Home Buying 101
The Process at a Glance
1. Decide if You Are Ready to Buy
Make a decision. If you think you are ready to buy, balance your personal reasons with your personal finances. Things to consider include the length of time you plan on living in your new home and whether you have enough cash available to pay for the down payment, closing, and moving costs. How about your income and future job situation… will you be able to afford your payments and the costs associated with owning a home?
2. Consult with a Realtor®
As soon as possible, contact a real estate agent. A Realtor’s services are FREE to buyers (seller’s pay the Realtor’s fees), so there is no reason not to get in touch with a Realtor. A Realtor can guide you step-by-step through each of these steps and the entire homebuying process. Your Realtor will help you find financing, identify a home, make an offer, negotiate the transaction, coordinate all inspections, appraisals, and the escrow process, and hand you the keys to your new home. For more information, call us at (916) 241-8000 or (53) 677-1332.
3. Be Market Savvy
Understanding the current market situation will put you in a better position as a buyer. If the current market is a "seller's market" where demand is high but supply is low, you may be required to make a full price offer or even higher. But if the current market is a "buyer's market" where demand is low and supply is high, you may be able to negotiate a more favorable price.
4. Determine Your
Calculate how much you can afford to pay. Keep track of your monthly debt, and create a reasonable budget with mortgage payments no more than one third of your net income. While creating this budget keep in mind the mortgage interest tax deduction available for homeowners. Also plan for increased utility costs, and future maintenance, repair, and renovation costs.
5. Get Pre-Approved for a Mortgage
Getting pre-approved for a mortgage is vital to a successful home search and purchase. Getting pre-approved will tell you how much you can afford so your time will not be wasted looking at properties that are financially out of your reach. Some information you will need to provide to get pre-approved include: your cash available for a down payment, cash available for closing costs, current income, job status, assets, and debts. Pre-approval will also put you in a better position to make a proper offer because the seller knows you are already in a position to be able to get a loan and close the deal on time.
6. Focus Your Search
A focused search can save time. Prioritize and narrow down what you want and do not want in a home. For example, do you want to buy a new or resale home? How many bedrooms and bathrooms? Big backyard or small? Pool? How important is the neighborhood or the proximity to schools, churches, shopping, work, etc?
7. Visit Houses
When visiting a house, pay attention to details and look carefully at those properties that need work. Always visit a house with a real estate agent, and take notes on the house's condition, layout, and neighborhood, as well as information like square footage, average utility bills, and annual property taxes.
8. Make an Offer
To make an offer means that you are committing to one home, signing a legally binding contract to buy, and making a considerable deposit which can be applied to the down payment at closing. Be sure that you can afford the offer, and do not forget to list any contingencies on the contract. Your agent will play an important role in assisting you in submitting an offer.
9. Negotiation
To negotiate terms, you should begin with your best offer based on market conditions and comparable listings. Leaving room within your price range for maneuvering is smart. When counter-offers arise, the rule of thumb is to match any price reductions by the seller with a corresponding increase in your offer. Keep in mind that getting the right house is more important than haggling over small price differences. Again, your real estate agent will play an important role in assisting you in this process.
10. Inspect the House
Various home inspections should be included in the purchase contract and many lenders require them. Sellers pay for some inspections and buyers pay for others, but they’re all negotiable in the purchase offer. These may include inspections for termites, overall home condition, the roof, and any potential hazards on the property. Inspections usually cost from $300 and up, but the peace of mind they will provide regarding your new home is priceless.
11. Close the Deal
Closing the deal generally takes from 30 to 45 days - this is the escrow process. Within this timeframe, the lender approves your loan, any contingencies in the purchase contract are satisfied between you and the seller, you arrange for homeowner's and title insurance, a closing date is scheduled between you and the seller, you review your closing costs with the lender, you schedule a final walk-through to inspect the home's condition, and finally, you schedule and organize your moving day.
