A Brief Description of the Various Steps it could take to Purchase your New Home.
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- First Things First
1. Pre-qualify and talk to a Mortgage Representative.
2. Find a Realtor in our Relocation Professional section.
You should find someone that you get along well with and someone that is used to the way of your life style.
Ex. If you have small kids it is good to find an agent that has kids or enjoys kids and doesn’t mind stopping at McDonalds and eating in their car.
The first thing a good agent should do is supply you with a map of the area so you can get to know the area and you will be able to drive around various neighborhoods to see which community you like the best.
They will take you to different homes in different areas either in their own car or you may follow in yours. If that does not make you comfortable either, you can have the agent ride in your car with you. - PHASE 1: Contract
When you find your dream home, your realtor will take out a Purchase and Sale Contract to go over each step with you. If you are not clear on some of the questions, please ask. It is their job to keep you informed.
As part of the contract, your Realtor will ask you if you would like a Home Inspection. Always say YES! Below you will find detailed information for finding a good Home Inspector.
Earnest Money
After the contract is filled out and dated, your Realtor will ask you to write a check regarding your Earnest Money. The Earnest money will be held in your realtor’s office and will be applied toward your closing costs. The purpose of giving Earnest Money to your Realtor is to show “good faith” and that you are serious about purchasing this particular home.
If for some reason you change your mind and do not want the house any longer, the seller will be able to keep your Earnest Money. If for some reason you end up having problems with your financing from the Mortgage Co., or if the buyer and seller could not come to terms regarding the home inspection or appraisal, the earnest money will be refunded to the buyer.
If you do not write a check for Earnest Money, the offer is not legal.
Making your contract Legally Binding
When the contract is filled out, you have initialed and signed your signature and written your Earnest Money check, your Realtor will submit your offer to the Seller’s Realtor. The Earnest Money you give to make the contract legal is what finalizes the offer. If all goes well, you will be under contract and the offer is accepted.
Note:
Sometimes it is possible to get into multiple offers which mean more than one person/family will make an offer on a home. It is up to the seller to hear all offers from their agent and to make a decision they feel is in their best interest. This is what I referred to in the above statement, “know how much of a purchase price you qualify for”. If you find yourself in a multiple offer situation, you are able to change your original offer and make it higher, if you so choose. You do not have to do this if you do not want to.
When your offer has been accepted “Congratulations”, the first step of negotiations is complete. There will be three sets of negotiations, each of which is between the buyer and the seller. Both parties have to be happy in order for the deal to go through.
Note:
(If for any reason you pull out of the contractual agreement, you will loose your earnest money and you risk being sued by the seller).
Now that you are in a contract, it is time to search for a "Title Company Representative".
What to look for in a Title Company Representative
Find someone that you get along with and can talk to very easily. Look for someone that will explain the process of closing in a clear and easy to understand manner. It is very important to understand what will take place on the day of closing. What paperwork will need to be signed and exactly how you will be required to pay your closing costs.
Everyone is busy when it is time to close your mortgage loan, especially at the end of the month. So find a Title Company Professional that will take the time to answer any and all questions you may have. The most important thing is that you are comfortable with that person and that you feel confident that they will be taking good car of you.
It can make the difference between having a “smooth transaction” when closing on your loan or one that is frustrating and has many unanswered questions. - PHASE 2: Home Inspection
Home Inspection
When you filled out your contract, you would have decided on a Home Inspector. Always get your home inspected. It should be around 7 days after your offer has been accepted. A good inspector will not only inspect the home but he will be looking for current safety regulations and codes to be met. He should also ask you to be a t the house at the time of the inspection. If for some reason he does not, tell your Realtor to let him know you will be there. He will show you around the home. He will show you where the circuit breaker is, if there is ventilation in the garage if the furnace is in there, if there are circuit breakers in the appropriate places as well as many more items. Your home inspector will give you various things to think about but the main reason you have an inspection is to make sure that the home you are intending to purchase meets safety code and requirements for the state you are in and he also will make you aware of any items that need to be fixed. Because of this there should be no hidden surprises when moving into your new home.
With in a few days the Inspector should give you a copy of his report. As specified in your contract with the Seller, it is up to you to let the Seller know (by the date stipulated in your contract) which items you want the Sellers to fix prior to closing. Welcome to the 2nd part of the negotiations.
Usually the Buyers ask the Seller to pay for all of the “Health and Safety” issues on the Home Inspection Report. Sometimes the Sellers choose not to fix what the buyers are asking them to. Your mortgage company will usually require “All” of the Health and Safety items to be fixed so this is where you go back and forth deciding on what are important for them to pay for and what you might need to pay for. Sometimes it all boils down to “how much do you really want this particular house?”
If both parties agree on these terms, congratulations! If you are not able to agree, then you are out of your contract and the Earnest Money will be returned to the Buyers.
(All contractual agreement must be done by the dates stipulated on your contract or you are legally out of contract. The only way to change your contract is to have your realtor fill out an addendum which can alter the terms of the contact in case you need more time. This can only work if both parties agree).
How to choose your Home Inspector“How Can I Make Sure I Get a Good Home Inspection?”
by Dian Hymer of www.DoItYourself.com
To maximize your chances of success, hire the best home inspector you can find. Your real estate agent can recommend home inspectors to you, and they are listed in the yellow pages of the phone book or the yellow pages on your computer. Be careful not to hire an inspector, without checking references.
Ask friends who purchased recently for recommendations. An inspector who is recommended by both your agent and by a friend whose opinion you respect is probably a good bet.
Interview inspectors before you select one. Find out how long the inspector has been inspecting homes in the area. Out-of-area inspectors may not be familiar with local conditions or codes.
Find out how many inspections each inspector does in a year. A good, active inspector will inspect at least two hundred homes per year. Make sure that the inspector works full-time doing home inspections and they are not also in the business of contracting to fix defects uncovered during an inspection.
The state of Texas licenses individuals as home inspectors, but most states do not. In states that do not license home inspectors, virtually anyone can operate as a home inspector. You need to be especially careful hiring a home inspector in a state where licensing is not required.
The American Society of Home Inspectors (ASH) is a trade group association for home inspectors. Membership is restricted to applicants with experience. ASHI membership does not guarantee that you will get a good inspection. But, an inspector who is an ASHI member, in good standing, is likely to exhibit a level of professionalism that might not exist with a non-member inspector.
Ask each inspector to describe the scope of the inspection. A home inspector should complete a thorough examination of all the major home components and systems: the works. But, some inspectors don’t check roofs, others won’t check out the drainage system. Make sure that you’ll get the kind of inspection you want and need.
Find out what the inspector charges. Make sure you ask the inspector if he gives a military discount. Also, don’t base your final decision solely on the fee. This is the one area where you don’t want to skimp. Make sure that your inspector has errors and omissions insurance which covers home inspections.
First Time Tip:
Let your home inspector know that you will be attending the general home inspection. This is a must. Schedule the inspection at a time when you can be available, and plan on devoting several hours to this endeavor.
Why you need to be there for the inspection:
There are several reasons why it’s important for you to be there. Attending the inspection allows you the opportunity to ask the inspector about defects while you are at the property. Also, attending the on-site inspection is an excellent learning experience. The inspector will be able to educate you about good home maintenance so that you learn how to preserve your investment.
If you are not local:
Transferring homebuyers, who are buying long distance, may have difficulty attending inspections. If it’s impossible for you to be at the inspection, try to find a friend or relative in the area who can attend the inspection for you and give you a detailed report. Ask him or her, or your real estate agent, to tape record the inspection. The audiotape, and the written report, can be express mailed to you. Call the inspector directly if you have any questions, or for a recap of the inspection.
Day of Inspection
Your home inspection should be scheduled during daytime hours, on a clear day, and the utilities at the property should be turned on. - PHASE 3: Appraisal
The next step is the Appraiser checking the property for its value.
By now the appraisal has been ordered. If the buyers have any loan other than a VA, the seller can pick the appraiser that will perform the appraisal on their property. If you are doing a VA loan, the seller can not pick who does the appraisal on the property. Only the lender can request that an appraisal be done. At that time, a VA Appraiser will be randomly picked and will be assigned the specific property.
Regardless of which type of loan the buyers have, the Seller normally pays for this part of the contractual agreement. If the Sellers Realtor did their job and the Buyers Realtor did their job, the property value should not be an issue.
(The property must appraise for the same amount as the “Purchase Price” or the contract is re-negotiable.)
The appraiser should get a copy of the home inspection from the seller’s realtor and will take it with them when they do their appraisal. When the appraiser comes to the sellers home, either the seller or their agent needs to be (at the home) to let them in. The inspection time will vary so don’t make any appointments close to the time of your appraisal.
The appraiser will look at the outside of the home, the inside of the home, go into the crawl space of your home and look for any water damager or foundation issues and will compare and confirm all of this information that is stated on the home inspection report and will make sure that all of the conditions have been met. He will also draw a diagram of the home showing where walls are etc. for clarification purposes for his report. Because of the way the appraiser does his job, will ensure that the buyers are well taken care of.
The Mortgage Company should receive a copy of the Appraisal anywhere from 3-7 days after the appraisal has been completed.
(Only at the time that ALL of the repairs have been completed on the sellers property, can the appraiser sign off on the appraisal). If he does not sign off that everything has been completed, then the loan can not be closed.
- PHASE 4: Approval
The seller will get a copy of the Appraisal and as long as the amount of the Appraisal is the same as the “asking price”, then the deal will close.
If for some reason it is higher, usually the Seller will ask the Buyers to pay the difference between the contractual price and the Appraised value. The Buyer has a choice. If they cannot financially afford to pay the difference, the contract is cancelled and the Buyers receive their Earnest money back. If they can afford the difference, the Mortgage Company will have to redo their paperwork and the closing costs could be affected.
If the appraised value is lower, then it is up to the Sellers if they want to sell their home at that price or even if they can, because they still need to pay their own closing costs (which usually come out of the proceeds of their house). If the sellers agree to sell it at the lower appraised value, then the buyers will be able to close on the loan. This will also affect the closing costs for both the buyers and sellers, making closing costs a little less expensive.
If the seller decides not to sell the home, then the buyers will receive their Earnest Money back.
**Now is a good time to contact your Mortgage Agent and go over the loan program again and what the closing will entail. That way when it is time to close, there will be no questions.
The only way the Mortgage Company can finish the paperwork and send your loan to the Title Company is if all of the conditions have been met! - PHASE 5: Closing
Congratulations!! You have completed all of the requirements and you have been waiting for what seems like an eternity to close. The only thing that is left is for the Buyers and the Sellers to go to the Title Company at the time that you and your realtor have agreed upon. Signing your documentation will be done at separate times and even separate days. As long as all of the paperwork is signed on or before the dates specified in your contract, all is good.
Usually, the Seller will sign their documents before the Buyer and at that time will leave all of the house keys, extra keys, garage openers etc. The Sellers normally take about 20-30 minutes to sign their paperwork. The Buyers take at least 1 hour. Be prepared, there are a lot of documents that will need to be signed. If you have children, make sure they are fed and changed prior to your appointment and has had a nap (if needed)... or, to make this process a little less stressful you can get a babysitter. This is a long, tiring process but just be reassured that it will all be worth it when it is over and done. Then, you will have the joy and anticipation of moving into your new home.
(You will be able to move into your home after the paperwork has been recorded). The reason for this is to allow the Title Company to record the new Deed of Trust showing the buyers as the new owners of the property.
(It is not a legal transaction until the Deed of Trust is recorded).
This is just an example of what could expect when purchasing a home. I am sure you are all very excited, tired and overwhelmed by this whole process. I wish all of you the best of luck and I hope that this website has been of some help in easing the burden of having to research and think of all of this information on your own. It is my intent to give you this information so that moving will be an enjoyable, easy and exciting experience for your while family with as little stress as possible. I would love to hear your stories and if possible, send some pictures. With your permission, I would love to display them on this website. Please tell your friends and family of your experience and I hope to see you and them in the near future. All of can make a difference, if we work together! By you using the “Real Estate Professionals” on this website, you have helped to contribute “Donations” for our Military Troops and their Families! |