Buying a home is one of the most important financial decisions in a person’s life. It is serious and deserves respect and a Realtor® attention. I know this can be confusing and stressful. My goal is to make it as stress free as possible. Part of that process is educating you as we go. This document is an overview of the steps the Buyer takes to purchase property. If you have any questions, please ask. I do not mind explaining anything. I want YOU to feel comfortable.
Jackie Frye, Broker Associate at Watson Realty Corp, REALTORS St. Marys, GA
912-510-4468 or 912-882-5658 JackieFrye@WatsonRealtyCorp.com
Step 1: Go shopping for Mortgage. It may seem backwards to shop for a mortgage before you shop for the house, but there are several reasons for doing this. First, you’ll find out how much you can borrow, which has a lot to do with how much house you can buy. The monthly payment that you are comfortable with is important. You may not want to purchase at the maximum you qualify for. There are no “rules” here – only you know how much you can comfortably handle. Get a preapproval letter from your lender. Tell them you are working with me and to send me a copy. You may want an updated one on short notice after finding a home.
Step 2: Come up with the funds necessary to purchase a home. There are out of pocket expenses even with a zero down payment home. Earnest Money, inspection fees, appraisal fees, deposits for utilities, etc.
Step 3: Write a list of what you want and do not want in your new home. If you are local look around and get an idea of what homes, you like and where you would like to live.
Step 4: Find an agent. Do not jump from agent to agent; you do not need a separate agent to view different houses. A licensed real estate agent will help you find a house and guide you through the entire process. Your agent will be with you from beginning until you have the keys to your new home. Find an agent that you like, trust and can work with easily. Sign a buyer’s agreement with your agent. This gives you more protection and allows them to represent you as a client. They will be working for you and NOT the seller. You and your Agent will formulate a plan to help you achieve your goals.
Step 5: Find your new home. Go over your list with your agent. Your agent will find listing for you to look at online. Be specific of what you like or do not like. You really need to narrow down your list. Looking at too many homes may confuse you and things run together. Only look at homes that meet your minimum specifications. Once you agree on a few homes your agent will schedule a showing and you will go together to look at these homes. It may take more than one trip to look at homes. When the time comes, don’t fall in love with one house. You may not get it. Your agent will help you come up with a price based on the other houses you’ve seen and recent sales of comparable to make a reasonable offer. You don’t have to offer asking price, but if you "lowball," the seller may be insulted and not respond. Put yourself in their shoes. Go in with a good offer. Your agent will help find out, if possible, what the seller’s circumstances are, if there is a mortgage, how long the home has been on the market, are there other offers, have they purchased another home. These answers will help your agent suggest what should be in the offer. Have a backup plan: 2nd and 3rd choice. If you cannot get house #1 for the price you are willing to pay, or the inspection reveals issues with the house you will need to move on to house 2.
Step 6: Make an offer: this is an entire package of requirements not just the price you are willing to pay. You may ask the seller to help with closing cost and special stipulations such as the seller to pay for inspections or re-pairs on the home. Closing date, how long you need for inspections, financing contingencies are all part of the offer. The seller will require proof of funds or proof that you can get a loan in the form a preapproval letter from your lender.
Step 7: Negotiations. The Seller may counter, and you may counter back. This can go back and forth until you come to an agreement or the offer is rejected.
Step 8: Binding agreement is when both parties have agreed to the terms and everyone has signed the agreement. Time is of an essence, there are time limits and you have a limited time to do certain things to protect your earnest money.
Step 9: You will provide Earnest Money. Earnest Money is provided by the buyer to secure the property once there is an agreed upon offer. Think of it is a security deposit for the Seller to take the property off the market.
The money will be held in an escrow account to be paid towards the purchase of your new property.
Step 10: Due Diligence Period begins at Binding and lasts the number of days specified in the agreement. You may back out during the due diligence period and get your earnest money back. This is the time you must inspect the property. The results of these inspections will help you decide if you want to continue with the purchase.
- Home Inspection: Hire a licensed home inspector. If the home inspection indicates defects you may ask the seller to make repairs.
- Obtain a termite inspection.
- Get insurance quotes.
- Find out if property is in flood zone; do you need flood insurance? Get quotes.
- Check out the schools, busing and other services important to you.
- Check on utilities. ETC ETC ETC
Step 11: Financing Contingency begins at binding and lasts the number of days specified in the agreement. Once you have a binding agreement you should be working with your lender. You must make every effort to obtain a loan, however if for some reason you are turned down during the financing contingency period you will get your earnest money back.
- It is very important that you do not do anything that will change your credit rating or debt to income ratio; do NOT make large purchases such as auto, open a line of credit, borrow money etc.
Step 12: Appraisal. Your Lender will order and Appraiser. The Appraiser will coordinate a time to visit the home. Your agent or you will not be at the home during this time. It may take a couple weeks for them to get the report back. If for some reason the home does not appraise for the contract amount your lender will require you to pay the difference or you may ask the seller to lower the price The lender will not loan you more money than the appraisal for the property. If you cannot come to terms you will not purchase this home.
Step 13: Work with your team; agent, lender, attorney, insurance agent etc. Your agent will help keep you on track.
- Insurance: 13 days prior to closing your insurance agent should provide binder to the closing attorney.
- Setup utilities: pay your deposits and setup switching utilities to your name on day of closing
- Attorney may ask you for some information
- Stay on top of your lender to make sure everything is on track. The lender needs to get a closing package to the closing attorney early enough for the closing attorney to prepare the settlement statement.
- The lender must provide you a copy of the closing disclosure 3 days prior to closing. You must acknowledge that you received it. If you do not have it 3 days prior to closing, closing will be delayed. Please send a copy to your Realtor®. It is important for the Realtor® to check the figures against the contract.
Step 14: A few days prior to signing the closing documents everything should be in place. Your lender and attorney have worked out the final details. If your agent has a copy of the final settlement statement, they will go over it with you. This document will give exact figures of what funds you may need at closing; or funds you may get back. The day of signing closing documents you will meet at the attorney’s office at a scheduled time. Bring a photo ID. The attorney will sit with you and your agent and go over all the documents as you sign them. Once everything is signed and documented you will be given copies of the documents. If you have a lender the attorney will scan/email to lender. Once Lender ensures documents are correct, they will fund. FUNDING is when money changes hands. Now you own the house and you will get the keys to your new home. The attorney will file the required documents at the court house.