My home buying days are behind me and I have really learned a lot going through the process of purchasing a new home as well as getting a really good deal on it. We ended up buying a 1904-1906 home not very far from where we lived and the first thing we did when we decided we were serious about buying a home was to check into our finances.
This is one of two very important things when thinking about buying a home, get a banker who knows what they are doing and a real estate agent for the searching part. A banker from your bank or wherever it is you decide to get your loan will be an integral part of your home purchase and will steer you through all the financial parts of a mortgage.
Even if your loan is going to be sold soon after you buy your house, surprise to me as well, a local banker will be worth it in the end. The loan being sold was a surprise to me but according to my banker this is a common practice and my loan was sold to Freddie Mac soon after Wells Fargo closed the deal.
A local banker as opposed to someone not in the area will be able to get things done from a local standpoint like running to the closing office, talking with realtors and the sellers. If you go with a national company that does not have a local representative you may be delayed getting things done in the closing process.
When we decided to buy we looked at our money and decided what we could afford for our home, this is easy to figure out but a book on first time home buying is always a good idea. Amazon sells many very good ones and I have reviewed a couple of really good ones as well but having it spelled out in black and white is much better than guessing.
Figuring out how much you can afford is much more of an important figure than what a bank will loan you, our bank was willing to give us more money. But how much you can spend on that mortgage payment may really mean the difference between foreclosure and simple enjoyment of your own home.
We could easily afford what we were paying in rent and a little more but as things worked out our rent was actually higher than our mortgage payment. Much to our realtors surprise at closing we had a good deal and things really worked out for us.
Our buyer’s realtor was also our landlord; we have been renting from our landlord for almost ten years and were pretty familiar with each other. We had also helped him out at times by fixing things up so things worked out well and he did know what he was doing in real estate so we asked him to be our buyer’s realtor.
A buyer’s realtor will be the one with all the connections and the ability to go online and get information about a house you’re interested in. They should be friendly, able to connect with people at a sale or with neighbors and be willing to help you get what you want.
Our realtor would walk up to neighbors when we went to homes and talk with them about the house and find out things that the seller’s realtor may not know or want you to know. He would also get the codes to get into the homes we looked at and find out things from the sellers about the house and why it is being sold.
A seller’s realtor works for the people selling the house and is only interested in getting the most money for their sale. The buyer’s agent is only trying to help you find a home and usually gets paid from the sellers proceeds of the sale.
If you happen to have an agent who is a seller’s agent and a buyer’s agent, also called dual agent, this is not a good deal unless you trust the person. Having the sale go through one person for both sides may not be a good idea as your interests may not be at the top of that agents’ priorities.
This situation is not unheard of but you should avoid it if you can, an agent selling a home should ask another in their brokerage to deal with you. Having what is called a dual agent is alright but you should have someone looking out for your interests so I would avoid this situation in a home purchase.
Once you have gotten a buyer’s agent and your loan officer or banker lined up you should tell your agent everything you want in a home, your price range and location. Your banker should go over your finances with you before you start to look for a home which means credit checks and financial history.
Once you and your banker have come up with a price range you can afford and you are preapproved for the loan give this information to your realtor who will go online looking for the perfect house. The MLS or Multiple Listing Service is a realtor website tool that lists homes for sale by area and date and is the main place to look for a new home.
A realtor that is licensed can search the site and find information that is detailed with things like yearly taxes, square footage of a home and even the year built. Any person can see some of this information but a realtor will be able to get exclusive things that we normal home buyers can’t.
Things like special viewing instructions, how long the home has been on the listing and past sales are available to realtors through the MLS. This is one reason a realtor is a must for a first time home buyer, another is he can get more help in a sale or home viewing than someone who is not a realtor.
A realtor is licensed through a state exam and works under a brokerage to learn the laws of home buying so they should know what they are doing and will be able to help you. Having a realtor just makes sense and a good one will be able to get you the home you want and help you avoid a bad deal.
Things go wrong in a real estate transaction, from small to big problems occur and a real estate agent is your contact to find out what is going on and to get things sorted out. A good agent will give you all the information he gets and help you deal with problems as they come up so the sale will go through.
Our agent forwarded emails that were dealing with problems of the sale so that we saw what the seller’s agent, the seller, and other people were saying and doing. We always knew as much as he did and he tried his best to explain things so we understood even if we already knew.
The sale did go through even with a few problems and a good agent is the main reason we found out so much about our home, the deal and things that were happening. We found our home listed on the MLS and asked our agent to view it; we went in, looked around and saw it was right for us and at a good price.
There were things wrong with the house and garage with one major issue being the roof; the shingles would not pass an inspection by an appraiser. An appraiser works for the bank who is loaning you the money to buy the home; he looks at the home and says what he thinks the home is worth.
He compares the house with others that have sold in the same type of neighborhood in the same town and ones that have been sold recently. This appraisal will be the banks way of knowing that the loan they are giving on the house is worth what they are giving for it.
If the home is not worth what the asking price is you either have to come up with the difference or negotiate the price down. You will get a copy of the appraisal by the closing so you can see what the other homes they compared to and any other information that the appraisal was based on.
The roof on the home we purchased was in desperate need of new shingles and the home inspector we hired also said this in his report. Sometime after you offer on the house you should get a home inspection but more on that in a minute, the offer is next.
Once you decide to buy any particular home your agent will write up a contract to buy the home with terms like your loan, appliances or other things included in the sale and the closing date. You can negotiate anything with the seller through your agent like price, closing date or inclusions in your offer or afterward.
You will have to give a check or money order, usually about $1000 or so to show you are serious about purchasing the home and wanting to go through with the sale. Some of our negotiations were the roof getting fixed, a rental situation with part of the garage and a few minor details.
From what I have read and heard our sale was pretty typical even with a few problems like not knowing the garage was part of the rental home next door. We found out when we were getting ready to close that part of our garage was rented with the neighbor’s home as the seller owned three homes on the same block.
Another inconvenience we ran into was the seller was a trust for an elderly woman and communication was across the country with them. This and having to mail documents for the people on the trust meant the closing got delayed but we ended up getting the house in the end.
Once your contract offer is made up and sent things start to roll, either they accept and you negotiate things to closing or they won’t and you will either reoffer or look elsewhere. Once they have accepted you need to contact your banker and start on the loan as well as start to get things working toward closing.
Your agent will work as a mediator and will work to help get things sorted out so the sale goes through so you need to stay in touch with them. One thing you will need to do between the offer being accepted and the closing is a home inspection for your own knowledge.
An offer should be contingent on a home inspection done by a professional so you can find out anything wrong with the home. A home inspection will give you information like any minor, major or deal breaking defects so you can back out before you purchase the home.
The inspector will look at everything in a home including the electrical, plumbing, heating, cooling and structural and give their opinions. Things like a roof in need of repair or a very old boiler are things you need to decide whether you want to deal with or that you need to negotiate on.
The roof on our home would not have lasted another year so the bank appraiser said it needed to get fixed before the home could be sold so the seller paid for that. The home inspector we used, a realtor can recommend some good ones, also found some other things like the 20-30 year old boiler and old wiring but these are things that we decided to deal with.
We went to closing after getting some paperwork sorted out and bought our home, after the roof was fixed and all the documents went around for signatures. At closing we had our banker and our agent along with the title company the banker chose to finalize our home purchase.
A title company is a third party company that deals with the paperwork of a home sale so no one gets cheated and the sale goes through legally. Things like clear title or no one having financial disputes with the previous owners and making sure all the forms get signed are the title company’s job.
You pay them as part of the mortgage so you get the home purchase and don’t have to worry about legalities later on and a good title company will make things go smoothly. You will sign a bunch of papers like a lead paint waiver or acknowledgement if there is any lead paint, the actual contract for sale, the bank loan papers and anything else needed.
The closing on the buyers end usually takes a half hour to an hour and only means signing a bunch of papers and showing some form of ID so the title company knows you are you. You should get copies of everything you signed, an abstract or previous owner listing and keys to the home at closing depending on whether anyone is still living in the home.
Some things you should know before closing and you should definitely do is a final walkthrough of the home and that all terms of the sale have remained unchanged from what you agreed to. A final walkthrough is to make sure the home is as you are buying it, no one has removed things that should be there and the home is still there.
I have read nightmare tales of people like renters or foreclosed sellers doing things to homes on their way out such as pouring concrete in the drains or tearing out wiring. Look around the home, count the appliances that should be there and flush toilets and run water in all faucets and showers. Peek into the garage and basement to make sure everything is alright and that nothing has been done from the time you last saw the home.
Your agent should arrange the walkthrough and even be there to make sure you are getting your fair deal and to help you with any last minute questions. Once you close go to a hardware store and buy new locks, even for a newly built home.
You need to change the locks on a new or used home as you want to make sure you are the only one with keys to your home. Even a new home has had keys for the locks made for contractors and subcontractors and you have no idea of how many could be out there so get new ones.
You want to be sure your home is safe and secure so new locks are one simple way to start things off right and another is good affordable insurance. During our home sale we also went with our same insurance company and worked out our home insurance.
Our company decided they wanted a year’s insurance up front so we had to come up with that right during the closing but at least we did not have to have that added into the mortgage. We were also able to come up with 20 percent of the purchase price as a down payment so we could forego the usual insurance and private mortgage insurance(PMI) which is mandatory for any less of a down payment.
Our final monthly payment was actually less than our renters payment so we did come out well when all was said and done. I highly recommend getting a good down payment together and trying to come up with 20 percent so you do not have to pay the PMI or private mortgage insurance which just adds to your monthly cost of the loan.
During our home purchase many small things came up but with help from our banker, realtor and looking things up on the internet we were kept informed and knew what was going on. I highly recommend getting a good book such as Home Buying for Dummies or 100 Questions Every First-Time Home Buyer Should Ask to help you get ready for the home buying.
A good buyer’s agent on your side and a local banker will be well worth your time in finding them to help you get things ready, help you with problems and keep you informed when things are going on with your purchase. I also highly recommend finding things out for yourself by looking any questions you have up on the internet so you can stay informed and know what is going on with your home purchase.
There are plenty of good real estate websites out there to find answers and you need to know what you’re doing so your money is well spent. Try to have fun with your home purchase but most of all stay informed and know what is happening so you avoid problems during your home purchase.