buyers will often feel troubled by the huge expenses involved.  Before setting out to buy a home, consider its affordability.  You need to know if the home is in your budget.

A home may seem affordable to you at a glance, but there are hidden expenses involved in buying.  These expenses may lead you into financial problems.  The actual cost of the home will always end up being more than the selling cost indicates, because there are added fees, also.

You need to make a detailed examination of the housing market to figure out your price range.  You will also need to figure out any issues you might have meeting your basic needs.  Dow research on school districts, impending construction, crime statistics, or anything else that could increase or decrease a home's value

2.  Make Sure You Can Get A Loan

Buying a home requires an amount of money normally not available to a buyer in their bank account.  For this reason, buyers contact lenders for loans.  There are lenders who will provide you with loans outside your budget.  For potential homebuyers, it is important to stay disciplined and go for an affordable home purchase.

Buying a home is expensive and can also be invested with emotion.  It requires careful thinking about your current financial situation.  There needs to be emotional control and you must make decisions based on your budget.  Do not go out of your budget for a house just because it "feels like the perfect home".  Overreaching your means will only cause you to experience financial problems in the future.

The best approach is a preapproval by a reputable and prudent mortgage lender with whom you have worked to assess affordability of a mortgage with your budget.

3.  Create A List Of Wants And Needs

Based on your specific budget, you must figure out what is important to you and what you are willing to compromise.  Wants and needs play an important role in the buying decision.  If your dream home is outside of your budget, you may need to settle for something less expensive, at least for now.

Make a two-column list.  Label one "Needs" and the other "Wants".  List items down each side based on their category.  While visiting homes, you can then track which homes satisfy most of the items on your list.

4.  Pick A Location

Among the most important choices people must make when deciding on a home is the location.  Every family has different demands for their home.  Home is a place you are connected to, not only physically, but spiritually and mentally also.  Commute to work, school district, and convenience to frequently visited stores and shops are a few important factors to keep in mind.

It is a desire of almost every buyer that their home be in a peaceful location.  There are places that can meet that need in almost every environment, though, from the urban to the suburban to the truly rural.  Find the right balance of bustle and tranquility that works with your needs.  Look at all surrounding areas to see if this is the place in which you can see yourself and your family.

5.  Decide On A Home Design

After price and location have been discussed, home design is the next major aspect to consider.  Single-family home, Townhome, Condo, One or Two story, Split floor plan, Formal dining room, Pool, Garage ...

6.  Contact An Agent

Contacting a reputable, qualified, professional real estate agent is highly advisable.  The agent will find the house for you according to your needs and desires and show you multiple offerings.  It is not easy to go out and search for homes without backup, so let a person who has a deeper knowledge base on the matter and a wealth of relevent experience help you find the right home for you and your family.

7.  Look At Homes

A complete search should be done on all houses available for sale.  The houses that come under your budget requirements should be visited.  Take photos, make notes and compare the characteristics of the houses to your list of needs and wants.  To further narrow your choices, visit the neighborhoods at different times of the day and night to gauge traffic and noise.  Also, do a test commute to work.

8.  Make An Offer

This means proposing a price to buy the property.  The assistance of an experienced real estate agent is useful.  There are standard forms that you need to comply with, such as the Residential Purchase Agreement.  Choosing to work absent the guidance of a real estate professional will leave you vulnerable to mistakes that can prove costly to correct over time.  You must be up-to-date on the latest home buying information available.

The offer made must conform to regulations.  In addition to purchase price, it must include the terms and conditions governing the purchase.  For example, if the seller agrees to pay a portion of the buyer's closing costs, this must be included in the proposal with clear terms and amount.

9.  Negotiate With The Seller

Once you find your prospective house and intend to make an offer, review comparable sales in the area.  Compare these to the subject house to help validate the asking price.

A purchase offer can evoke three possible responses from the seller.  First, the seller may accept the offer as is.  Second, the seller may counter the offer by requesting changes, Third, the seller may reject the offer altogether. 

 

Always remember that the home buying negotiation is a professional business transaction, so do not approach it with personal sentiments.  If you cannot agree on purchase price and terms, then you must know when to walk away.

10.  Put Money In Escrow

After an offer is accepted, the buyer is expected to put money into escrow as a deposit for the purchase.  This is negotiated in the purchase offer.  Escrow is the period between the time a purchase offer is accepted and the time when the property's title is transferred to the new owner.

The escrow agent is a third party neutral to the buyer and seller.  The escrow is assurance to both parties and is involved in the transaction so that clauses of the offer will be met completely.  The money held in escrow until all obligations are met by both parties.  It is then transferred to the seller and used to cover some or all of the down payment and/or closing costs.

11.  The Closing Process

The closing agent reviews the property's ownership for errors, unreported claims, or flaws.  There is also title insurance for issues that may come up after closing.  During the closing process, the deeds, loan documents, and other papers are prepared, signed, and submitted to the proper offices maintaining property records.

While the buyer gets the keys, the seller gets payment.  The closing agents deduct the necessary funds to pay the existing mortgages and other costs connected to the transaction.  The end result of the closing process is that buyers receive title to the property, the lenders get their loans documented in public records, and the government gets to collect the taxes generated by the transaction.

12.  It Is Not Yours Until You Close

When everything looks set and all is going well, nothing could be worse than the deal falling apart at the last moment, but it does happen.  This can be due to a variety of reasons including home inspection, low appraisal, or failure to obtain appropriate financing.  It is easy for buyers to ensure the deal goes through if they know these potential pitfalls beforehand.

If physical damage is noticed during the home inspection, the deal could be called off.  If the house is not sound, is not safe to live in, it should come as no surprise that its purchase may not go through.

As you are finalizing the deal with the seller, be in close contact with your lender and verify the preapproval they gave you is solid.  Do not make any major purchases or do anything that will lower your credit score.  Applications can get rejected during the mortgage approval process due to not having appropriate funds and/or your credit score going down.

Low appraisals can break deals.  If the appraisal is too low, the lender may not give you the loan.

You should always have the home inspected by a licensed home inspector.  Some items discovered during the home inspection, if not remedied, can cause the lender to deny the loan.

© 2021 by Jim Shorkey