1. Prequalification
Prequalification is to everyone's advantage. It lets you shop like a cash buyer. If you get prequalified before you find a home you want to purchase, you can get it quicker because you already know that you can get a loan for the home. It also helps in negotiating. Let's say you find a home that is listed at $100,000 and you want to make them an offer of $97,000.The sellers receive another offer at the exact same time, and everything is the same on both offers except that the other offer is for $97,500. The only difference is that you have been prequalified and the other potential buyers have not. It is a good possibility that the sellers will entertain your offer first, or possibly accept yours because they know that you can obtain the loan. To sellers, it may not be worth the risk to accept the other offer and then find out that the buyer cannot qualify for the loan. The sellers could then try to find you to take your offer but it may be too late because you've already bought another home, or have changed your mind altogether. Besides, prequalification is usually free and only takes about 15 minutes over the phone.
2. Beginning your search
Lesson One in searching for that new home: Let the real estate agent search for you! Find an agent with whom you feel confident. Trust that they have the tools to find what you want. If the agent does his/her job properly, they can find everything you might want in 30 minutes. The same search would take you a month at best. Many times, if you give a client a list of homes in their price range, with the specified number of bedrooms and baths, in the areas that they want to live in, a few days later they will call up their agent and say, "I saw this home in an advertisement that is not on the list you gave me, and I want to know why!" We must show them that the home in question is in an area they wouldn't want to live if it was the last place on Earth. Everything becomes calm again, and two weeks later the buyers do the same thing. Now we all make mistakes from time to time, but chances are what the agent gave you, the buyer, is a complete list of everything available matching the specifications you wanted. If you feel like that is not the case, find another agent!
3. I've found a home...Now what?
Emotions run high when you find a home you are looking for. Calm down! This is a very big financial responsibility, and one you will probably live with for a long time. Look at the home again and make sure. Take a notepad with you and write down the pros and cons of the house. Neighborhood? (Drive by the home on a Saturday afternoon and again that night. That is when most people are home and the kids are out playing. Do you like what you see?) You wanted a garage and this house has a carport. Is that okay? Not everyone has the same taste, so look at the house and imagine it with your furniture and your taste in carpet, curtains, etc. Ask yourself, what will have to be done to get it looking how I want it to look. After all that, now is the time to write up the offer. Here is where your agent will be of more help than you can imagine. Find out an estimate of your closing costs (which does not include your down payment). Most people list their homes with closing costs in mind. A full price offer from a buyer typically asks the seller to pay some or all of the buyer's closing cost. Remember this is not a rule, so it doesn't always work that way. Again your agent will inform you of these types of thing.
4. Inspections
Your agent will know what to do here, and all homes and loans are different so these may vary. Some of the things that need to be done may include:
Appraisal - Determining the value of the home.
Termite inspection - To see if the home has or had termite damage.
Well and/or septic tests - Of course you want clean, safe water and a working septic tank.
Survey - So that it is clear where your property boundaries are.
Structural - To make sure that the basic structure of the home or building is safe and sound
General home inspection - This is a good idea even if not required by a lender. It will let you know of things, such as how many more years before you need a new roof, or if the windows have small cracks. Little things that you may have missed.
5. Loan progress and finishing touches
Is your loan going through? Is the closing still on schedule. Have you made arrangements for homeowner's insurance. Did the inspection come out okay? Ask your agent, "What else do we need to do?"
6. Closing
A few days or maybe the day before closing, you should know how much money you need to bring to the attorney's office. It needs to be a certified check. If you have made it this far, then your agent should be on top of things. If anything arises, ask your agent or the closing attorney. Other than that, take your keys and enjoy your new home!
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