(ThyBlackMan.com) The home-buying process can seem daunting for someone who hasn’t done it before. You know that buying a house isn’t like buying a car, but you don’t understand all the ins and outs, and you get confused by terms like “escrow” and “due diligence.” You may get so overwhelmed that you don’t know where to begin or who to ask for help.
While the home-buying process may seem complicated, it really isn’t. So long as you work with the right professionals, the whole process will go relatively smoothly (barring no complications with financing or no unexpected problems turned up by the inspection). Here’s an overview of the first-time home-buying process to help you better orient yourself to get started:
Contact a Lender
Before you can start shopping for a house, you need to find out how much you can actually spend. You may have looked at the budget and come up with a number you can afford, but a mortgage broker
may have a different idea after looking over your finances. Your credit should be in top shape when you set up this meeting.
You’ll need to meet with a lender to understand your loan options and determine which might be best for you. There are loans designed for first-time homebuyers that offer lower interest rates and that do not require a down payment. There are also loans for homes in areas that need more development, loans for veterans, and more.
Talk to a lender that specializes in managing a pre-approval first time home buyer. The pre-approval will let you know what you can get out of a loan, and it will let sellers know that you have the means to buy.
Work with a Realtor
Your realtor will be your best friend during the home-buying process. Not only will your realtor show you some houses that you may love, but the realtor will also be a resource for you to help you understand what to expect every step of the way. Your realtor will educate you on the home-buying process, give you important things to think about, and connect you with other resources, such as a great home inspector or a real-estate lawyer.
To start, you need to find a realtor. A property search engine such as this one for Florence SC Real Estate can help put you in contact with real estate agents in that area. Your chosen realtor will sit down and talk with you about what kind of houses you are looking for and what kind of budget you have set. You can name some “must haves” and some “nice to haves” in potential houses. For example, you might have to have three bedrooms, but you might like to have four bedrooms if something fits your budget. Or you might have to have hardwood floors for the dogs, but you might like to have a fenced yard for them also. Your realtor will then start sending you listings and making appointments with you to go see the houses you like in person.
Make an Offer
When you finally decide on a house you like, you will make an offer through your realtor. You may offer to pay the asking price, or you may try to negotiate. Your realtor will advise you on what’s possible based on the market and the particular house. You may also be able to negotiate things like keeping the appliances or asking to have repairs made. Your realtor will put the offer together for you based on what you discuss.
You will hear back from the sellers within a day or two to learn if your offer was accepted. The sellers may also have a counter-offer, or they reject your offer.
Begin Due Diligence
Once your offer is accepted, you will be asked to make a payment of earnest money, which shows that you are committed to completing the sale. This money will be put in escrow – held by a third party – while you complete due diligence. During the due diligence period, you will have a home inspection to discover any potential problems with the house. If you find problems, you may be able to ask for repairs to be made, or you may even be able to back out of the sale.
During this time, you will also have the home appraised to ensure that the amount you are offering is not too far off from the amount the house is worth. Your lender will want to ensure that you are paying a fair price for the home.
Confirm Financing and Close
During the due diligence period, you will get to work confirming your financing. Earlier, you met with the lender to determine what you could probably borrow. Now that you are actually making a purchase, you have to get approved for the loan and fill out all the paperwork.
Once you have the loan and all the inspections and appraisals are over, you are ready to close. You will meet with a real estate lawyer and your realtor to sign a stack of paperwork, from the title transfer to the appraisal findings. Once all the paperwork is signed, you should be handed the keys and be ready to move in.
If you have hired the right realtor, you will be able to call on this person again in the future if you have any questions about managing your home. For example, if the roof starts leaking a few months after you move in, you should be able to call your realtor to find out the warranty information or to get the name of a good roofer if there is no warranty.
With the right people on your team, the first-time home-buying process will be a breeze. Then you can enjoy your dream home for many years to come!
Staff Writer; George Baker