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Merv Realty

Buyers

Step-by-Step Guide to Home Buying

Checking your own credit score is the best place to start with your home buying process. It is FREE and very simple. You can get a FREE report from all three credit bureaus once a year, https://www.consumer.ftc.gov/articles/0155-free-credit-reports

During this process, you will also discover how strong your credit score is and your DTI (debt to income ratio) which will be essential to procuring a mortgage loan. If necessary, you can plan ahead to pay down debts and increase your credit score and DTI ratio.

In today’s loan market, you will need to have a FICO score of at least 580 to be considered for some loan programs but most programs will require a minimum of a 650 FICO score. It is best to consult with a lender will help you determine if your score is high enough and how to best improve your credit and circumstances.

Getting pre-approved for a mortgage is an essential step when getting ready to buy a home. It is important to obtain a pre-approval letter from a lender for many reasons such as:

  • A pre-approval helps you determine how much you can borrow and what home range to shop in. It’s not favorable to fall in love with a property out of your budget.
  • Getting a loan estimate will help you figure out how much you will need to save for a down payment (about 3-5% of loan amount with most loans) and closing costs (3-6% of sale price).
  • Most importantly, most sellers require a pre-approval letter when submitting any offer and some even to view their home, as a security measure! This not only demonstrates that you are a serious buyer to both your real estate agent and to the seller but that you are also qualified to afford the home you’re submitting an offer on.

Once you have an idea of your budget, you can start saving to gather your down payment, closing costs, moving costs and strategize for any additional money that will be spent on customizing your new home, décor, furniture and any possible renovations.

It is important that you work with a realtor you trust and confide in. Someone who is available to you and will put your needs first, going above and beyond to help you find your dream home at the best price possible. Real estate agents can provide you with helpful information on homes and neighborhoods that isn’t easily accessible to the public. Their knowledge of the home buying process, negotiating skills, and familiarity with the area you want to live in can be extremely valuable. And best of all, most of the time it won’t cost you anything – they’re compensated from the commission paid by the seller of the house. Once you decide on your real estate agent, review and execute the Buyer’s Representation Agreement provided.

During your first meeting with your Realtor, you should discuss what your dream home looks like and what features are most important to you. Make two lists, “must-haves” and “desire but not a deal breaker”. Here are some things to consider:

  • Number of Bedrooms and Bathrooms
  • Pool / Spa
  • Type of Home – Single family home, 2-story, 1-story, duplex, townhouse, condo, multi family, co-operative, etc.
  • Location – Identifying a perimeter is best if you require a specific location.
  • Kitchen – Is having a large kitchen very important to you or the kitchen layout and dinning or entertaining space? Try not to focus too much on the cabinetry color. This can be transformed with paint for a moderate price.
  • Flooring – Do you prefer to have carpet, hard wood or tile flooring? How about colors?
  • Yard and Lot Space – Does your dream home have a large lot and spacious backyard or is this not as important to you? Do you require a corner property or cul-de-sac?

After evaluating homes sent to you by your Realtor, let them know if you want to view specific properties.

When you find a home that you feel is a right fit, work with your real estate agent to negotiate a fair offer based on the value of comparable homes in the same neighborhood. Within the written offer prepared by your Realtor, you are able to indicate an offer expiration date. Most sellers respond to offers within 24-48 hours. Your Realtor should communicate with the sellers’ agent to check the status of your offer. The seller can accept, decline or counter your offer. Once you and the seller have reached agreement on a price, the house will go into escrow, which is the period of time it takes to complete all of the remaining steps in the home buying process.

Typically, purchase offers are contingent on a home inspection of the property to check for signs of structural damage or things that may need fixing. Your real estate agent usually will help you arrange to have this inspection conducted within a few days of your offer being accepted by the seller. This contingency protects you by giving you a chance to renegotiate your offer or withdraw it without penalty if the inspection reveals significant material damage.

Both you and the seller will receive a report on the home inspector’s findings. You can then decide if you want to ask the seller to fix anything on the property before closing the sale. Before the sale closes, you will have a walk-through of the house, which gives you the chance to confirm that any agreed-upon repairs have been made.

Even if you’ve been pre-approved, you still need to take a few additional steps to officially submit the mortgage application. Your lender may ask for updated financial statements and other various documents needed to finalize your loan. Once you’ve completed the following steps, assuming everything checks out, you should receive the “clear to close,” which means that the lender has approved your purchase.

Your lender will hire the appraiser, so there’s not much for you to do here. Your real estate agent should work with the seller’s agent and the appraiser to schedule the appraisal. After the appraisal is complete, you and your agent will receive copies of the appraisal report, so you can see the appraised fair market value and check out the comps that were used in the calculations.

  • If the appraisal matches your offer price: You should be clear to close.
  • If the appraisal comes in above your offer price: Even better! This means not only are you clear to close, but you’re purchasing the home for a price below market value, giving you instant equity.
  • If the appraisal comes in low: Your lender won’t approve the full loan amount, as in their eyes, you’re overpaying for the property. You’ll need to either make up the difference between the appraised value and the offer price in cash or try to re-negotiate the offer price with the seller. If you believe the appraisal was incorrect, you can try to request a new appraisal from your lender.

Before closing, you will need to procure a homeowner’s insurance policy. Your lender may be able to help you obtain a policy that can be paid through your monthly escrow account. Also, ask your real estate agent for any professional recommendations for a trusted vendor.

During closing expect to spend at least a few hours at the title company signing paperwork. You should also be prepared to bring funds to cover your closing costs, which typically range between 3-6% of the purchase price. Once the signing is complete and the sale is recorded, you’ll receive your keys. The property has now conveyed and is yours!

 

You will now have the ability to set up utilities in your new home — things like electric, cable and internet.

Finally, get ready to move and settle into your new home. Congratulations!

Looking to buy or sell anywhere in the US?

Our services are not limited to Vegas or South Florida

Our expert agents and partners can assist you with all of your commercial and residential real estate services across the US.