You want to buy a house? You want a master bedroom with master bath and double sinks? (It’s called a principal bedroom now… don’t make me cancel you). You want a yard with a she-shed? Pay attention… here are ten steps to home ownership.
- Set an ownership goal. Your goal should say what you want with a due date for achieving it. Download a photo of your dream home for motivation, write a due date on it and get to work.
- Get pre-approved by a lender. A conditional commitment would be better. Important: Get the conditional commitment before you start looking for the house. This will help you avoid the foreclosure list down the road. It will also save you wasted time and energy. If your lender tells you to find your house first, change your lender.
- Start researching your choices on the Internet. Many web sites have maps, walk scores, videos, virtual tours and photos to help you decide. Leverage the realtor MLS systems with powerful property sites like AskHollingsworth.com. Find your preferred area. Ask one realtor to send you homes meeting your criteria. If you ask more than one, then your inbox will look like a crime scene. Pick one realtor.
- Use a realtor. Yes I am biased, but let me make my case. Searching for a home without a realtor is like sailing to an island without a compass or GPS. You will save time, money and frustration. The realtor will narrow your search, research comps for you, negotiate the deal, and help you avoid pitfalls. Make sure your realtor does a disclosure with you.
- Go to visit the homes. You will make appointments to see the homes you selected. Photos, videos and virtual tours can’t tell you the real story. Nothing substitutes the real thing. You can even attend open houses. If you have your own realtor, tell the realtor on-site that you do. Visit the homes with your realtor, open doors and ask questions.
- Make an offer. A house is worth what the market will yield, not what the owner is asking. Your realtor will know what the house is worth. If you like it, make an offer. Don’t worry about asking price. It’s called negotiation. The owner will either say YES, NO, or counter with an offer. If you have a number that both of you like, you have a deal. Remember, even with a verbal deal, you don’t have anything until the seller signs the contract. So act accordingly.
- Have it inspected. Hire a licensed home inspector, out of your pocket, before you sign contracts. Some states allow you to sign a contract pending inspections. But most New York sellers don’t play that. Once they have your deposit check they don’t like giving money back. After the inspection, you can ask the seller to fix or credit any issue that came up. Or you can walk away.
- Sign Contracts. The realtors obtain information from the buyer and seller…Names…addresses, etc. Owner’s attorney will send a contract to your attorney. Review it with your attorney. When you are happy, sign the contract and put down your deposit. Your attorney will send it to the seller’s attorney and they will sign the contract and send it back to your attorney. You are now in contract.
- Get your loan. Most likely you are getting a loan. You probably had a “pre-approval letter”, which is you might get a loan. Now you need a “commitment letter”, which is you will get a loan. You bank will send an appraiser to the house to make sure the house is worth the amount you agreed to pay. If the house appraises at or above the purchase price, you are winning! If it appraises below the purchase price, then the bank will give you less money, so you will have to either renegotiate the price, or come up with extra money, or walk away. It happens. You will get your deposit back unless you waived this contingency. Once appraisal is done, your application will go into underwriting and then you will get a commitment letter.
- Time to close on your house. Once you have a commitment letter your lender must clear you to close. You will do a walk through right before the closing. Speak to your lender before the closing to make sure they have your money ready. Have a photo ID. Ask your attorney to give you a written statement of your closing costs, so you know what checks to bring to the table.
At the closing table, the following people will be there: You, your attorney, your realtor, the Seller, the seller’s attorney, the seller’s realtor, the bank, the title company, and maybe the bank’s attorney. WHEW. All these people are there to make sure nobody pulls a fast one. Everyone signs paperwork. Your pen will put out more ink that day, then any other day. You will promise to pay your note. You will promise to pay your taxes. You will promise to abide by the rules and regulations of your mortgage. You will acknowledge that everyone told you all that you needed to know.
Congratulations. You are a homeowner. You have a marketable asset. You have a new life. Enjoy it. Make your payments on time. Make sure to invite your realtor to the party. If you would like a private home buying consultation and eligibility screening … AskHollingsworth.