TEN EASY STEPS IN THE BUYING PROCESS:

STEP 1 - DEFINE YOUR NEEDS

Congratulations on your decision to purchase a new home! Your first step toward buying your new home is to determine needs. Your real estate agent can help you figure out what you want the new home to look like and how it should function for you and your family.
First, write down why you are looking for a new home.  Are you currently renting and would like to begin building equity? Maybe you recently married or have outgrown your current residence. Or, maybe you received promotion and need to relocate. These factors will all have a bearing on how you approach your home search.  Second, establish a time frame for buying. Depending on your reasons for buying, and the current state of the market in the area you are looking to buy, you can come up with a rough guideline.  Finally, have a mental picture of what your dream house looks like. Turn these ideas into two lists: one describing your dream home and the other with absolute "must haves." In a perfect world, your new home would fulfill 100% of requirements on both lists, but it is more likely the two lists will turn into a list of priorities.  And that's ok!  As you get a better grasp on what you want and what is available, your choice won't seem so overwhelming.

STEP 2 - PRE-APPROVAL VS. PRE-QUALIFICATION

So you know what you want in a home!  You need to find out what you can afford. There are two ways to go about this: prequalification or pre-approval for a loan. Either way, contact your agent, and they can assist you in choosing a mortgage company to fit your specific needs. Prequalification is the simpler of the two. It can be done online or via phone. When you contact a mortgage company, they will ask you for some basic information about your finances...This basic information includes how much you earn, your debt, etc. They are able to give a rough estimate of how money they will be able to loan you. Pre-approval is a more in-depth process. The lender will perform an extensive check of your finances including credit rating, whether or not you're a first-time buyer, outstanding debt, down payment, etc. This figure will be a reliable estimate of what you can afford.  Often times, pre-approved buyers are preferred over those that are pre-qualified. Being pre-approved lets the seller know you have gone through a financial background check and there should be no unexpected obstacles.

STEP 3 - INFORMATION ON NEIGHBORHOODS

You have your "list"....You know what you can spend.....What's next?  Start looking!  People don't just buy a house; they buy the neighborhood, too.  In case you're not convinced, think about this:  if you found the perfect house but it was in a neighborhood that you hated, would you make an offer on it?  Probably not!  Make another list for the type of AREA you want to invest your money in. Consider things like commute, amenities such as community swimming pools, tennis courts, parking, schools and demographics of the surrounding area.  I'm sure you are not thinking of selling this home -- you haven't even bought it yet -- however, neighborhood factors can play a BIG part in your home-selling future!  

STEP 4 - SEARCH

You are ready to begin the search!  If you don't know much about the city, you need to start by finding areas that meet your criteria and then narrowing your search to particular properties in those areas.  Possibly the most efficient way to find homes is to allow your real estate agent to keep you up-to-date on available properties that meet your criteria, and then allow your agent to screen them for you. That will save you time!  When your agent finds a home that interests you, he or she will arrange for you to tour it.  You can find available homes by reading local real estate publications, contacting local Neighborhood Associations, visiting the local Chamber of Commerce, looking on the Internet, or driving through neighborhoods you like. In fact, driving is good, but it can be very time consuming.  Let your agent do the initial foot-work! 

STEP 5 - OFFER

Your agent has found your dream home, so it's time to make an offer. Your agent will help you determine the offer by reviewing recent sales of homes that are similar in size, quality, and conveniences and amenities. Your real estate agent will lend expert advice to create an offer that is likely to be accepted.  After consultation, your agent will create a written contract with your offer that meets all the local and national legal requirements. This document details what needs to be done by both parties to execute the transaction. It should protect the interests of both parties and will ensure your financial position as the buyer.  The contract should include, but is not limited to, the following:

• Legal description of the home
• Offer price
• Down payment
• Financial arrangements
• List of fees and who will pay them
• Amount of the deposit
• Inspection rights and possible repair allowances
• Appliances and furnishings that will stay with the property
• Settlement date
• Contingencies

Remember the legalities of this phase are very important. If you have any questions or concerns, be certain to address them with your real estate agent right away.  In some cases, agents suggest that it is best to seek legal advice from a lawyer too!  All bases should be covered at this important step. 

STEP 6 - THE NEGOTIATION

Once an offer is made, you may need to negotiate with the seller to reach a final agreement. Keep in mind, everything is negotiable when you are buying a house. This actually gives buyers leverage in the buying process!  Acceptable things to negotiate:

• Price
• Financing
• Closing costs
• Repairs
• Appliances and fixtures
• Landscaping
• Painting
• Occupancy time frame

Counter-offers are frequent. Remain in close contact with your real estate agent so you can quickly review counter-offers from the seller. Remember...bargaining is not a winner-take-all deal. It is a business process that involves compromise and mutual respect.  Because they have done it many times, your agent will be skillful in the art of negotiation! 

STEP 7 - SERVICE PROVIDER COORDINATION

After your offer is accepted, your agent will help you coordinate service providers and serve as your advocate when working with those providers. Your agent will make sure these vendors have access to the property, and will oversee them on your behalf.  You probably need a home inspection. An inspection of the property, the foundation, and the surrounding environment may be needed to make sure the property meets the standards set forth in your written agreement. If there are issues or inconsistencies discovered, both parties will try to rectify them.  Insurance is another issue. Experts recommend you obtain title insurance equal to the full replacement value of the home. This kind of insurance is purchased at closing and protects the buyers in the unlikely event that the title to the property becomes invalid. Homeowners insurance protects against theft, fire and liabilities. It often includes things such as bicycles, furniture and jewelry. Flood insurance is generally only necessary for flood-prone areas.  In addition to these types of insurance, you may want additional assurance for your new home. Home warranties are one way to protect yourself after the purchase. Warranties for new homes protect against plumbing, wiring and structural defects. Existing home warranties cover things like major appliances and structural problems.  Your agent's experience in this area will be invaluable.

STEP 8 - BEFORE THE CLOSING

The closing date draws near!   Stay in contact with the escrow company and your lender to make sure all necessary documents are being prepared and are on track to be delivered. Find out what form of payment you need to bring to the closing for any unpaid fees.  Federal regulations mandate that transactions of more than $10K be in an electronic transfer.  Your agent will advise you on such matters.

STEP 9 - CLOSING

Closing is when ownership is legally transferred from the seller to the buyer. It is a formal meeting that most parties involved in the process will attend. Closing procedures are usually held at the title company. A closing officer coordinates the document signing and the collection and disbursement of funds.  For the closing to run smoothly, each party involved should bring the necessary documentation and be prepared to pay pertinent fees.  Sellers sometimes pay for a portion or all of the closing costs -- depending on what was decided in the purchase agreement.  This will be acknowledged in writing. Most lenders will allow a credit from the seller to the buyer for the non-recurring closing costs. However, they usually won't allow a credit that reduces the amount of the buyer's down payment or any of the buyer's recurring costs, such as expenses for fire insurance premiums, private mortgage insurance (PMI) or property taxes.

STEP 10 - POST-CLOSING

You did it!  You own your dream home!  Congratulations!  Now that you have taken ownership, it's time to contact local utilities.....set up electricity, cable and phone, etc.  Don't forget about trash collection!  In addition, be aware of possible homeowner expenses such as Neighborhood Association fees, landscaping costs, and annual taxes so you can budget for them accordingly.