Should You Say Yes to the House?
Buying a home is an amazing and emotional experience, and the emotions experienced can vary greatly. After saving and dreaming of owning your own home, the time has come to take the plunge, or has it? Before you buy a home, make sure you have done your homework and some soul searching. You also need to understand the process so the emotional aspects will be positive, and you will be confident in your decision.
Talk to a lender
Getting prequalified is a “must do” to get your offer accepted. Sitting down with a lender will give you the opportunity to ask questions and learn about the process of obtaining a mortgage. A lender will ask you to provide information about your income and will require you to submit pay stubs, tax returns, and bank account information. The lender will also ask about any debt you may have and will run a credit report. This is a more thorough preapproval than one obtained by self reporting information on line with a lender. If you are applying for a loan based on your income and that of a spouse or partner, the lender will need the financial information from each of you. Having a lender review all of this information first hand will increase the strength of your offer when you find “the one”. With the verification done upfront, your lender will be able to help you close on the purchase of your home sooner, often within 21 days rather than the traditional 30 day close. Most sellers are interested in getting their homes sold quickly and are more likely to accept an offer with shortened time periods for closing. In addition to sitting down with a lender, it’s a good idea to shop around and speak with one or two additional lenders to compare rates. If you like the first lender, but the second lender is offering a better rate, see if the first lender can match it. Be sure you settle on which lender you want to use before you make an offer.
Make a list
Make a list of the features you want in your future home. If you are buying with your spouse or a partner do this together and then share it with your realtor. Having this list will help you when you are house hunting. How many bedrooms do you need? Do you want the home to be “move in ready” or are you willing to do some updating? How many bedrooms do you need? Do you need a quiet street or a fenced yard? How many bathrooms do you need? Does the home have to face a certain direction? How about the school system, is that important to you? When you are out looking at homes, it is easy to get caught up in the excitement of different features and lose track of what you really need. Your realtor will be able to bring you back to your must have’s and want’s list and keep you on track both in price range and amenities.
Do your due diligence
Visit open houses in the area where you want to live, even if they do not match all of your criteria. By doing this you will not only gain a better feel for the neighborhood, but also obtain a better idea of the value of homes there. Compare notes with your spouse or partner to make sure you are in agreement on what features you really do need in your future home. Review new homes to the market online also. Your realtor can set up email alerts so you receive property details of the homes that come on the market that match your criteria. I preview property for my clients and let them when a home hits all the marks on their list. This way if my client’s schedule gets busy for any reason, they have someone in their corner and they won’t miss “the one.” Check out neighborhoods, commute time, and schools. Do they match up with the needs you put on your list?
Understand the offer and timelines
It is a good idea to understand the process of buying a home before you make an offer because that will let you know what to expect. Your realtor can review the purchase contract with you and explain the different aspects and ways it can be tailored to make a your strongest offer possible. Your realtor will also advise you whether or not it will be beneficial for you to write a “love letter” (see my blog from February 2018 “Love Letters are not Just for Valentine’s Day”). Your realtor will explain the types of inspections usually done in a home purchase, the average associated buyer costs, and a list of trusted inspection companies. Your realtor will inform you regarding your earnest money deposit and the specifics of the contract including: timelines, contingencies, and disputes. By learning about all of the aspects of making an offer and buying a home, there is less to learn when the actual time comes to make your offer and there is less chance that the experience will be overwhelming.
Ready, set, go!
You have found the perfect home, yea! Your realtor will find out what specific needs the seller may have and whether or not multiple offers are expected. Next, your agent will review comparable sales with you and help you determine the best price to offer. You may be writing a “Love Letter” as mentioned before. Then your realtor will write the contract and review it with you before you sign,answering any questions you may have. Your agent will then submit your offer and package it with your mortgage preapproval letter, your love letter, and your down payment proof of funds. This is a copy of your account balance (with account numbers blacked out to retain privacy). Providing this shows the seller in black and white, that you have the funds to close the transaction. Now, you wait until the seller responds with a “yes”, a “no” or a counter offer. If you get a counter offer, your realtor will review the terms with you and you can decide yes or no or make your own counter offer. This will continue until both you and the seller either decide you cannot come to terms or you do come to an agreement and ratify the contract. If you do come to agreement, the contract timeline begins. Knowing ahead of time what to expect definitely helps decrease the feeling of being overwhelmed, although there may still be some up’s and down’s as you progress to the closing.
With an excellent realtor, knowledge, and some preparation, you will get to your goal of home ownership. When you release your last contingency, congratulations, you have said the final “Yes to the House!”