Home Buying 101 Part Two – The Home Buying Process
“If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it” – Steve Jobs
So you’re finally ready to buy your new home! You have your Real Estate Agent, Lender, and Attorney lined up (check out my first blog on tips for picking a Lender, Realtor, and Attorney-add link to first blog here) and you can’t wait to jump in! So now what? Who on your team do you start with first? Most homebuyers are so excited to start looking for homes, and they start the process with their Real Estate Agent; the process actually begins with your lender, however.
The first step in buying a new home is going to your lender to get Pre Approved for a mortgage. Keep in mind that there are two key terms you should know of: Pre-qualified and Pre Approved, and yes there is a difference. When you ask to be Pre-qualified your lender really asks for ball park figures and gives you a roundabout price range for homes that you can shop for. In fact, most Pre Qualifications can be done over the phone. When you get Pre Approved lenders dive further in-depth to your finances. Asking for pay stubs, tax returns, any debts such as car payments or student loan payments, and will weigh your debt to income ratio to come up with a more concrete figure of what they will lend. I always advise my clients to get Pre Approved first if they are serious about buying; there is nothing worse than falling in love with a home that you can’t get financing for.
After you get Pre Approved for your mortgage then the fun part starts: house hunting! You will meet with your Real Estate Agent and go over your wish list, certain must have’s you’re looking for in your new home, and areas you’re looking in. From there, your Real Estate Agent will send you listings, and schedule showings until you find that one home that you’ll call your own!
Once you find your dream home it is your Real Estate Agent’s time to shine! From there they will prepare and submit an offer. Many times, on HGTV reality shows you will see an Agent call another Agent to submit an offer over the phone. As a buyer, it’s important to be informed. In the State of New Jersey that verbal offers do not need to be presented to the sellers if their agent feels that the offer is inadequate. All written offers, however, must be submitted to the seller no matter what the offer is. As a result I like to write up all my offers and get them out for my clients; this way I know their offer will be presented to the seller to consider.
After negotiating with the seller, a price of the home will be decided, and your agent will draft up the final Sales Contract for you to sign. It’s important to note that nothing in a Real Estate Transaction is final until closing. Even if you signed the sales contract you can still walk away free and clear if something comes up during the inspection or another situation occurs that might require you to walk away from the transaction. From here on out your Real Estate Agent will be by your side including walking through the house with you when you get to your inspections, the home’s appraisal, and finally your final walkthrough.
Once both parties agree on a purchase price and the Sales Contract is fully executed it is now time for your Attorney to show you what their made of. Your Attorney, along with the seller’s Attorney, will go back and forth to cater the transaction to both parties needs. They will ask for surveys, about underground oil tanks, and a slew of other possibilities to make sure you are covered when buying your home. When your home is out of Attorney review , it will be officially considered “under contract” which means if any other offers are submitted or interest is shown in the home the house already has an executed contract and is considered to be claimed by you!
After Attorney review you typically have 10 days to schedule a home inspection. Just like the other members of your team you want to choose a great home inspector as he or she will be hired to find any defects or challenging situations that may arise with the home. It’s important to note that so many buyers become frightened when going through a home inspection. The inspector’s job is to give you leverage for your transaction. If something comes up in home inspection you can always have the seller fix it or take the cost of the repairs off the purchase price of the home. The moral of the story: don’t walk away from your dream home because of a little chipped paint; just have the seller fix it!
After you receive your inspection report from your inspector a copy will be sent to your attorney. If you are satisfied with everything, appraisal will then take place. Just as the home buying process started with your lender it also ends with them. The second to last step of the process is appraisal. Appraisal is important because your bank or lender wants to make sure they aren’t lending to you more money that what the home is worth. Your lender will hire an appraiser on your behalf who, with your Real Estate Agent, will walk through the home, take measurements of rooms, observe the area, and take pictures of the home. The appraiser is able to come up with a price of your home based on surrounding homes and what they sold for in the area.
After your appraisal comes back, your mortgage lender will finally order a review from their underwriter, closing documents will be generated, and the lender will give you a closing date to close on your new home! Next on the docket is your final walkthrough of the house. This is to make sure that everything is the way that you want it, and it can usually can take place a day to hours before closing.
The last step of the process is here! Closing takes place and you sign the closing documents, bring your bank check for your money to put towards the home, and receive the keys to your new home! From there you are free and clear to start moving in and enjoy your new home!
In closing the home buying process is an involved process; however by hiring experienced professionals such as Oaktree Realty, the home buying experience can be fun, enjoyable, and stress free!