Planning To Buy A Home

The first and one of the most important steps in your journey to buying a home is planning.  Planning helps to ensure that during your search for a dream home that you know your “comfortable price range” or more simply “how much you can afford”.  This may involve talking to lenders beforehand who can pre-qualify or even pre-approve you for a mortgage.  Being pre-approved gives you the advantage of being able to negotiate as a “cash buyer”.  

What is involved in determining how much you can afford?  A lender will determine how much monthly payment you can afford (typically between should be less than 25% to 33% of your gross monthly income).  From there he or she will back into the mortgage amount that you qualify for.  This depends on the term of the loan, interest rate, property taxes and hazard insurance. 

Searching For Your New Home

Now that you know how much you can spend on your home, it is time to start considering what type of home you will like.  Here are is list of considerations that will help you better develop a sense of your likes and dislikes.  Being prepared before the search begins will make choosing much easier. 

Regional Considerations

• Do you like urban, sub-urban, semi-rural or rural areas?

• What type of land and or views are you most fond of?  Examples:  golf course, hills, lakes, ocean, and gulf.

• How far do you want to travel or commute?

• Where do you typically shop?  Think about your week for a moment and write down a list of places that you need to visit on a regular basis.  How far are you willing to travel in order to get to these destinations?

• Are schools a factor in your decision?

• What type of recreation are you wanting to be near?  Are you looking for a nightlife?

 Neighborhood Considerations

• Are you looking for a neighborhood where families socialize, hold block parties and holiday gatherings?  Or are you looking for a private retreat?\

• What type of building do you like?  Single family home, high rise condominium, villa?

• What type of amenities do you need?  Golf, Tennis, country club?

• How conveniently located is the neighborhood?

• How do children typically get to school?  Bus, walking and riding their bicycles?

Choosing the Home

Now that you have found the town and the neighborhood it is time to consider your ideal home.  When you know that features you are wanting, your agent can use his resources (computer and contacts) to find prospective homes in the area that fit your specifications.  During the house hunt it might be helpful to keep a notebook to record your likes and dislikes of the homes you are viewing for a comparison later.   You may even want to bring along a digital camera.  Sometimes it is difficult to recall details about every home you have viewed. 

Your agent will find out the financial details of the home such as the previous year’s property taxes, local assessments, and home owner’s association dues.  Additionally your agent can do a comparative market analysis to determine how the asking price compares to other homes for sale in the area. 

Making the Offer

Now that you have found the home of your dreams, it is time to make an offer.  You are your agent will go over the document carefully to be sure that you understand the terms thoroughly.  This document will actually become the Sales Contract once it is accepted by the seller.  Once you have decided on and offer your agent will present it the listing realtor and seller who will either accept it, reject it or present a counter offer to change some unacceptable aspects.  The offer finally becomes a contract once both parties agree to all terms and have signed and initialed the document.  You will submit an earnest money deposit at this time to show the seller you are “earnest” about your desire to buy the property. 

Financing & Contingencies

After the Sales Contract has been fully executed you will enter a “contingency period” during which certain contingencies such as financing and inspections will be fulfilled.  During your planning process you probably already were pre-qualified or pre-approved for a mortgage.  You will want to revisit your lender in order to firm up the details of your loan.   Once final approval is received, your lender should send a commitment letter to the Seller indicating the financing contingency has been satisfied. 

Inspections

Before you close on the sale of your home, your agent or mortgage company will schedule several inspections.  Usually a termite inspection is required by the mortgage company.  Additionally, you may hire a traditional home inspector to inspect the appliances, foundation, roof, air conditioner and general condition of the home.  Click here to read more about the Inspection Process. 

Additionally, you will do a final walk through of the property prior to the closing to determine if all conditions have been satisfied before the settlement.  

Closing

Finally, closing day is here!   What do you need to do?  Prior to the closing your Attorney or Title company will advise you of the settlement amount and you will need to bring a cashier’s check made payable to the closing agent in the amount of money.  You may alternatively arrange to wire transfer the funds for the closing.  Click here to use our closing cost estimator for buyers. 

At the closing, all parties to the transaction will usually be present as well as the realtors and closing representative.  The seller will bring home warranty information and all keys.  The Title company or attorney will have already searched the title, provided title insurance and prepared a closing statement for the buyer and seller.  You will be signing this as well as your mortgage note and the deed of trust. 

Finally, the keys are passed and congratulations you are a homeowner!