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How to Buy a Home


Buying a home is an exciting experience, but it can also be overwhelming. It will probably be the single largest investment you ever make. For that purpose, you should make sure you have done your research and are properly informed about this important decision.

Where do you start? Let’s take a look at steps you should take when purchasing a home:

Step #1: Define Your Needs

So, you have decided to purchase a home…what is your first step? You should define the needs you and your family have for a home. How many bedrooms do you need? How many bathrooms? Are you looking for a large or small backyard? Do you want one or two stories? Whatever it is you desire, you should make a list to help facilitate your home buying process.

Step #2: Work With a Realtor

While you will have to pay a realtor a fee for his/her time, it is recommended that you use a realtor to purchase your home (especially if it is your first home) to facilitate finding a home that meets your needs. Additionally, a realtor has worked with many different clients and knows the process; he/she will know a good deal when it is out there.

Step #3: Get Pre-Qualified or Pre-Approved For a Loan

Once you have met with a realtor and you have determined the general price range to meet your needs, you should then get pre-qualified or pre-approved for a loan. A pre-qualification is a simpler process as you can do it online or over the telephone with a financial institution or mortgage broker; it is a rough estimate of what you can afford.

On the other hand, a pre-approval is a more in-depth process and may take longer; however, you will know exactly what you can afford. In most markets, pre-approved buyers are preferred as it is a way for the seller to know you have done your due diligence and are serious about closing the sale. Additionally, it will keep you in a price range that will allow you to live within your means.

Step #4: Home Search and Neighborhood Information

Now comes the most difficult and fun part of the process…finding the right home. You need to look at the city to which you would like to move, the neighborhoods available, the schools available (if you have children), the distance to and from work or to and from commercial businesses (e.g., grocery stores, shopping centers, etc.), or even entertainment. You may also want to consider the demographic make-up of the community or neighborhood of interest or the type of homes available. Are there parks nearby? Are there community programs and events available?

Once you determine your general specifications, you should then start looking for the home that will meet the needs described in the first step of the process. You can use a real estate agent, search the Internet, drive around the city or town of your choice, go to the Chamber of Commerce, or search newspaper ads. Whatever you decide, you should look at several homes prior to making any decision. You want to make sure you make the right decision; this is too big of a purchase to be made on impulse.

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Step #5: Make an Offer

Once you find the home you would like to purchase, it is time to make an offer; this step can be EXTREMELY stressful! After consulting with your real estate agent (if applicable), you will determine how much to offer the seller in a written agreement or contract. This contract is designed to protect you and the seller in the sales process and meets both local and national legal requirements for real estate purchases. Most contracts include the following information:

  • Legal description of the home
  • Offer price
  • Down payment
  • Financial arrangements
  • List of fees and who will pay them
  • Amount of the deposit
  • Inspection rights and possible repair allowances
  • Appliances and furnishings that will stay with the property
  • Settlement date
  • Contingencies

If you have any questions during this portion of the sale, ask them; do not leave anything left unsaid.

Step #6: Negotiating the Price

Once you make an offer, you will receive feedback from the seller within a certain time period, which is called a “counteroffer.” A counteroffer provides you with what the seller is willing to negotiate. Keep in mind that everything in the deal is negotiable, and in most instances, your original offer will not stand as originally presented. Some things that may be negotiated are: price, closing costs, landscaping, closing time period, repairs, appliances, furnishings, painting and financing.

Step #7: Coordinating With Service Providers

After you make the offer and it is accepted, your realtor (or you if you don’t have a realtor) will then work with various vendors to perform an inspection, and then coordinate with the seller to complete any work that must be done due to the results of the inspection.

You will need to coordinate with your home insurance company to provide coverage for your home. You may also want to consider additional home warranties for such things as plumbing, wiring and structural defects.

Step #8: Before Closing

The next step in the process is to meet with the representative of the escrow or settlement company you plan to use and your lender to make sure all necessary documentation has been prepared and delivered to the appropriate location and on the appropriate date. You should also make sure you know what type of payment must be made, who to make it out to, and when it is due.

Step #9: Closing

Closing on a home is where the ownership of the home is legally transferred from the seller to the buyer. In most instances, you will meet at the title company’s office to sign the necessary documents. You must bring the appropriate documentation, identification and payment for the closing to go smoothly. The closing on your home should be done in one visit if you have an organized and professional realtor (if applicable) and mortgage lender.

Step #10: Post-Closing

Once you have closed on your home, you will need to set up the following: electricity and/or gas, cable, phone service, water service, and trash/waste service. In addition, you may need to start paying homeowner association fees, landscaping costs or other annual taxes.

As you can see, buying a home is an involved process; however, with good preparation and professional assistance, your experience can be positive and seamless.

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