Most of us think that the purchase of a new home will and should begin with searching for that perfect home. Once upon a time that was the case we looked, found the home, wrote an offer, negotiated the contract and applied for the loan. However, in today' housing market applying for the financing should be much earlier in the process.
There are a few things to think about:
- Should I work with a REALTOR?
Working with a REALTOR, is a positive decision because you benefit from the expertise of the Realtor in supervising many areas of the purchase such as financing, inspection of home, title as well as finding the right home for you .
- What are the amenities I desire in my home?
Make a list of amenities you would like to have in your home. This will allow your agent and you to do a better search for that perfect home. Think specifically what you cannot or do not want to live without and be sure your agent understands you desire for that amenity.
Some criteria to think about include:
- Price range
- Neighborhood or subdivision
- Proximity to work
- Nearness to schools
- School district qualifications
- Proximity to shopping, restaurants, entertainment, churches, hospitals, etc.
- Number of bedrooms
- Number of bathrooms
- Number of Living areas
- Is there office space
- Garage ( number of car spaces)
- Lot sizes
- Pool
- Home owner's association?
- What monthly payment can I afford? If you currently know or have a bank or mortgage broker that can help you to determine this payment affordability number contact them for help. If not ask your REALTOR for names of loan officers with whom they have had good experiences.
- How much cash will I need at closing? As a part of the pre-qualification process your lender will be able to tell you not only what payment you can afford, but the price of the home, down payment and closing cost needed at the time of closing.
- What is Pre-qualification? A lender will look at information you have given regarding your financial situation and give you an Idea of what you can afford with regard to payments down payment and price of a home, assuming all the information is correct.
- What is Pre-approval? A lender has not only looked at the information you give them regarding your financial information and employment, but has made all verification of information and has issued a letter stating that you are approved for a loan of a certain amount subject only to approval of the property once you find that property. This will put you in a better position when negotiating with the seller of the home.
Your Search Begins
After you have selected your agent, determined what you want in a home and arranged for pre-qualification and pre-approval, you are ready to start your search. Your agent will search their listing data base for the area for properties based on the criteria you have discussed.
It is important that during your search you compare the homes you visit. All homes have different character and features that will appeal to you. As you view each home take notes and make note of likes and dislikes for each. You may want to look at the homes with an eye toward things such as:
- Upkeep and utility cost
- Maintenance required
- Cost of decorating or updating appliances, flooring etc.
- Homeowner's Association Dues and/or upfront fees
- Are there special utility districts etc that add to the taxes related to the property
Taking notes and referring to your checklist will help you later when you are comparing properties to determine the most desired property to make an offer to purchase. It is always better to make an informed decision rather than an emotional or impulsive decision.
Making the Offer to Purchase
Once you have found the home of your dreams it is time to make and offer to purchase. The agent you have selected to represent you will be able to provide you with guidance as to the price you should offer as well as other decisions related to writing your offer. The other decisions to be made will include:
- Earnest money amount
- Concessions asked of the seller ( Closing cost, carpet, appliance, or paint Allowance)
- Home inspection contingencies
- Financing contingencies
- What items might be included with the purchase.
- Closing Date and possession if different from closing
You should not be surprised if the initial offer is either declined or countered.
Closing the Transaction
Once the offer is accepted there are many details to deal with and most of the are to be completed in specified time frames. You and your agent will need to be sure these time limits are met promptly. If they are not it could prevent closure on the property.
The Texas Real Estate Contract calls for an option period if the buyer desires. This is important because it gives you time to have the home inspected and assert that you can obtain insurance for the property. During the time period of the Option the buyer can cancel the contract to purchase for any reason, however, if the buyer backs out of the purchase after the option period they may lose their earnest money. There are also time limits on the final approval of your financing etc. Please consult with your agent about time frames for your contract.
Just prior to closing you should do a final walkthrough of the property to be sure that all repairs have been done or if it was in as is condition that the property is still in the same condition. If the seller was to be out prior to closing is it vacant and clean. This final inspection is done by you not your inspector and should be done as close to closing as possible.
On the Day of closing remember to bring:
- A certified check for the total amount of your closing costs and down payment
- A picture ID, such as a driver's license
- Your personal checkbook
During the closing the escrow agent will explain to you the details of the contract with regard to closing on the property. If everything meets with your approval you will be the proud owner of your new home. If you have questions please be sure to ask for clarification.
