Here is a detailed step by step guide to buying a home
Step 1: What can I afford?
Step 2: How to find an affordable property?
Step 3: Counseling for Home Buyers
Step 4: Checking Your Mortgage Eligibility
Step 5: How to Make an Offer
Step 6: How to Apply for a Mortgage
Step 7: The Home Inspection
Step 8: The Closing Process
Step 1: What can I afford?
This first step in becoming a homeowner helps you determine your budget and how much you can afford to spend on a home. Remember that along with the mortgage payment, there are other expenses to pay.
Before venturing down the road to home ownership, all first-time home buyers should evaluate their personal finances.
To understand your credit
Your credit history plays a very important role in determining your ability to buy a home. The following resources will help you understand your credit and the role it plays in the home buying process:
- Questions and answers about credit report
- To obtain a copy of your credit report, visit https://www.consumer.ftc.gov/articles/0155-free-credit-reports
It would seem that there is another language exclusive to real estate professionals and homeowners; Getting that jargon right is one of the biggest challenges in the home buying process. Probably the most important term you will hear while looking for a home is the word mortgage:
A mortgage is a written agreement by which a lender agrees to deliver money whose repayment is guaranteed by real estate.
Real estate is the home you are buying (the word real estate distinguishes home ownership from other types of property, for example, stocks or bond certificates).
The borrower uses the money pledged, or pledged, by the lender to pay the seller of the property. During the stipulated term of the loan (in general, 15 or 30 years), the money lent is returned to the lender in payments or periodic installments, meanwhile the entity keeps the documentation that proves the right to ownership over the mortgaged asset ( title). Along with the payment of the principal, or sum borrowed, interest is also paid; in this way, the lender obtains benefits for lending money. The lower the interest rate, the lower the monthly payment that must be made on the loan.
You must think that the mortgage is a product that you buy; the goal is to get the best price (the lowest interest rate) and the most favorable terms. So just like when you make a major purchase, you should go out and research your options before deciding which program offers the most benefits.
While most home buyers take out a mortgage to buy their home, no mortgage will cover 100% of the purchase price. Buyers must use their own funds to make a first payment, known as a down payment, for the home they are buying. Lenders consider that those buyers who contribute their own funds to the purchase of a home, in general, present a lower financial risk.
Step 2: How to find an affordable property?
Once you’ve determined your price range, it’s time to start looking for a home. But where to look? What can you expect to find? Most likely, no home meets everything you are looking for. But the home you ultimately buy should meet as many expectations as possible. A key point of the whole process is to narrow down your search and not waste time looking at all the houses.
Where do I start?
Start by making a list of your expectations for your new home. Some items on the list will describe the interior, amenities, and size of the home. Location, lifestyle, and availability should also be on the list. The distance you must travel to work, the distance to public transportation, and the quality of the schools in the area are all topics that might be on your list.
Your list of wants and needs is a reflection of you, the future owner. Take the time to make the list, review it, and update it throughout your home buying process. The more items on the list your new home has, the happier you will be when you live in it.
What are my options?
Before finding the right home, you will need to decide what type of home you want. There are a large number of homes to choose from, the most typical are
- Single family Home
- Multifamily housing
- A property for sale at a low price that needs repair
To analyze in more detail the pros and cons of each type of home, Go to >>
Choosing a location
Once you’ve decided what type of home you want to buy, the next step is choosing the location. There are several issues to consider:
- How far are you willing to travel to work or how far is freeway access?
- Will it be close to shopping malls, churches, day care centers, and recreation facilities?
- Is there public transportation nearby that could eliminate the need for a second car?
- Are public schools meeting the educational needs of your children or will you have to enroll them in private schools?
As you answer these questions, you can narrow down the number of locations to look for a home. Again, prioritize the attributes that are most important to you, both in terms of location and the home itself. Would you be willing to trade a bigger yard for freeway access, public transportation for shops and restaurants, shorter commuting distance to work for better public schools? With your list of wants and needs in hand, you will be better equipped to search and identify the locations that best suit your lifestyle.
Tips for finding a home
When you start visiting open houses [for show] and other properties for sale, keep the burnout factor in mind. It is not just about being physically tired, it is that, after a certain time, all the houses begin to look the same. So remember the following:
- Take a notepad and map with you. Mark the location of each house on the map and write down any special features in your notepad.
- If the owner offers you a fact sheet, keep it, even if the house doesn’t interest you at the time. Later, you may think about that home again and find it more interesting than at first glance.
- Never see more than three homes at a time. After the third, he no longer looks closely, he just goes through them and does not pay attention to the details that would help him find the home of his dreams.
- If you are going to see a lot of houses, take long breaks. See three homes in the morning, then stop and have lunch. See three more, stop and do something different. See three more in the afternoon. Nine homes in a day is the maximum capacity of almost any prospective buyer. Even with nine, the characteristics of one home will begin to blend in with those of the others.
- Bring a camera and take photos of the houses you like. Pictures of the interior and exterior will refresh your memory and help you remember the details of that home. Photocopied photos are often provided by agents or owners, be sure to take copies with you whenever they are available.
- Make a simple drawing of the floors of the houses that you consider are the finalists in your choice.
- Ask questions. Many buyers worry that the agent will consider them fools if they ask questions. But remember, there are no dumb questions!
- As a first-time home buyer, you want to know everything you can about each property. Often times, a question about plumbing, heating or cooling systems, taxes, the age of the home, or recent repairs will lead to other questions. You may find troubling issues in a specific home that initially appeared to have no problems.
Remember, it is much better to know the problems of a home before you buy it than to discover them when you already own it.
How do I find the right house?
There are a number of resources that help you find the right home. For example:
- Local newspapers
- Drive around the area and look for “For Sale” signs
- Talk and work with real estate agents
- Look at the bulletin boards in the office, in the neighborhoods or around where you are thinking of buying.
- Talk to friends, acquaintances, and co-workers
- Search the Internet
If you decide to search for the home yourself, gather information on various locations where you can afford to buy. Find out what neighborhoods offer in terms of schools, public transportation, business, safety, recreation, and accessibility to a job.
It would be easier if you contact a real estate agent. In a single chat, a real estate agent can give you information that may take you several weeks to gather on your own. Real estate agents can be excellent sources of information. However, when it comes time to buy a home, remember that real estate agents work for the seller, not the buyer.
The agent can select homes included in a Multiple Listing of Homes for Sale (MLS), a computer system that lists all listed properties for sale by market area. In a few minutes, a real estate agent can do an online property search for a prospective home buyer.
Another resource for buying a home is a real estate broker. Unlike a typical real estate agent, the broker works exclusively for the buyer. The buyer may pay their broker directly or may receive a portion of the commission earned by the property seller’s agent. In general, payment is agreed in advance, when negotiated with the buyer’s broker.
Step 3: Counseling for Home Buyers
If you are very eager for information on real estate, home buying, home ownership, think about a home buyer advice. Homebuyer counseling programs teach first-time buyers the intricacies of the home buying process and prepare them for the responsibilities of home ownership.
What are the benefits of home buyer counseling?
Participating in a counseling course for home buyers will reveal the mystery of the home buying process, because it explains it in detail. Among other things, you will know how to find the right house in the right neighborhood, how to choose the most suitable mortgage and terms, you will also receive help to understand the terminology of the real estate business.
Programs include analysis of
- the process to apply for a mortgage
- down payment requirements and closing costs
- the evaluation and importance of credit
- how to submit a purchase offer
- how to get a home inspection
- preparing for the closing [of the transaction]
- Special Considerations About Buying Condos and Multifamily Homes
- Post-purchase issues
- How to budget
Step 4: Checking your eligibility for a mortgage
The eligibility tool is not currently available.
Step 5: How to bid
Once you find the home that best meets your wants, needs, and budget, it’s time to bid. An offer is a formal proposal for the property and, among other things, establishes the amount you are willing to pay for the home. The purchase offer is a signed agreement and therefore valid from the legal point of view where you represent that you will buy the property provided that certain terms and conditions are met.
Many factors come into play when preparing an offer to purchase a property. Consider carefully the following points:
- What condition is the house in and how old is it?
- How much will the repairs cost?
- Are the sellers willing to bear any of the repairs or closing costs?
- How long has the house been for sale?
- Is the market active? (for example, we are in the presence of a buyer or seller market)
- Are sellers eager to sell?
- Is the property located in a particularly desirable school system or zone?
- Does the house have everything or almost everything you have been looking for?
How to prepare the offer
When you’re ready to make an offer to the seller or real estate agent involved, don’t offer more than you can afford. The offer must clearly outline all the terms and conditions of the sale, especially your name and the name of the party to whom you are making the offer, the address of the property, any particular clause on fixed appliances, electrical appliances, etc. , the total amount of the purchase price that you offer (including the amount of the deposit that you make to give legal validity to the offer and the complementary deposit that you will pay when the Purchase Agreement is formalized) together with any additional clauses and deadline.
Opportunity and deadlines
Timing and deadlines are very important in real estate transactions. Your offer to purchase real estate should give you enough time to get an inspection, negotiate the purchase agreement, apply for and obtain a home loan, and set a closing date. Often times, real estate transactions fail because the deadlines stated in the offer cannot be met.
An accepted offer
The seller can accept, reject or answer your offer. If you submit a counter offer, you can also accept, reject or reply to it. Negotiations between you and the seller can go on for several days and can sometimes be stressful. One way to mitigate stress during negotiations is to allow a broker to mediate the process. It is important to remember that no matter how your negotiations progress, the home is still for sale.
I need a lawyer?
We recommend that you retain the services of an attorney when purchasing your first home.
How can a lawyer help me?
An attorney can protect your interests as a home buyer and also
- help you negotiate a fair purchase price
- help you prepare the purchase offer
- help you negotiate a more favorable purchase price if your home inspection reveals major problems
- draft and / or revise the purchase agreement to protect you and your money
- assist you during the home loan process
- prepare you for the final steps of getting a property
- participate in the closing of the transaction and represent your interests
Tips for successful trading
When negotiating the price of a home with the seller, you need to analyze all the relevant factors and determine who has the strongest position in the negotiation.
Potential factors include market activity, location, and opportunity. If the local market is active and there are many other buyers interested in the home, the seller will be in the best position. If the local market is not very active and the seller needs to sell the home, you will be in a better position to negotiate. +
For tips on trading, Go to >>
The Purchase Agreement
Once your offer is accepted, the real estate broker draws up a purchase agreement (typically the second contract between the buyer and seller after the initial purchase offer is signed). The sales agreement details in detail the points that the parties agreed upon.
REMEMBER! It is a legally valid contract that should be reviewed by your attorney before you sign it.
There are two types of sales agreements: a standard sales agreement and a condo sales agreement, specifically designed to cover condo-related issues. It’s a good idea to contact a real estate broker for copies of these standard agreements.
To see a description of all the points of a sales contract, Go to >>
Provisions and contingencies
By including provisions and contingencies in your offer, you better protect yourself and your money. The purchase agreement should include a mortgage contingency that states that your ability to purchase the home depends on your ability to obtain financing before an agreed date. This type of clause ensures that you do not lose your deposit on the house if your loan is not approved.
Other contingencies should include a home inspection with an acceptable result for the presence of termites, radon, and lead-based paint. The closing date of the loan and the occupancy date of the house should also be indicated in the agreement. For more information on provisions and contingencies, Go to >>
What is the value of a home inspection? A satisfactory home inspection, while not a legal requirement, is a very important part of buying a home. The home inspection examines the condition of the property and ensures that you are aware of any necessary repairs or potential problems before you buy the home. The buyer chooses a licensed home inspector and pays for the inspection. A home inspection will cost over a hundred dollars but it would have to be done; after all, discovering problems before you buy could save you several thousand dollars. For more information, read Step 7: The Home Inspection .
Step 6: How to apply for a mortgage
After submitting an offer and it has been accepted, it is time to think about financing. There are several options for financing the purchase of your new home. So how do you decide which one suits you best? Knowledge is power, and with the right information at your fingertips, you are sure to make the right decision.
Here are some resources to help you apply for a mortgage:
- Mortgage application checklist – steps and necessary documentation required to obtain a mortgage
What are the terms of a home loan?
When shopping for a home loan, shop around for lenders on these terms or factors:
- The interest rate offered by the lender
- If the rate is fixed or variable
- If the rate can be secured when you apply for the mortgage. During how much time? At what cost?
- The costs of closing the transaction
- Other fees charged by the lender. Compare these fees with those charged by other lenders
How to get a mortgage
The first-time home buyer completes the mortgage application with many doubts. Questions like, where do lenders focus when I apply? And what is the best mortgage for me? they often add confusion and fear at this stage of the process. But your questions and concerns are by no means rare. In fact, many of the questions you ask yourself have already been answered.
- Questions and Answers for the First Time Home Buyer
Search for a loan
A very important part of the home buying process is finding a loan. Even if you have already been prequalified by a lender, you are not required to choose one of the home loans it offers. A well-prepared home buyer compares the terms of different loans offered by various lenders and then makes an informed decision on which loan is best for them.
Prequalification and pre-approval
As you search for a home, there is no question that you will hear the pre-qualified and pre-approved terms in relation to a home loan. Prequalified means that a lender has determined that, based on the information you submitted, you may qualify for a home loan.
Being prequalified, however, does not guarantee a loan or the rate at which the lender will lend you money. On the other hand, being pre-approved guarantees (generally for a period of 30 to 45 days) a mortgage loan at a specified rate. Prequalification puts the seller of the property confident that the prospective buyer will be able to obtain a mortgage. This confidence has a great influence on the seller’s decision to accept an Offer to purchase real estate. If you are a smart consumer, you should use your good sense to find a home loan that offers the available terms that best suit your particular circumstances .
A good resource to start looking for is your local newspaper, for example the real estate section of the Boston Sunday Globe. The Globe includes, every Sunday, a list of 50 to 55 lenders distributed in the state with their respective mortgage interest rates. As this list is being renewed, each lender appears at least once a month. While you may be considering a lender or may even be prequalified (remember: you are not required to borrow money from a prequalified lender), a competent search can save you a lot of money over your life useful mortgage.
- Other sources of information:
- Mortgage companies
- Savings and loan entities
- Federal Credit Union
- Other financial institutions
Another good resource is your real estate agent. In general, they know the lenders in the area and also the programs they offer.
To find the best rate and terms, you may have to make numerous phone calls and spend a lot of time, but it will pay off in the end.
Step 7: The Home Inspection
A home inspection is an objective visual examination of the physical structure and installed systems, from the roof to the foundation. It is the equivalent of a physical exam by a doctor and allows you to learn what problems could potentially arise if you decide to buy the home. When problems or symptoms of problems are found, the inspector may recommend a new evaluation or action to take. For example: evidence of termites will surely determine a detailed inspection for pests.
A satisfactory inspection is an important element of your home purchase. The buyer chooses a licensed home inspector and pays for the inspection. A home inspection will cost a few hundred dollars extra, but it will give you the peace of mind of knowing as much as you can about the property.
Remember: the lender’s appraiser is not the home inspector!
Do I need a home inspection?
A home inspection summarizes the condition of the property, highlights the need for major repairs, and identifies areas that may require your attention in the near future. Buyers and sellers depend on an accurate home inspection to maximize their knowledge of the property and to make smart decisions before entering into a purchase agreement.
An inspection highlights the positive aspects of the home, as well as the maintenance that will be necessary to keep it in good condition. After an inspection, both parties have a better understanding of the value and needs of the property.
Homeowners can use the inspection to identify ongoing problems and to learn about preventative measures that could avoid costly repairs in the future. If you are considering selling your home, a pre-sale inspection provides a better understanding of the conditions that the buyer’s inspector may discover, giving you the opportunity to complete repairs that make your home more attractive to buyers. potentials.
What does a home inspection entail?
A standard home inspection summarizes the findings found during the visual inspection of homes:
- Heating system
- Central air conditioning system (with temperature regulation)
- Internal plumbing
- Electric systems
- Roof, attic and visible insulation
- Windows and doors
- Foundation, basement and visible structures of the house.
Note : A good inspector will give you a written report immediately after the inspection.
A negative inspection is grounds for withdrawing from the transaction (provided you have included the contingency in your offer to purchase real estate or your purchase agreement) or to renegotiate the price of the home.
When you do your home inspection, make sure they also check for termites, radon gas, lead-based paint, and asbestos.
Where can you find a home inspector?
The following resources may be helpful:
- Get a list of certified home inspectors
- Access a list of frequently asked questions about home inspection
- Visit the website of the American Society of Home Inspectors
Step 8: The closing process
You have already applied for your mortgage, have already requested and obtained a home inspection and signed your Purchase Agreement. Now you just have to choose the colors to paint and decide where to put the sofa, right? It is not like this. It still remains to close the operation.
The “loan closing” is the transfer of title from the seller to the buyer and the cancellation of all money owed. The real estate agent or broker, your attorney, the bank’s attorney, the seller and your attorney, and of course you, the buyer, are involved in the closing. Although it is a stressful time, good preparation can ensure that everything goes well.
How do I prepare?
Take a final walk-through and inspect the property the day before closing to make sure the home is in acceptable condition and suitable for you to move in.
Note : If a problem is discovered in the house after closing, you will not have any recourse to the property seller; the solution of the problem will be totally in your charge. Therefore it is important to look carefully at the property during the last moments of the transaction.
What do I bring to the closing?
A certified cashier’s check or cashier’s check is required to pay closing costs. The closing attorney will give you the correct figure before the closing date.
A homeowner’s insurance policy, a provisional receipt and a paid receipt of the insurance premium are also required, covering 100% of the replacement costs of your home, for the first year.
What happens at the closing?
The closing is actually the purchase operation, where the seller deeds the property in favor of the buyer. This generally happens at the lawyer’s office or at the Real Property Registry; It can also be done at the offices of the credit institution.
The lender’s attorney will contact you and tell you what to bring to closing. Generally, a driver’s license, provisional insurance receipt, and cashier’s check are required for the outstanding amount of the down payment and closing costs. You should read all documentation before signing and have no qualms about asking the closing attorney any questions you may have.
There are a number of costs associated with closing the loan and completing the purchase of your new home.
Here is a list of ongoing costs associated with the closing process:
- Initial payment
- The points that could be applied to the transaction (one point is 1% of the loan amount)
- Attorney fees
- Property title search (verifying title records to ensure that the seller is the legal owner of the property and that there are no liens or other pending claims)
- Title insurance (to protect the lender and / or buyer from losses arising from disputes over home ownership)
- Verify the existence of outstanding municipal liens to determine that there are no pending legal claims against the property that must be paid when the property is sold)
- Credit report and certified plot plan
What other costs are paid at closing?
- A provisional insurance receipt valid for one year
- Registration and transfer fees
- Anticipated interest due on the mortgage for the month the loan is late in closing. You must also pay the premium for the first year of mortgage insurance, unless you have chosen to finance it monthly.