Patti Thomas
Coldwell Banker Realty

7 Steps to the Home Buying Process

FINANCING

If you are planning to finance your purchase with a mortgage loan then speak with a lender to determine your buying power. A lender will identify the price range that matches your ideal monthly payment. Once you obtain a pre-approval letter, you are ready to start visiting homes in person. This pre-approval letter is also needed in order to compete in a competitive market – to submit an offer your pre-approval letter is needed.

If purchasing with Cash, then supply your REALTOR® with either a letter from your bank written on your bank’s letterhead stating that the funds in your account exceed the sales price amount or supply your most recent account statement with your account number blacked out.

HIRE A REALTOR

Employ a local full-time REALTOR® to assist you through each step of the home buying process.

THE HOME SEARCH

This is a process of elimination. Start by deciding which neighborhoods you want to live in and whether you want a New or Re-sale home. Drive the areas you’re considering to decide if it’s the best fit for you & your lifestyle. Then, start visiting your favorite homes with your Realtor who will provide further assistance and help with any of your questions.

MAKE AN OFFER

Once you find the right home, we will review market conditions and decide on the most competitive offer to submit to the seller. I will write the offer and explain the paperwork necessary for submitting our offer. The negotiation may go back and forth a few times between parties – this is normal.

UNDER CONTRACT

After final acceptance of the terms by both parties (when both buyer and seller have signed the offer/contract) then we are “under contract.” At this time, you’ll provide an Earnest Money check to the Title Company to open escrow and an Option Check to the Seller for the Option Period. We have 3 days to deliver both Earnest & Option (both checks are processed upon delivery) and I will help you make arrangements for the delivery of both checks to appropriate parties.

INSPECTIONS & APPRAISAL | first 7- 10 days under contract

Now begins our Option Period, which is what your Option Check paid for (usually 5-7 days). Inspections are performed for you to become familiar with the home. Any negotiated repairs will be completed prior to closing or we can ask for a $ amount to be credited toward your closing costs in lieu of repairs so that you can preform repairs as you see fit post-closing.

Once the inspection is complete & negotiations are settled between both parties then your lender will order an appraisal. During this time, you will also need to arrange insurance for your new home (your Lender will help with this.) Title will also provide a Commitment for Title Insurance for your review. If you have any questions about the Title Commitment - contact the title company (title is a neutral 3rd party and happy to assist).

CLOSING

You will need to either have funds wired to the title company or bring a certified check. If paying cash then the Title Company will confirm the amount you need to bring to closing and if you are financing your home purchase then Lender will confirm your “cash to close” amount.  You will also need to bring a photo ID. Possession of your home occurs when the funds arrive at Title. With financed transactions this will happen when your lender “releases funds” (which can take 1-3 hours after both parties have signed all closing documents). Typically, you will receive keys the same day, unless one party closes late in the day. Once this is complete, the home is yours!

 

 What Costs to Expect

 Earnest Money            

Earnest is usually equal to 1% of the sales price and is credited toward your closing costs. The Earnest money can also be refunded to you based on provisions in the purchase contract, which you and I will discuss when we make our offer.

 Option Money              

Depending on the price of the home this can vary, but $150 - $200 for a 7-10-day option period is not uncommon in our real estate market. The option check can be paid in the form of a personal check & is made out to the Seller. This time period gives you the exclusive right to cancel your purchase and refund your Earnest money. If you move forward with your purchase and do not cancel, then your Option money is also credited toward your Closing Costs.

 Inspection                  

During the option period it is recommended that you have the home professionally inspected. Depending on how large the home is and the age, the cost of inspection will vary. Most of the time, for a home under 3,000 sqft the inspection will run around $425 - $475. *Note the following can be considered add-on services but can vary based on company – there may be an additional fee for the following: termite inspection, sprinkler system, septic tank, well, and pool/spa.

 Appraisal

An appraisal of the property typically costs between $500 - $550. Typically, the best time to order Appraisal is immediately following the Option Period, at which time we’ll notify the Lender to order the Appraisal.

 Survey

The survey customarily is purchased by the buyer but is a negotiable item. The cost of obtaining a new survey is usually around $400. Although, the seller sometimes has an existing survey that we can use, so that a new one isn’t necessary.

 Closing Costs

These costs can be broken into 2 categories:

  1. Loan Items
  2. Prepaid Items

Loan costs include things such as Escrow Fees, Loan Origination Fee, Prepaid Interest, Mortgage Insurance, etc.

Prepaid items are put in an escrow account to build reserves for Property Taxes and Homeowner’s Insurance.

 Closing costs can vary from 2% to 6% of the purchase amount depending on the time of year and the loan program you are using. Typically, the lender will provide a good faith estimate that serves as a detailed account of costs and fees. These costs can be paid at closing or possibly rolled into your financing.

 

Home Inspection

 What is an inspection?

There are numerous types of inspections. An inspection is meant to evaluate the structural and mechanical condition of a property. It is not the same as an appraisal which evaluates the market value of a property. Persons involved in real estate transactions need unbiased information about the physical condition of a property they plan to buy or sell.

 Remember that every home is inspected using the most current building codes & every home will have a laundry list of items that could use attention; the older the home, the longer the list. Items that the Seller will likely repair or provide an allowance for repair includes the following main points of concern: Foundation, Roof, HVAC, Major Plumbing and Electrical.

 

 Frequently Asked Questions

 What to Expect when Viewing Homes

How many homes should we view in one day?

The most is typically 5-6 homes in one day. More than that and it’s not uncommon for the properties to begin blending together.

Will the owner be present during our visit?

Some homes will be vacant, while others will be occupied. An owner or renter could be living in the home. If so, I will call ahead to give notice to the occupant. Please let me know which homes you’d like to visit in advance, that way I can schedule appointments for us.

 What should I notice while looking at the home?

Your big focus should be on 3 things: 1) Lot, 2) Location and 3) Layout. Which we’ll discuss further while visiting a home, as each property will be unique and have different considerations to take into account.

 What if I don’t like the home when we walk in?

Please be honest with me and we will move onto the next home

 

 

 

 

Find your Next Home!