So you are ready to buy your first home and want to know the process. Here are the 10 steps that can help make the home buying process as stress-free as possible:
Step 1: Obtain a Pre-Approval Letter or Proof of Funds
When contacting a lender for a pre-approval, have your documents ready. They will likely ask for your state ID, SS Card, 30 days of paystubs (or proof of income that is not from employment), 2 months bank statements, two most recent years’ 1040 Tax Forms, etc.
If you will be purchasing with all cash, you will just need to supply your proof of funds (most recent bank statement or a letter from the financial institution of the account you will be paying from).
Step 2: Provide me with your Home Criteria
Once we know the price range you are able to purchase in and the type of financing you will utilize, we can start looking at the home listings available that you may be interested in.
Inform me of your must haves and know your desirables. Must haves may include a minimum number of bedrooms, minimum number of bathrooms, type of garage, areas you want to live in (or do not want to live), school zones you want to be in, etc.)
Step 3: Find a Home, Negotiate and Get into Contract
Start touring homes in your price range. Make sure to check out the little details of each house and evaluate the neighborhood. I assist you with making offers, negotiating price and terms and reaching an agreement with the Seller.
Take as much time as you need to find the right home. Then work with your real estate agent to negotiate a fair offer based on the value of comparable homes in the same neighborhood.
Step 4: Escrow
Once you and the seller have reached agreement on a price, the house will go into escrow, which is the period of time it takes to complete all of the remaining steps in the home buying process. The following steps are done throughout the escrow process. When you receive the final settlement statement and sign off, you have closed escrow. The transfer of the property is recorded with the County Recorder then you will officially own your new home!
Step 5: Get a Home Inspection
Typically, purchase offers are contingent on a home inspection of the property to check for signs of structural damage or things that may need fixing. You can use any Home Inspector your wish, or I can send you a list of a few. This contingency protects you by giving you a chance to renegotiate your offer or withdraw it without penalty if the inspection reveals significant material damage.
You can then decide if you want to request the seller to fix anything on the property before closing the sale. If the Seller agrees then before the sale closes, you will have a walk-through of the house, which gives you the chance to confirm that any agreed-upon repairs have been made.
Step 6: Home Appraisal by Your Lender
Lenders will arrange for an appraiser to provide an independent estimate of the value of the house you are buying. The appraiser is a member of a third party company and is not directly associated with the lender. The lender will use the lower of the appraised value or contract price when calculating the Loan to Value ratio and the amount they are willing to lend on the property.
Step 7: Coordinate the Paperwork
As you can imagine, there is a lot of paperwork involved in buying a house. Be sure to provide any requested documents to your lender as soon as possible to ensure a timely closing. The title company will receive the lender’s paperwork for you to sign, provide you with a settlement statement outlining costs and make sure that the seller is the rightful owner of the house you are buying and can transfer the title free of liens.
Step 8: Close the Sale
At closing, you will sign all of the paperwork required to complete the purchase, including your loan documents. It typically takes a couple of days for your loan to be funded after the paperwork is returned to the lender. Once the transaction is sent for recording with the state, my favorite part, you will receive the keys to your new home!