This article is meant to give a first time buyer information on very specific steps on how to initiate the process of purchasing a home.
There are a few people you will need in order to successfully purchase a home. They will help guide you on your journey towards home ownership and make sure you are comfortable with each step. It is important to pick professionals you feel at ease with, since picking incorrect real estate specialists can turn your home buying experience into a nightmare.
It is important to note that the following are all hired professionals, and so it is reasonable to expect a certain level of service and professionalism. Since they are all compensated for their work, should you ever feel overlooked, rushed, or unsatisfied, keep in mind that there are plenty of others willing to work with you.
The Loan Officer – Your loan officer is there to help you take out a mortgage; they are your financial consultant, and the first person you should contact during your home buying experience (the only time a loan officer is not needed is when the buyer has enough cash to purchase the home and is not planning on taking out a mortgage.)
As your debt adviser your loan officer will help you calculate how much money a bank will lend you. Your loan officer will also help you figure out how much money you want to borrow, as it is not always necessary to borrow the maximum amount that the bank is willing to lend. For example, a young couple once came to me looking for a mortgage. Though both were working at the time, after a discussion I learned that they were planning to have a baby soon, at which point the wife would leave her job. Based on their combined salaries the bank was ready to lend them $400,000, but we calculated that the monthly payments would be too high with his salary alone. They ended up buying a smaller house and borrowing $250,000 only because we had been able to sit down and have a conversation about what sort of plans they had for their future.
Buyers should consult a loan officer as early in the process as possible for a number of reasons. First of all, it is always useful to have a third party professional go over all the facts in order to gain a realistic perspective of the full picture. Also, speaking with a loan officer this early in the process allows for adequate time to make necessary adjustments before approaching a bank; for example, attempting to improve your credit score, deciding to save money for a down payment, and paying off credit should all be done well in advance. Now that you have found and consulted with a loan officer it is time to approach your next real estate professional.
The Real Estate Agent – The main role of your real estate agent is to show you various homes and/or areas, help negotiate a price with the sellers, and assist in some of the legal jargon that goes with buying a home.
When picking a real estate agent it is important to choose one you feel comfortable with, as well as one that will spend the time necessary to put you at ease while shopping for a new home. The amount of time a real estate agent will have to spend with a prospective buyer differs for all occasions; as some people already know the area they want to live in, the real estate agent may only need to show a couple of homes. For those of you unfamiliar or uncertain regarding the area of your new home, the real estate agent you choose should be willing to take the time to find a location that will fit all your criteria.
Another reason it is important to choose an agent you feel at ease with is because you should always be realistic with your real estate agent about your expected time frame for buying a home. Remember, there are plenty of great agents who will invest the time necessary to find you the perfect home!
Now that you have found you new home it is time to negotiate a price with the seller; this is truly where the expertise of your real estate agent comes through, as they are the person you should look to for guidance and advise while an offer is being negotiated. The reason negotiation is done through real estate agents as opposed to directly between buyer and seller is that purchasing a house can be emotional. Very frequently an inappropriate comment by one party can make the other unwilling to negotiate. Allowing professionals to negotiate the deal helps control the process.
The Home Inspector – Typically a licensed professional who inspects the condition of your potential new home. By checking on the various key elements of your home, such as plumbing, heating, and structural aspects, your home inspector will be able to point out any areas of concern the house may have. Occasionally, the purchase price can be renegotiated after the home inspection if any major flaws are detected. In some rare cases the buyer can back out of the purchase if the defects found are too great for them to work around.
The Attorney – An attorney is not necessary in every state, though it is a good idea to hire one in order to help successfully fight through the plethora of legal documents. Also, as the attorney is the only person involved who will be compensated regardless of whether or not the sale goes through, they are a good person to go to for advice. Though a trustworthy loan officer and real estate agent are invaluable, they get paid only if a sale takes place. The main role of an attorney is to protect the interest of you, the buyer.
Once a price has been agreed upon, it is time to purchase a home. The agreement is written up by your real estate agent or an attorney, reviewed, approved, and signed by both parties, at which point it becomes a binding document. A few key points to review in your contract are: the purchase price, the amount of the down payment, and the closing date; either your real estate agent or your attorney will help you go through and understand the contract prior to signing.
The closing is the culmination of your entire home buying experience; it is where all parties come together, the necessary documents are signed, and money finally exchanges hands. Your closing is finally where you become a homeowner!