There are a lot of steps involved in buying a home. Below is guide to help you understand the process a little bit better on how to buy a house.
Before you go out looking at homes for sale you should start by getting pre-approved by a lender so you know what you can afford. If you start by looking at homes over your budget it’s going to be very difficult to go down in price and find something you are happy with.
When looking for a home to purchase it’s a good idea to look at a few homes before you make an offer. Once you see around 5 or so you should get a good feel of what you can get it in your price range. You also might have to edit your wish list after seeing a few homes. The art of home buying a home is the art of self-compromise. A lot of buyers make the mistake of looking for a “deal” soley looking at price. Keep in mind that most likely you will be living there for a while so buy a home you want to live in.
Once you find a home you like have your real estate agent prepare a comparative market analysis (CMA). The CMA should have at least 3 sold properties that have sold in the last 6 months similar to the subject property. The CMA should be able to help you decide a price range for the subject home based on days on market, style of home, neighborhood, condition, size of home, etc..
There is much to consider when preparing an offer on a home. It’s crucial to contact the listing agent to see what kind of activity there is on the listing. With that information along with the CMA you can come up with a game plan. For more information on negotiating, click on the negotiating link on the sidebar under helpful articles.
Once the buyer and seller agree on all terms of the contract then it’s considered mutually accepted. Once you have mutual acceptance then all of your contingencies with expiration dates will start. Mark the contingencies down on a calendar and pay close attention to them. It’s also time to had in your earnest money and get a copy of the contract over to Escrow, Title, and to the lender.
You normally have a few contingencies’ that were negotiated in your contract. The most common contingencies’ would be a financing contingency and an inspection contingency. A financing contingency normally would state that the buyer has a certain amount of days to get lender approval. If the buyer isn’t able to get approval then the buyer would get the earnest money back.
The inspection contingency is similar to the financing contingency except that the inspection contingency usually provides another opportunity to re-negotiate depending on the how the inspection goes. You should also have an out if you don’t approve the inspection report.
Once Escrow has the accepted purchase and sale agreement they will setup both the buyers and sellers information. They will send out disclosures to both parties and should update you if they need anything signed. Once the Title is cleared and loan docs are in they will send you a HUD statement that will show in detail your closing costs associated with the transaction and how much money you will need to bring in to close the transaction. Usually buyers and seller are called into escrow a couple of days before the closing date.
Once the contract is turned into the lender they will be getting a hold of you for more information. Items they could be asking for could be w2’s, tax statements, employment letters, copy of checks, bank statements, death certificates, divorce creeds. Your lender will most likely preparing the file for the underwriter for final approval. Once documents are cleared to close they will be sent to escrow for you to sign.
Once the contract is turned into the Title they will work on clearing any issues with the Title. It’s a good idea to also do some of your own due diligence since not all issues show up on a title report. Check for city violations and talk to neighbors when possible. Once all known issues are cleared, Title will inform the lender and escrow.
Closing generally happens during the end of the day once the Country records the transaction. Once the county records the transaction and recording numbers are in then the house officially become yours.
How long does it take to buy a house?
The amount of time it takes to close on home depends on the situation. For a cash buyer that doesn't need lender approval can close as soon as a week. If you are using traditional financing it takes around 30 - 40 days.
When is the best time to buy a house?
That depends on what part of the country you live in. In the Seattle area most of the listing come out in May. You will have to most homes to choose from but you will also have the most competition from other buyers. States like FL might have the most listings come out in the Fall.
How much should I offer on a house?
The amount you offer should depend on how long the home has been on the market, when was the last price drop if any, and how much competition there is. If it's new on the market and the home has tons of activity and an offer review date, you may want to offer more than the list price. If it's been around 30 days or more on the market with no price drops then you should be able to negotiate. Brokers tend to drop prices about every 30-45 days.
How much money do I need to buy a house?
Lenders are always changing their rules. It's best to talk to a lender to see where you might fall. For a VA loan you can do no money down. For an FHA loan it's usually a minimum of 3.5%, Conventional financing might be around 5%.
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