Buying a home is an exciting process. Just thinking of the planning and meticulous search involved in looking for that perfect piece of property often gives some individuals goosebumps - either from excitement or exhaustion. But home buying, once successfully completed, is a rewarding experience - one that requires careful consideration of many sorts including your finances, your motivations, and your readiness.
And with the abundance of news, articles, and information about the recovering Boston real estate market, you might find that yourself down that home buying road. If you do, don't panic - we've come up with the 10 basic steps you'll need to make to tuck that home that you've set your eyes on under your belt.
Step 1: Ask yourself, are you ready to buy and own? This might sound simple, but reflecting on whether you are ready for the responsibilities of being a home owner often leads to a successful deal. Managing your expectations is a must when you are in any kind of transaction, and this most especially includes home buying.
Step 2: Clear up that credit Majority of homeowners need a mortgage to buy property. It used to be that securing loans and mortgages were easy, but the ripples of the recent financial crisis makes it difficult to do so. Banks and financial institutions need to know that they will get paid. A good credit score greatly helps with this process. But before doing anything else, you should preview your score and get the low down on it. For this, use credit rating agencies like EquiFax, Transunion, and Experian that usually offer a free one-time credit score pull.
Step 3: Getting pre-approved "Pre-approval" simply means you have met with a loanofficer, your credit files have been reviewed andthe loan officer believes you can readily qualify for a given loan amount with one or more specific mortgage programs. Based on this information,the lender will provide a pre-approval letter,which shows your borrowing power and that youhave the ability to go through with a purchase.
Step 4: Determine your budget While getting a pre-approval letter is an importantstep, determining what you can afford isa personal decision. Only you know what feelscomfortable. Remember, in addition to yourloan payment (that includes principal, interest,taxes and insurance) there are also heating andcooling costs, water and sewer bills and potentiallymaintenance and association fees.
Step 5: Stick to what you're looking for Make a list of the features and benefits you want in a home. Consider such things as pricing,location, size, schools, amenities anddesign. Consider your priorities. If you can't geta home at your price with all the features youwant, then what features are most important?For instance, would you trade fewer bedroomsfor a larger kitchen or a longer commute for abigger lot and lower cost? Finally, consider yourneeds in several years.
Step 6: Get help from a local realtor A local realtor truly knows the local market.They have been in many of the houses that arefor sale in the market that you have seen online.They understand why certain homes in certain neighborhoods are priced the way they are. They are also in the best position to help you find thehouse that most closely matches what you wantin a home. Most importantly, a realtor will be looking out for your interests.
Step 7: Make an offer Once you have found a house that you would liketo buy, you need to make an offer to the owner.In a typical situation, you will complete an offer along with a $1,000 deposit that your realtor will present to the owner and the owner's representative. The owner, in turn may accept the offer, reject it or make a counter-offer. The owner'sresponse will determine your next step. (Please note: In some markets, it is not unusual to godirectly to signing a purchase & sale agreement.Working with a local realtor will be able toeasily guide you through the process)
Step 8: Inspecting the goods After your offer is accepted, it is routine to have a home inspection. During these examinations, a licensed inspector determines if there are material physical defects and whether expensive repairsand replacements are likely to be required in thenext few years. Such inspections for a single-familyhome often require two or three hours, and youshould attend. This is an opportunity to examinethe property's mechanics and structure, ask questions and learn far more about the property thanis possible with an informal walk-through.
Step 9: Sign and seal it Provided you are satisfied with the home inspection, the next step is to sign a purchase & sale agreement. This document details thespecifics of the transaction, such as: repairs to becompleted; fixtures to remain with the property theproperty's status regarding lead paint; and, if aseptic system exists, the confirmation of a Title 5 certificate (in Massachusetts). The closing date isfinalized and a five percent deposit is made (which is held in escrow until the closing). If you have anyquestions about your legal rights or responsibilities,you should consider consulting an attorney.
Step 10: Close the deal, open the door
This is the day when you will become a homeowner, but there are several steps that are necessary. Prior to closing you will have a walkthrough of the home you are buying. This is tomake sure repairs (if any) were made and thatthe house is in the same or better conditionthan when you made the offer. Most lenders willrequire that you have a home owner's insurance binder (proof of insurance) before they will close the loan. Many buyers also purchase title insurance that is bought with a one-time fee atclosing. Title insurance protects owners in theevent that title to the property is found to beinvalid. After signing the loan documents (andthere are many), the sellers will receive the remainder of the payment from the closing attorney and you'll be handed the keys.
This guide was prepared with the help of our friends over at the Massachusetts Association of Realtors (MARS).