How to buy a house in today’s real estate market. Let’s face it; the news today does not promote a promising picture of the housing market. The fact of the matter is, if you’re thinking of buying a home, today might be the best opportunity you have had in a long time.
Rates are low, and slowly inching down even further. Sellers are unfortunately faced with tough decisions to sell. Foreclosures are on the rise, leaving sellers very little choice but to sell or let the bank foreclose. This is putting an increased number of homes on the marketplace.
You can buy a home without using a Realtor, but why would you want to? Realtors bring years of experience to the table and a good Realtor will negotiate for you for the best price and terms. Especially if you’re a first time home buyer, the process of buying will seem very intimidating as you wade through form after form after form. They can make life a lot easier for you by explaining everything in detail.
The first and most critical step before you set out to those open houses is talk to a lender if you are going to need financing. Very few people in the world today buy homes with straight cash but it’s not unheard of. Talk to friends, family members, and neighbors and try to get referrals to a bank or a mortgage company. You can go to a local bank, such as a Credit Union, or mortgage companies are a dime a dozen that you’ll be able to have access to. The good thing about your local bank is if there is ever a problem down the road, you’ll be able to go and talk to a real person face to face. The bad thing is, most local banks don’t have as flexible as financing as mortgage companies do. If your credit isn’t in the best shape, or you have very little funds available as a down payment, many mortgage companies can structure a loan to fit your needs. The downside of a mortgage company would be if there were trouble in the future – you would have a harder time getting to a “real person” who will be able to help you. Whichever way you choose to go, make sure you are comfortable with your monthly mortgage payments, they’ll follow you around for generally 30 years!
The biggest reason behind obtaining your pre-approval as the first step, is when you find the house of your dreams, you’ll want to make an offer on it. Real estate agents will submit a copy of your pre-approval letter with the offer to “back up” the fact that you’ve spoken to a lender and that you are ready, willing and able to buy. This makes the home seller feel more comfortable. Most home sellers will not accept an offer unless there has been some effort made towards obtaining a loan. The other important point of a pre-approval would be looking within your price range. It’s incredibly aggravating to look at homes above your price range, wanting what realistically, you can’t afford.
After you’ve spoken with your lender, it’s time to go house hunting! A good real estate agent can provide you with the most up to date list of homes that are available for sale. The internet is also an incredibly source of information for the home seeker. Homes are advertised at several different sites that are directly linked off of your state’s Multiple Listing Service (MLS), which is a service Realtors use to offer your home for sale. Realtor.com, remax.com, homes.com are all popular sites that will pull listings up for your area. The average number of homes a person looks at will vary by what your needs are. Some people have bought the first home they looked at, because it met all of their needs, others have looked for over a year, just not finding “the one” yet. Most homebuyers look at anywhere from 8-10 homes before deciding on putting an offer in. Buying a home is very much an emotional experience. When you walk in that front door, you’ll know it’s “the one.”
Once you find that dream home, it’s time to write up an offer! Your real estate agent can assist you with the finer details inside the contract, because they will vary from state to state. Basically an offer is, by contract, an “Offer to Purchase.” What you will do is write your intentions down, and make your offer to the home seller. You will state a price, as well as terms that will hopefully be acceptable to the seller. Sometimes, it will take some negotiating back and forth to come up with a price, and terms, that are acceptable to everyone.
Once your offer has been “accepted” it’s time to start moving quickly at getting the necessary tasks done. You have the right to have the home inspected, which you will want to do fairly quickly. Ask for referrals, check prices, and make sure your home inspector is insured. At the same time, you’ll want to let your lender know that your offer has been accepted, he/she will have additional paperwork for you to fill out that will be specifically set up for that particular home.
After your home inspection, typically you will sign what’s called a “Purchase and Sale” contract. This is the finer details of your original offer spelled out in a longer form. You do have a right to have an attorney review this for you. This is a binding contract, so make sure you read it carefully and are satisfied with the terms and conditions that are listed on there. After signing this, you will submit a copy to your lender and they will order an appraisal. The appraiser will go to the property to perform an inspection and document to the lender that the home you are buying is worth what the bank is lending. You do not have to be present for the appraisal.
All of the above happens in a very short time span. After this is done, there might be some more minor paperwork or pay stubs to submit. This is the time you’ll want to settle down and start packing! Make sure you remember to submit a change of address form to the post office, as well as making necessary changes to your utilities.
As complicated as it sounds, it’s usually not incredibly difficult to buy a home. With the programs that are available today for financing, as well as the wealth of information available, you’ll be able to learn a lot about the process and secure your loan, fairly easily. Make sure you have someone “on your side” whether it is a Realtor, or an attorney. They can be worth their weight in gold if a problem arises.