You’re dreaming about becoming a homeowner. Because this will likely be the single largest purchase you make in life you’re concerned about how to handle it. Not to worry. This doesn’t have to be a stressful experience if you’re properly prepared. I’ve identified the 10 steps that will help you better understand the process involved in buying a home.
1. Get control of your credit score and save a down payment: A mortgage lender will decide to give you a loan based on your probability of paying it back. To judge that, lenders look at your credit score. The higher your score the more likely you’ll be approved for the mortgage and with a better interest rate. Additionally, most lenders require a down payment of 20%; otherwise they will require private mortgage insurance (PMI). Your down payment gives you equity in the home, protecting both you and the lender.
2. Get pre-approved for a mortgage: Visiting with a mortgage professional before you look for a home is wise because it will help you identify the price of the home you can best afford, the amount of your down payment and the type of loan you will need. Ask your lender to review and verify your financial history to determine what you can afford to borrow and how much they are willing to lend, issuing you pre-approved mortgage letter. You can then look for homes in that price range with confidence.
3. Prepare a “Wish List” to set your ‘needs and wants’ priorities: While nothing should be written in stone, this is your opportunity to organize your search for your dream home. Start by listing the house and lot size, number of stories, garage/parking, bedrooms and baths and neighborhoods you desire. Decide on the condition you want – move in vs. fixer-upper and if you want it to be expandable. Add things to your list like access to parks, transportation, shopping and churches. Consider how far you want to commute to work and what type of neighborhood zoning you prefer. Please visit the communities page to access everything you need to know about each neighborhood.
4. Work with a realtor: You can drive around or check online to see what’s on the market but you will save time and have greater insight into availability and pricing by working with a real estate agent. You’ll also want to have a professional represent you when you’re ready to purchase. Your agent has access to the MLS (multiple listing service of homes currently up for sale in your area), will inform you of current listings and arrange to take you to see homes that interest you. Your agent will also help you with a market analysis on the valuation of the house and structure your offer, present it to the seller, deal with counter-offers and coordinate the inspection and closing processes. Remember, your agent works for you to get you the most and best house for your money.
5. Looking at houses: This is generally considered to be the fun part, but it can also be time consuming as well as frustrating. Be prepared to spend a good amount of time visiting open houses and making appointments to see homes you’re interested in. Nevertheless, do look at several homes before deciding which one you want, even if you love the first house you see.
6. Finding your home: Take your time, be careful and refer to your Wish List. Once you’ve reconciled your needs and wants list pay attention to what really matters – the condition of the house, its location in the neighborhood and the school district. You can overlook things that are easily and inexpensively fixed like paint and worn carpet – you might get yourself a cosmetic fixer-upper deal.
7. Making an offer: You’ve reached the exciting part of your home buying process. Your agent will now help you manage these five key stages of the offering process:
• Decide What You’re Willing To Offer (consider market conditions)
• Identify What You Want From The Seller – tangible items in and around the house as well as financial concessions
• Fix Your Closing Date
• List Contingencies – for the seller to perform and for you to perform
• Be prepared to negotiate
8. Home inspections and appraisals: A home inspection by a licensed professional verifies the condition of the house, revealing defects and repairs that wouldn’t be seen by the naked eye. Typically, you can require the seller to fix problems or, if they’re more significant, to adjust the price of the house. You can also cancel your purchase offer if the problems are serious. Additionally, a licensed appraiser will come to the house to confirm its market value. Mortgage lenders require an appraisal before they will loan money to buy a house.
9. Paying closing costs: These are the costs related to the financing and ownership transfer of the house. They may include application fees, discount points (money paid to buy a lower mortgage interest rate), credit report, title search, escrow and other fees.
10. The closing: When you sign on the dotted line your new home is now yours!
Please visit our Market Report page for an in-depth analysis of the real estate market conditions.
A Top Producing Agent for 2015
Decker Bullock Sotheby’s International Realty
100 Tiburon Blvd, Mill Valley, CA.94941
Marin County Real Estate Report