The 12 steps to home ownership – a practical guide for first-time home buyers
If you have never purchased a home before, the process may seem daunting. For many people, a home purchase will be the largest purchase of their lives. However in reality, it is not as complicated as it seems. The process basically breaks down into 12 steps as highlighted below. As issues arise, you will want to make sure that you are working with an experienced Realtor© who can navigate you through the process.
1. Buyer consultation. There is an old expression, ”you can’t get to your destination if you don’t know where you are going”. This is especially true with home ownership. When deciding on your first (or next home), there are number of questions that you should consider. These include: how many bedrooms are you looking for, what style of house do you want to live in and what neighborhood(s) are you interested in. Sitting down with your Realtor© will help you gain a better understanding of your criteria.
2. Mortgage pre-approval. In order to determine what you can afford and to put an offer on a house you need to get pre-qualified for a mortgage. There are many different lenders that can assist you through the pre-approval process. Your Realtor© should be able to refer you to one or more mortgage brokers.
3. Previewing homes. After you have completed steps one and two, its time to preview houses online and decide which ones you want to visit in person. Often a house will look different from the pictures so don’t be surprised when you get there and feel like you are looking at a different house. A knowledgeable Realtor© will point out things in the house that you may not be looking for such as the condition of the furnace and roof, the topography of the property and the quality of construction.
Check out: Find your dream home
4. Making an offer. After you have found the house of your dreams, it’s time to make an offer. An offer will be accompanied with a small deposit and a copy of the pre-approval in the amount of the offer. Having the right agent to provide guidance in this part of the process is crucial as a low-ball offer could annoy the sellers and risk your chance of securing an agreement. Likewise, too high of an offer and you may be leaving money on the table.
5. Negotiation. After an offer is made, the negotiation process starts. Depending on the property and the market there could be several counters back and forth (unless of course you offer list price and your offer is accepted from the beginning). Once both parties agree on a price, then the agreement goes into attorney review (in New Jersey).
6. Attorney review. After both sides come to a meeting of the minds it is the time for the buyer to give the contract to their attorney so that he/she can make changes to the contract. These changes could include time frames, burdens etc. Once the attorneys on both sides agree to the changes, attorney review is complete and the house is now under contract. Typically, this takes about 3 days.
7. Home inspections. After entering into a contract to buy a property, it’s time to schedule the home inspections. There are a number of possible inspections that a buyer should schedule depending on the property.
Check out: What to inspect when you’re inspecting
8. Appraisal scheduled. The mortgage company will arrange for an appraiser to visit the property and provide an appraisal. This is another part of the sale process where working with a knowledgeable realtor© is important as he/she can provide the appraiser with some context on the sale and the comps.
9. Title and insurance. Your mortgage representative will work with you to obtain a homeowner’s insurance policy and a title representative.
10. Closing costs. At least three days before the closing, you will receive the Closing Disclosure with final settlement costs from your lender.
11. Final walk through. Typically on the day of the close, there will be a final walk through scheduled. This will provide an opportunity to check out the house and ensure it is in the condition which you expect. This is also an opportunity to make sure everything was left behind which was agreed upon.
12. The close. This is attended by attorneys for both the buyer and seller, the title person who is typically also representing the lender, the buyer, the real estate agents and sometimes the seller. All the documents will be signed, parties will be paid and the keys will be handed over. It’s now time to celebrate!
For more information, or if you need a referral for a knowledgeable Realtor© in your area, contact:
Coldwell Banker Residential Brokerage
211 South Street
Morristown, NJ 07960
(O) 973-267-8990 x153