Home buying can be tricky if you are not familiar with the process. Rest assured your friends on the Sandi Meisse Team have you covered! Here is the process of buying a home broken down step-by-step to make your home buying experience seamless.
SAVE FOR YOUR DOWN PAYMENT
The general rule of thumb is to save as close to 20% of the home’s cost as a down payment. This will cover the mortgage insurance costs, as well as ensure there is equity in the home straight away. However, there are lower down payment options available through loans such as an FHA Loan, which requires as little as 3.5%. To figure out how much you need to save, your first step is to decide when you would like to purchase your home.
Next, determine the price range of homes you are comfortable with. Calculate what 20% of the price is. Then, divide the 20% amount by the number of months until you plan to purchase to reveal how much you need to save each week to reach your savings goal. For example, if you are planning to purchase a $200,000 home in 5 years, you would need to save $385 each week to reach your savings goal of 20%.
KNOW YOUR CREDIT SCORE
Credit score is everything when it comes to getting approved for a mortgage, so doing all you can to raise your score is very important. While you are saving, work on paying your debts down. You will also want to avoid incurring new debt, such as opening an auto loan or getting new credit cards. You should also avoid running your credit report unless absolutely necessary, as each credit check negatively impacts your credit score.
As you pay off debt and your credit scores improve, so will your opportunities for lower interest homeowner loans. This will help to keep your monthly mortgage payment on the lower end of the spectrum.
FIND A REAL ESTATE AGENT
Now that you’ve gotten your finances prepared, it is time to team up with a Real Estate Agent to help you find your dream home! The Sandi Meisse Team has decades of experience in the Pocono Mountain area, and are excited to join you on your home buying journey.
As the members of the Team are long term residents of the Pocono Mountains, there are no better agents to assist you in finding a home within the school district your children will thrive in, the community you will love and the landscape that will bring endless adventure.
Now that you have determined your budget, it’s time to choose which type of homeowners loan you would like and to get pre-approved. There are many different types of mortgages, including Traditional FHA loans, Fannie Mae and Veterans loans. Research each type of mortgage thoroughly to determine which would work best for you. Choose the length of the mortgage you would like to go with. Will the traditional 30-year mortgage be best, or would you prefer to have a 15-year mortgage?
Only after you have made these decisions should you apply for a mortgage pre-approval. Remember to limit your applications, as each time you apply for a loan your credit report will be run, in turn affecting your credit score.
FIND A HOME
Are you looking for a move in ready home, or a fixer-upper? Are you looking for a traditional style home or more of a modern style? Searching for that open concept kitchen to entertain your friends and family? Do you prefer a yard that you maintain, or would you rather live in a community that handles all of the landscape maintenance for you?
Now is the time to seek out your dream home with all the bells and whistles your heart desires. Your Real Estate Agent will locate homes for you to tour that meet all of your expectations. Be sure to share your honest reviews with your agent to help them narrow down exactly what you are searching for and further increase their ability to find the home you want.
MAKE AN OFFER
After you have found the home you want to purchase, you must then make an offer to the buyer. Based on the amount you have been pre-approved for, the amount of your down-payment and the amount you are able to pay monthly, you will work with your agent to draft an offer.
Once the offer is submitted, the seller has three options- accept, counter or decline. If the offer is accepted, the written offer that your agent submitted is now legally binding. Be sure to include an inspection contingency in your offer, so that if there are any major issues with the home that may cause you to want to back out of the purchase (such as a crumbling foundation) you would be able to do so.
You will also need to include an appraisal contingency should the home appraise for less than the asking price (See below for how the inspection and appraisal steps affect the home buying process). The next option the seller has is to make a counter offer. With a counter offer, the seller would suggest a price that would be more appealing to them. You can then accept their counter offer or make another offer of your own.
Lastly, the seller could decline your offer. You would then be able to make another offer or begin the home hunting process again. An accepted offer will become a significant document in the closing of your sale as it will be the contract between you and the seller (and ultimately the loan holder). When making an offer on a home, it is important to remember to not offer the entire amount you are pre-approved for on a home owners loan to leave wiggle room for a counter offer and other closing costs.
HAVE AN INSPECTION
The purpose of having a home inspection is to determine any current or potential major problems with the property. Keep in mind that inspection costs are the responsibility of the buyer. Be sure to hire a home inspector that is certified and reputable for being thorough and honest with clients.
Your home inspector should examine things such as the roof, foundation and all structural components in between. They should also inspect the plumbing and electrical systems, in addition to a multitude of other items. As a buyer, you are allowed to be present during the time of the inspection to speak with the inspector about any issues that may have come up.
You will then need to request an inspection report outlining any and all issues with the home. This written report can then be used to negotiate with the seller about repairs. You may be able to require the seller to make the necessary repairs prior to settling the sale or have the cost of the repairs credited to the bottom-line cost of the home. If the seller is unable or unwilling to make the repairs, you may then be able to walk away from the sale.
GET AN APPRAISAL
Your new home appraisal is to determine how much your mortgage lender will give you towards the cost of the home. This is so that the mortgage company can protect their investment. Lenders want to be sure that if the homeowner defaults on the loan that the resale of the property would cover the balance of the loan outstanding. Again, the cost of an appraisal is the responsibility of the buyer.
If the home appraises for less than the asking price, your purchase may be delayed or even cancelled altogether, as lenders will not want to overpay for a property. You will then work with your agent to determine how the contingency in the offer you made can be applied.
CLOSE THE SALE
This is the last step before your dream home is finally YOURS! This is when you will become the legal owners of the home. At your closing you will be signing all of the contracts, deeds and loan paperwork. You should also do a last walk through of the home.
At your closing meeting, you should have your Real Estate agent present, as well as your attorney, escrow agent, title clerk, mortgage representative, inspector and title agent present at the time of signing to review all of the details of the sale. Upon completion of the paperwork, you will receive the keys to the property to begin making the transition to your new home.
CONGRATULATIONS! You’ve successfully closed on your dream home and are now able to move in! Aside from bringing all of your belongings to your new house and setting everything up perfectly, be sure to make time to explore your new community.
Take some time away from unpacking your boxes to check out a local restaurant or park. Bring the kids and the pooch for a walk around the neighborhood to meet some of your new neighbors. Afterall, this is what you’ve been dreaming about since you saved your very first penny in the new home fund!