Purchasing a home can be a stressful experience. However, with an understanding of the process and the assistance of a professional buyer’s agent, the process is manageable and rewarding! Here is an outline of the key elements of the home buying process:
Pre-Approval
The most important step of purchasing a home is to determine how much you can afford to borrow. The pre-approval involves speaking with a mortgage broker or lender. The broker or lender will compare your income and expenses to certain qualifying measures, called the debt-to-income ratio and will review your credit score.
Determine Your Search Criteria
Begin your home search by defining the location where you would like to buy and what you require in a home. It helps to make a list of your “must-haves” and your “wishes”. Knowing what you’re looking for helps you focus your search and also helps your real estate agent understand your needs.
Shopping for a Home
A buyer’s agent is committed to working only for you. Your buyer’s agent can send you daily e-mail listings based on your needs. Attending open houses and driving around neighborhoods is a great way to understand the market and how properties fit with your price range. Your buyer’s agent can schedule private showings to view properties.
The Offer
Your buyer’s agent will write your offer and submit your pre-approval and collect a “good faith” deposit of $1,000 from you. Once an offer has been accepted by a seller, the buyer usually has 7-10 days to have a home inspection conducted by a certified inspector. The home inspector looks thoroughly at the home and gives an assessment of the condition.
Purchase and Sale Agreement
The Purchase and Sale Agreement (P&S) is the binding agreement between the buyer and seller and lists all of the conditions of the sale. Your P&S should be reviewed by your attorney before you sign it. An additional deposit is also typically required at the signing of the P&S.
Appraisal
The mortgage lender will require an appraisal of the home to ensure that the property is worth the money you are borrowing.
Mortgage Contingency
Once a Purchase and Sale Agreement has been signed, you have a period of time to secure your mortgage. If, for any reason, you are unable to secure the funding during the time allocated in your Mortgage Contingency Clause, you could legally cancel the contract.
Homeowner’s Insurance
Lenders require you to have homeowner’s insurance to protect their interest in the property as well as yours.
Closing
Before closing, your real estate agent will schedule a final walkthrough inspection to make sure that the property is in the condition that the contract states. Your real estate agent and attorney should be present at the closing and after the paperwork has been recorded with the Registry of Deeds, you are the proud owner of your new home!
