10 Steps to Purchasing a Home

One of the questions I get asked the most is to explain the home buying process in general. Here is a summarized version of what to expect and a few things to watch for. I am always available to answer questions if needed. My contact info at the bottom of every page.

1. The first step should always be to get with a lender. Choose one that will work with you to optimize your score and rating. Allow a little time to make any financial repairs that will boost your credit score. A good credit score can not only save you on house and car payments, but can also save you on insurance, credit cards and can get you a better paying job that may not consider someone with a lesser score. Check with your lender on the different programs available and see if you qualify for any down payment assistance programs. MSHDA offers some attractive products that may fit.

2. With a pre-approval in hand, let's find an agent to represent your needs. I always recommend a Realtor®. Take time and choose carefully as this person will be your guide through the process. I always recommend full time, full service Realtors®. Part time agents sometimes do a good job but I would want to be represented by someone all day, every day and not just when the other job allows. Test them on returning calls and emails to make sure that when the voicemail says "Your call is important to us", they mean it. Pick someone you communicate well with and who listens to what you're saying. Your agent will take your "must haves" and "absolutely not's" and select homes for you to see. After a little trimming you should have a select few that you would like to see.

3. Now it's "show time". Schedule showings and try to be prompt.  Even after arriving, if you don't think it will work, be courteous enough to see the inside. The seller had left their home to allow you the opportunity to see it and it may surprise you and be the one. Bring a note pad, as once you have seen a few homes, they will all start to mix in your mind. Ask your agent if a camera is allowed and take pictures of areas of interest and concern. Make notes of heating and cooling systems and if appliances are included. Maybe how far to school or work and what traffic may be like at different times of the day. The more info you get here will make your decision easier later.

4. Now that you have narrowed the field, have your agent check on existing leases, property taxes, maintenance fees, assessments and utility bills. Now is the time to find out about anything that may affect your purchase. Talk with your Realtor® about a strategy to putting in an offer. If the home you have chosen is a foreclosure or short sale (where the seller is hoping the bank will accept an offer for less than what is owed) you will have to approach it differently. If your agent can find out the reason for selling it helps too. For example, an estate sale or relocating to a new job seller may be more motivated than someone looking to make a profit on their investment. All of this helps in deciding on how much to offer and what terms.

5. Next step is the offer to purchase. Your agent will guide you through the process. Usually the more precise the offer to purchase, the less chance for confusion later. I always worry when I see agents using a 1 page purchase agreement. It offers no protection and leaves way to many questions unanswered. We use a 6 page Purchase Agreement here in Big Rapids, MI. that covers about anything that will come up. Different areas have different customs on earnest deposits and timing for responses and counters. Your agent should be able to help there also. Make sure any offer is contingent on financing and inspections.  The process of offering and counter offering can take a few days.

6. We now have an accepted offer to purchase contingent on financing and inspections. Make sure you know how long your inspection period is and what to do if your inspections reveal something. I always recommend pest inspections. They are cheap and can save thousands if a problem is found. Choose a home inspector that has a good reputation and has referrals. Your agent probably has a few he trusts and has worked with. Builder friends also make great home inspectors.

7. Once inspections are complete and looking good, you can rest. It is time for your agent and your lender to do their job and get things ready for a smooth transaction. Depending on loan type this can take from three weeks to 60 days. You may be asked to provide additional info to your lender depending on what their underwriters' needs are.

8. Don't start shopping for furniture just yet. While the pre-approval and preliminary title work were done there can always be a stopper. While you wait you can check on the process to switch over utilities, cable and mail service as well as making sure your cell phone coverage is available there.

9. Once you have a "clear to close" (lender term meaning all their requirements have been met and they are willing to proceed), you know the lender is happy and you can set a closing date. Go over the HUD1 with your agent and make sure everything looks like it should. Things like tax prorations and fees can need explaining. Your agent can guide you as to what the numbers mean. Just before closing I always recommend a pre-close walkthrough to make sure everything is still in the condition that it was when you first looked at it. In some instances you will not have occupancy on the day of close and will have to wait to move in. Some foreclosures, while vacant, have you Close in Escrow, which means you have to wait until the seller signs their side of docs (usually a day or two).

10. Closing day has arrived. Normally you need to bring certified funds (cashiers check or money order) and a valid picture ID, but everywhere is different so ask your agent what all you need to bring to close. Closing can take anywhere from 20 minutes for a cash transaction to a few hours if multiple lenders and people are involved. If you picked the right team and everyone did their job this should turn out to be a smooth transaction.

Congratulations, you are now a home owner!!!