Buying a Home Usually Represents Your Single Biggest Investment – and Debt.
The Home Buying Process is one of the most exciting, and frequently stressful, experiences you’ll ever go through. This holds true whether you’ve previously purchased many homes or you’re looking to buy your first home, whether you’re in the market for a new primary residence, an investment property or that perfect vacation getaway.
Today’s Real Estate Market can offer more opportunities, yet can be filled with more risks than ever before. There are a multitude of factors to consider and decisions to make. When buying, it’s crucial to have all the available resources necessary to make a well-informed decision, together with the time required to make use of them. It’s important to enlist the help of a trusted real estate professional like Niecie Draper who’ll be able to provide expert guidance at each step of the Home Buying Process.
Finding and purchasing a home includes the following steps, which we’ll examine in detail:
1. Define Your Goals, Research Your Options, Make Your Plans
2. Contact Niecie Draper, Your Real Estate Professional
3. Get Pre-Approved for a Home Loan / Mortgage
4. View Homes and Select THE ONE
5. Make an Offer and Negotiate with the Seller
6. Secure Your Financing
7. Close the Deal
1.) Define Your Goals, Research Your Options, Make Your Plans
Given that buying a home is such a big step, it’s very important to educate and prepare yourself as much as possible. This means clearly determining the reasons you’re buying and what kind of home you’re looking for. Since buying and financing a home are so closely related, it also means examining your current financial situation and projecting how much you can afford.
Once you’ve answered these questions, even tentatively, you’ll be in a better position to research housing and mortgage options, and create an action plan and timeline for moving forward. It’s virtually impossible to do this yourself. You may benefit by consulting with Niecie Draper, an experienced real estate professional, right from the start.
2.) Contact Niecie Draper, Your Real Estate Professional
Buying residential real estate is a complex matter with many factors to consider since no two people, homes or transactions are alike. Moreover, with all the unique opportunities and potential pitfalls of the current market, it’s more important than ever to contact a real estate professional like Niecie Draper once you’ve decided to buy your new home.
When choosing a real estate professional to guide you through the property search, financing, negotiation and transaction processes, you should consider their education, training, local market knowledge, experience, and track record.
3.) Get Pre-Approved for a Home Loan / Mortgage
It’s great to “window shop” by looking at homes online when you first start the Home Buying Process. We can use your current rent amount or the amount that you are comfortable paying for housing each month as a starting point. We’ll convert that monthly payment into an estimated Purchase Price by estimating interest rates, taxes, insurance, mortgage insurance, fees, etc. Window shopping allows you to see “what’s out there” in the market that meets your budget, is in the area and has the features that you require in your new home.
We recommend that you get Pre-Approved for a home loan before you start physically or virtually touring homes with the serious intention of buying. Houses in the Baltimore Washington Area go fast, with potential Buyers putting in Offers to purchase homes within hours of the homes hitting the market. So it’s really no need to go and physically see a home with the intent of buying it, if you are not already PreApproved and your Real Estate Agent has a PreApproval Letter in hand.
The Pre-Approval process involves “meeting” (typically on the phone, via a virtual online meeting or in person ) with a lender and authorizing them to examine your current financial situation and credit history. The basis of this examination includes the lender reviewing the documents that you have provided and reviewing the answers to questions that they have asked you on the mortgage application. After reviewing your file and running the data through an automated underwriting system, the lender will either provide you with a PreApproval Letter or a detailed plan on what to do to qualify for a home loan in the future. A PreApproval Letter is a document detailing the amount you can borrow to buy your new home.
Finding the right lender for your financial situation can be difficult. All lenders are not created equal. Lenders fall into 3 categories – Retail, Wholesale and Correspondant. Each category is looking for a different type of client. The Retail lenders definitely cherry pick for the best borroweres with the least amount of risk. You may consider looking online to see what different lenders have to offer, or contacting your local bank or credit union. I recommend that you contact me directly and we do a Prequalification Consultation (I’ll ask you some questions) and based on your situation, I’ll recommend one of my Preferred Lender Parteners. It’s important that you DO NOT let multiple lenders pull your credit report. Your credit score can drop 5-7 points per credit report pull. If you like, feel free to talk to various lenders about the programs that they offer, just don’t let multiple lenders pull your credit.
If through the PreQualification or PreApproval Process, we determine that you need to fix some things on your credit report using credit repair or credit restoration, I’ll recommend credit repair as part of your Road Map to Home Ownership.
The Benefits of Pre-Approval Include:
Once you are PreApproved for a home loan, you’ll know the amount that you can pay each month and determine the Purchase Price you are eligible for, then you can plan accordingly. As a PreApproved, motivated Buyer you’ll be taken more seriously by the Listing Agent and Seller when you make an Offer on a home. In addition, your Lender can tell you if you qualify for Special Financing Programs and Down Payment Assistance Programs that will help you afford a better home (particularly if you’re a first-time buyer).
Real estate financing is available from many sources, and an experienced real estate professional like Niecie Draper will be able to suggest lenders with a history of offering excellent mortgage products and services. For more information about the benefits of Pre-Approval and the home loan process in general, see – The Loan Process – Financing Your Home Purchase, on page 14.
We’ll update the maximum dollar amount on your home search criteria based on your Lender’s PreApproval.
4.) View Homes and Select THE ONE
Simply put, the key to the Home Search process is knowing what you’re looking for. Among other things, that means distinguishing between “must-haves” and “like-to-haves”. To help you to target your search and define your home preference priorities, this guide includes a Home Search Worksheet on page 23.
That said, here are a few recent facts about the search process that might put your Home Buying Process experience in perspective:
- 92% of Buyers use the internet or mobile apps to search for homes.
- The typical Buyer searches for 12 weeks and views 12 homes,
- 97% of Buyers view Real Estate Agents as important in the Home Search Process.
There are many benefits to starting the search process at a real estate website like realtor.com® and NiecieDraper.com. You can view many homes and their details, take video tours and access neighborhood info.
However, it’s also important to view homes in person. While the property details may seem similar online, homes can be very different in terms of layout, design, workmanship and other aspects. Ideally, you should view homes with the help of Niecie Draper, your experienced real estate professional. She’ll notice things you might miss, provide expert analysis, and act as an impartial sounding board.
5.) Make an Offer and Negotiate with the Seller
Once you’ve found The One – the home you’d like to buy, it’s time to make an Offer. Your Realtor’s state and/or local real estate association has contracts that are generally used for transactions in the Baltimore Washington Metropolitan area. These contracts enable you to specify a sale price and also allow the inclusion of clauses specifying various terms and conditions of the purchase, such as the closing and possession dates, your earnest money deposit amount, finance contingency, home inspection contingency, appraisal contingency, and other conditions.
You should carefully review these clauses with Niecie Draper, your real estate professional, to be sure that they accurately express your intended Offer. In addition to drawing up the contract, your real estate professional will be happy to address all of your questions about the Offer process.*
Once the Offer is written and signed Niecie Draper, your real estate professional, will present it to the Seller and/or the seller’s representative (the Listing Agent). At that point, the Seller can accept your Offer, reject it, or counter it to initiate the negotiation process.
Successive counter-offers, with deadlines for responding and meeting conditions, may be exchanged between you and the Seller until a mutual pending agreement is reached or the negotiations breakdown.
Negotiations involve many factors specifically relating to different market conditions, homes and Sellers, some of which are examined in – Successfully Negotiating The Deal – on page 18.
If the negotiations are successful and you (the Buyer) and the Seller come to an agreement, all changes to the Offer are signed and initialed (usually electronically using a software like DotLoop) and we are Under Contract! Congratulations!!!
The remaining steps are commonly referred to as the Contract to Close Process.
6.) Secure Your Financing
Once you have a Home Purchase Contract, it’s time to return to your chosen Lender to finalize the mortgage details in order to close the deal. You’ll submit any updated documents needed by your lender. These tylically include recent pay stubs and bank statements. Depending on how old the credit report is, your Lender may also need to repull your credit report.
The Lender will finalize your loan program, your down payment, interest rate, regular payment schedule and all other financial conditions associated with the closing your home loan.
Please be sure to respond to all Lender calls, emails and texts expiditiously. Be sure to get them and their team any thing that need ASAP. If you have a problem getting the required information or documentation for any request that they make, please tell them immediately. You can also talk to me about your situation. While I’m not the Loan Officer on your transaction, I have been in the Mortgage Industry since 1992. With two or three minds working together, we may be able to come up with an alternative solution.
As the saying goes, ‘let the Buyer beware’. Unfortunately, too many Buyers suffer negative consequences from not fully understanding their financing decisions. Thus, it’s crucial for you to work with people you trust. In this regard, a good real estate professional with a mortgage background like Niecie Draper can become a true friend for life. For more information on the Home Loan process, see – The Loan Process – Financing Your Home Purchase, on page 14.
7.) Close the Deal
If you’ve efficiently taken care of everything connected with purchasing your new home, taking ownership should be a positive joy with no surprises. Key steps to the closing, also referred to as the “escrow” or “settlement” include:
*Getting a Title Search – You will need a historical review of all legal documents relating to ownership of the property – to ensure that there are no claims against the title of the property. It’s also necessary to purchase Title Insurance for protection in the event of errors in the records or mistakes in the review process. Your title company will handle this process and be sure that you have Clear Title for the property.
*The Final Walkthrough – You will be given the chance to look at the home one last time to make sure it’s in the same condition as when you signed the sale agreement and to confirm that any repairs negotiated in the Home Inspection or Appraisal Processes have been satisfactorily completed. The Final Walkthrough is normally the night before or a few hours before settlement.
*The Settlement – In the Baltimore Washington Area, the Settlement Date and Closing Date are the same for home purchases. Typically on the Closing Date you’ll meet at the Title Company with a lawyer, real estate professional, and escrow agent to verify and sign all the paperwork required to complete the transaction. The settlement will include paying your closing costs, legal fees, property adjustments and transfer taxes.
Once you’ve signed you’ll receive copies of all documents pertaining to the purchase. The Title Insurance will be mailed to you, typically in 4-6 weeks.
Oh, and one more thing – you’ll get the keys!!!
In the Baltimore Washington area, the Possession Date is the Closing/Settlement Date!! So you’ll be able to transfer the utilities and move into your new home right away!!
Step One – Home Search| The most immediate next step is to provide Niecie with the information for your Home Search so that she can create your unique URL and email alerts. You’ll need to know what area(s) you want to live in, how many bedrooms and bathrooms you want and the maximum monthly payment you are willing to make each month for housing (ie: rent/mortgage).
You can complete an online questionaire or schedule a 15 minute Home Buyer Consultation.
Step Two – PreApproval| After getting set up on your Home Search, you’ll want to start gathering the Documents Needed to Finance Your New Home so that we can begin the PrApproval Process.
I look forward to working with you!
The original document provided courtesy of Realtor.com, has been modified for clarification and additional information by Niecie Draper.