The Decision to Buy

One of the first things that you should consider is whether or not you are ready to purchase a home. You should first consider your personal reasons for planning to purchase a home. Are you being relocated? Do you need a larger home? Are you just tired of paying rent with no tax or monetary benefits? Do you want to be closer to work? Are you attached to your current home—will it be emotional for you to move? It’s very important that you have asked yourself these questions and are emotionally prepared to face a move. Here are some more questions you should ask yourself before you make the decision.

Have you been planning to make your move “at the right time” and now find with rising prices and interest rates that you are being pressured to act more quickly? If this is the situation, consider current market conditions and what projected market conditions are in the area you’re considering purchasing in.

How long do you expect to live in the home? Buying a home comes with closing costs which can be expensive. Typically, and based on market trends, you should plan to own your home at least 2 to 3 years before you consider selling in order to recoup the closing costs.

Based on your current finances, are you situated to purchase? Do you have enough funds for closing costs? Does your budget allow you to pay the mortgage along with taxes and insurance?

Are you taking into account that purchasing a home is an investment as well? Under current conditions, it’s one of the wisest decisions you can make to invest your money in. Not only do you have a home to live in, your initial investment will grow in the form of equity.

First-Things-First

Now that you’ve decided to purchase a home, it’s time to make a list. House hunting doesn’t have to be stressful if your organized. Now it’s time to decide what is most important to you. Where do you want to live? How many bedrooms? How many baths? Do you need a large yard or will a smaller yard do? What features do you want in your home?

First, where do you want to live? In making this decision, consider the schools, recreational facilities, access to shopping, distance to work, and what you can afford. There are many neighborhoods to choose from that share the same services and that will meet your needs. It doesn’t make any sense to get excited about a home and then discover it doesn’t meet your wants, needs and price range.

The next step is to determine how much home can you afford and what are your financing options. Lenders offer pre-approval programs that allow you to secure a loan before you even find the home. As a matter of fact, I recommend you do obtain loan pre-approval before looking at your first house. By being pre-approved you are in the position to make a serious offer on a home. When sellers see the pre-approval letter along with the offer they view your offer very seriously. On the other hand, if they receive an offer and the buyer has not been pre-approved, it leaves the seller with the question: Can they really afford to purchase my home? Being pre-approved may be the deciding factor of whether or not you get the home.

Next, I recommend you make a list detailing the features you need and want in your home. Consider what your minimum requirements will be. List square footage, bedrooms, baths, etc. Also, as an example, even though you would like to have a four bedroom home, will a three bedrooms serve you just as well if the home has an additional room that can be used for an office or study?

See related article, “To 10 Tips on Buying a Home”

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Most homebuyers use a real estate agent or broker, at no cost to them, to help find a home, negotiate the contract and handle other details of the house purchase process. Your real estate professional is available to assist you in finding your ideal home, knowledge of the neighborhood, explain your financing options, your legal rights and how to evaluate comparable prices before you know what to expect from the agent or broker who will assist you.

Advantages of Using an Agent

Your agent can give you insight into the market and provide access to available homes through the Multiple Listing Service (MLS) as well as for sale by owners (FSBO).

Choosing an Agent

It’s true--Not all real estate agents, Realtors, and brokers are alike. It’s wise to shop around and find the agent that’s right for you. These are some of the things you should be looking for. The agent you choose should be in the full-time business of selling real estate and should have, ideally, at least the following six traits:

Working with Your Agent

Once your search begins, don’t hold back. Tell your agent what you want. Also, take advantage of your agent’s knowledge and experience. Don’t hesitate to ask questions or request market data.

Research the Market

The current status of the market can have a significant effect on your home buying strategy. Let your agent explain what the current conditions are so you’ll have a feel for how hard you can bargain when negotiating.

Finding the Right Home

There are two characteristics of a successful house hunting experience – staying focused and looking at as many suitable homes as possible.

Which Properties?
Your agent should compile a list of properties that match your general search criteria and arrange for viewings.

Ask Questions
Make your house hunting valuable by taking notes. Remember to bring your list as well. Ask questions during the showings—get as much information you’ll want later when considering each property.

The Contract

When it’s time to decide which home is right for you consider your wish list, the location, and the price when making your final decision.

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Choosing Your Home

It’s time to take one last look at the neighborhood to make sure it’s the right place for your family. Remember to consider the schools, recreational facilities, access to shopping, and distance to work. Make sure your furniture will work and it fits your family’s life style. Check you list to make sure you haven’t left out anything.

Making an Offer

Making an offer starts the process of negotiating the purchase of your new home, terms, closing costs and conditions of sale. When offering a price, remember to consider all the facts.

Market conditions—what is the current market condition? In a slow, or Buyers Market, Buyers may be able to negotiate a lower price then listed. On the other hand, in a Hot or Seller’s Market, it is risky to make a low offer. In a strong market it’s possible for another Buyer to appear and make a better offer while you’re in the process of negotiating.

How badly do you want the house—Will you or your family be very disappointed if you don’t get the house? If so, it may be wise to be less aggressive when negotiating the purchase. However, if you’re willing to take the change, you could get a better price, terms, or conditions.

Ask Your Agent—Your agent has experience and knowledge of the local market. Use that knowledge. Your agent can provide you with valuable information when making the offer.

Writing the Offer—A contract is a legally binding instrument—make sure you clearly state all of the required terms and conditions. Once you’ve reviewed the offer, now it’ time for your agent to present the offer to either the seller or seller’s agent. At this point the seller has three options, accept your offer, counter-offer, or reject your offer.

The Counter Offer—A counter-offer means that the seller did not accept all of your conditions. After reviewing the counter-offer you’ll have a better idea of what the seller expects. At this point, you have the option of accepting the counter offer or make another counter-offer. As you go through this process it is always advisable to do it in writing.

The Contract

Once you have made the offer and both you and the seller have reached “the meeting of the minds” you now have a contract and are ready to begin the process of “getting to closing”. Your agent will assist you along the way to ensure all contingencies, terms and conditions of the contract are met. It’s time for you to obtain homeowners insurance, conduct a home inspection, and get your mortgage finalized.

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Finalizing the Mortgage

Now that you have a contract on a home it’s time to provide the information and required paperwork to your lender and consider locking into an interest rate. Before locking in an interest rate consider whether interest rates are increasing or declining, how long is the lock-in for (usually 30 to 45 days) and your closing date.

Prepare to Close

Your realtor will assist you in this process. There are many things to do prior to closing such as, scheduling inspections, the appraisal, survey, ensuring your funds are available for closing, arranging homeowner’s insurance, the final walk-thru, time of closing, and the moving company. You will also need to review the HUD-1 closing document with your agent to ensure all charges are listed correctly and the dollar amount is correct.

I always recommend that you bring all your paperwork to the closing just in case there are last minute questions. Once at the Closing Table you will be asked to sign many documents associated with your loan. You will also need to bring certified funds. Also, once you’ve signed all the documents you will be able to obtain the keys to your home. Once the seller has signed over the deed the closing agent will ensure the deed and associated documents are recorded at the county court house. Once done—CONGRATULATIONS you just bought your home!

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