Table of Contents
The Home Buyers Road Map
This video explains the “typical” home buying process.
The Home Buying Process
Step 1 – Pre-Approval
Get pre-approved by a reputable local lender. You will establish a price range before you to start looking, and understand your monthly mortgage payment. Most importantly for the steps following, you will get the all-important pre-qualification letter, and you’ll be on your way to being pre-approved.
Step 2 – Home Search
Once you are pre-approved and have a good idea of your price range, let the search begin! Search for homes for sale in cental Maryland. You will want to know how much house you can afford to buy before you start your search, because it will save a lot of wasted time and effort, and a lot of disappointment! Your local Realtor® will be a great resource for you, with experience and familiarity of the neighborhoods and communities, housing styles and values, as well as amenities you are looking for. When you find the right house for you and your family…it’s time!
Step 3 – Offer and Negotiations
There are many considerations when writing an offer. Your real estate agent should do a market analysis to determine a good offer price, and help you craft an offer with all of your important contingencies inside. Contingencies can include: Financing Contingency, Appraisal Contingency, Home Inspections, Radon, Well and Septic, HOA, and several others.
Step 4 – Ratification
When all terms are agreed-upon, we have what we call a “meeting of the minds”. The ratified contract means the clock starts ticking. “Time is of the Essence” is the first phrase you will learn. All contingencies have time frames, which must be met. Your inspections must be done and negotiated within the allotted time-frames, you loan application must be done, and both parties must make sure to respond in kind to keep the process moving forward.
Step 5 – Loan Application
Get your paperwork ready. Soon after ratification, you’ll need to make a formal loan application. Your lender will be in communication with your Realtor® to keep the process moving forward.
Step 6 – Home Inspection, other inspections
Your real estate agent is here to take you through each step of the home inspections and other contingencies, representing your best interests, and facilitating all the processes.
Step 7 – More Possible Negotiations
As inspection reports may reveal any issues, the necessary and extra fixes need to be negotiated. When all contingencies have been met and when loan application has been made, we move on to…
Step 8 – Underwriting
The underwriter’s desk is the final place before the loan gets approval.
Step 9 – Closing
Your Realtor® will be with you at settlement to review the closing statement with you and make sure the settlement goes as planned. This is the best day for everyone, and even though the process is eventful, hopefully it has been rewarding! [We love closings without drama!] Welcome to Home Ownership.
Your Team of Real Estate Professionals
A successful purchase starts with the right representative. In fact, once you’ve selected the best agent to represent you, it is likely that he or she can recommend other professionals to join your team, taking more of the responsibility off of your shoulders.
A bank is not just a bank. Having the right backer can be extremely important – it is your money we’re talking about after all! Make sure that your lender and financial representative is someone with whom you feel comfortable, and be wary of any lender who promises you more than you think you can reasonably afford. Your lenders may or may not require an independent appraisal, and typically will make arrangements for the appraisal themselves.
Your home purchase is far too important a transaction to skimp on legal representation at the risk of leaving yourself open to costly future issues. Find a lawyer who is willing to take the time to answer your questions and who specializes in real estate law.
No home inspection is 100% guaranteed, but a few hundred dollars to catch a major problem now is certainly better than many thousands to correct that ‘surprise’ down the road. Ask your agent for a recommendation.
Planning some renovations? You’re not the only one! The home renovation industry is booming, and in some markets, booking a contractor must be done months in advance (that’s a long time to go without a kitchen). Don’t let finding the right contractor slip through the cracks – planning ahead will almost certainly make your renovation smoother, and you contractor will appreciate the advance notice.
Your Buying Plan
1. Find the right representative
Even if you’re not quite ready to buy, your buyer’s agent can be an absolute wealth of information, and can often offer ‘scoops’ on local developments you might not have know about otherwise. Speak to your agent first and he or she can be helping to guide you right from the start. Contact Chris Highland for Buyer Representation.
2. Find out what your price range is
Online mortgage calculators are a good place to start, but as you get closer to being ready to buy, there is no substitute for a written mortgage pre-qualification. Just speaking to your lender is an extremely worthwhile venture – this is the only way to really get an in-depth picture of your overall financial picture and to discover exactly what you can reasonably afford to spend on a home (and possibly on renovating).
3. Find out what your local market looks like
The internet can be incredibly valuable in doing preparatory research. Start with your agent – he or she can direct you to valuable resources and immediately start e-mailing you real estate listings that may interest you (or at least give you a better idea of what your needs and wants are).
4. Find out what your true needs and wants are
Compose a needs/wants list that takes into consideration your local market conditions, your price range, and the advice of your real estate agent.
5. Find your dream home!
Once you’re ready to act, you may be surprised by how quickly you can make a decision. Armed with your pre-approval, a little market knowledge, and your needs/wants list, call your real estate agent, hit the pavement, and when you see ‘the house’, put in an offer. With the right team behind you, it really can be that easy!
Avoid The Most Common Buyer Errors
Shopping for a new home is an emotional experience. It’s also time consuming and comes with a myriad of details. Some buyers, however, caught up in the excitement of buying a new home tend to overlook some items. Their home purchase turns into an expensive process. These errors generally fall into three areas:
- Paying too much
- Losing a dream home to another buyer
- Buying the wrong home
When you have a systematic plan before you shop, you’ll be sure to avoid these costly errors. Here are some tips on making the most of your home purchase:
Bidding without sufficient information
What price do you offer a seller? Is the seller’s asking price too high? Is it a deal? Without research on the market and comparable homes, you could lose thousands of dollars. Before you make that offer, be sure you have researched the market. A professional realtor, can offer an unbiased opinion on the value of a home, based on market conditions, condition of the home and neighborhood. Without knowledge of the market, your offer could be too much. Or worse, you could miss out on a great buying opportunity.
Buying a mis-matched home
What do you need and want in a home? Sounds simple. Yet, clearly identifying your needs and bringing an objective view to home shopping, leaves you in a better position. Sometimes, home buyers buy a home that is too large or too small. Perhaps they didn’t consider the drive to work, the distance to school, or the many repair jobs waiting for completion. Plan ahead. Use your needs list as a guideline for every home you view.
Before you sign any document, be sure the property you are considering is free of all encumbrances. As part of their services, a realtor can supply you with a copy of the title to ensure there are no liens, debts, undisclosed owners, leases or easements.
Before the purchase is completed, an updated survey is essential. This report will indicate boundaries and structural changes (additions to the house, a new swimming pool, neighbor’s new fence which is extending a boundary line, etc.).
For $300 – $500 a professional inspector will conduct a thorough inspection of the home. This way, you’ll have an idea of the cost of future repairs. Make the final contract subject to a favorable report.
Shopping without pre-approval
It only takes a few days to get financing pre-approval. When you are shopping for a home, this gives you more power. A seller is more likely to consider an offer from a serious buyer.
Remember additional cost
Besides the funds for the purchase of a home, you’ll need funds for items such as loan fees, insurance, legal fees, surveys, inspections, etc.
Rushing the closing
Before you sign, ensure that all documentation clearly reflects your understanding and conditions of the transaction. Has anything been forgotten? Don’t rush. You could lose money, financing or even the sale.
read More in our Buyer Information Archives