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What is the process of buying my first home?
We are going to be discussing this today. There are a lot of people out there who are looking to buy their first home or returning home buyers that just want to have a better understanding of what the process is of buying a home. So I’m going to dive right into this and not waste too much of your time here.
The first thing is to find a real estate agent and not just any agent, but a good one. I have a video that talks about some of the things to look for in a real estate agent from our experience. The second one is to find a lender and again, a good one. You can watch our video on that topic as well. That works well with you, has access to the right programs, the right interest rates, those sort of things to help you in your home buying process.
Once you have the lender in place, you’re going to need to get pre-approved for a home. This is one of the first things you want to do before you even go looking out for homes because you need to know how much you can pay for that home. How much you can get it qualified for and approved for. Now here’s a tip, don’t go and buy a home or make offers on homes that are at the very tip-top limit of your approval limit from your lender because you may find that it’s too much for you to really afford at the end of the day. This process will also help you understand what sort of loan programs you may qualify for because there are some great grant programs out there and different things you may have access to.
Now with your agent now, define your list of wants, needs, and must-haves. Now this is really important as you’re looking at location, style, size, amenities because what’s going to happen is when you’re looking at a lot of homes, you want to make sure that you’re not wasting your time with homes that don’t meet your must-haves and your needs. But there are maybe some things that maybe, “Hey, it would be really nice if it had this,” but there are other things that you say, “We can’t live without this.” So you don’t want to be looking at homes that don’t have your list of must-haves. It’s just going to be a waste of time.
Now a good real estate agent will help you come up with this list before they show you homes so that you’re not wasting their time and they’re not wasting your time. Just so that everybody’s on the same page. Now we’re going to make offers. Okay? The offer is to the seller on a home that you really like. That offer is on a real estate purchase contract or a REPC. You may hear that word often, REPC, real estate purchase contract. Now hopefully as you’re making the offer one gets accepted, which means you go under contract as you put earnest money down on that home to buy it. It goes under contract and you enter a period of time, which is called “due diligence”.
I’m going to go over, a little bit over, the timeline here within the contract. We have a due diligence period, which is for the inspection. For you to see if there’s anything wrong with the home that you can’t live with. Where you can ask the seller to fix some things or you can decide if it’s worth it for you to fix it. You’ll also be reviewing the seller disclosures, which are disclosures the seller gives on anything that they’re aware of what’s wrong with the home.
Then deciding if you really want the house. That’s really important during this period of time, which is usually 7 to 14 days of deciding if it’s really the home for you. Okay? Now we have an appraisal and financing deadline, which comes next, which is basically for the bank to make sure that they’re not going to be over lending on the home. An appraiser goes out, they get a valuation of the property based on market comparables and some other approaches, to get an idea if it will value at least what the contract is saying. If you’re buying it for 200,000 the bank wants to make sure they’re not going to be underwater on that.
Then we have the financing period as well, where the bank is working with you or your lender is working with you to make sure that you can qualify, that they will fund it based on various criteria that your lender will talk to you about. Now then we move towards settlement once we’ve got the appraisal, the financing, all squared away you’re going to be going into a title company or an attorney, typically a title company, to sign all the paperwork. Now if you’re getting a loan, you’re getting financing, there’s going to be a lot of paperwork. Just be prepared with your John Hancock to sign a lot of documents. Okay?
Funding and recording is next. It’s typically a couple days or even a day after settlement, that the bank funds it and it gets recorded with the county that the old owner or the seller’s no longer the owner and it’s transferred over into your name. That’s what we call “closing”.
Now, what’s next? Well, pack your bags because you move in now. Okay? So you’re moving in and hopefully living happily ever after. Now, this is a very high-level view of what the home buying process is. If you want to get a little bit more into the nuts and bolts, feel free to contact our office. We’re happy to talk to you about that. We’re even happy to work with you in buying your first or returning home.