Buying a home is one of the most rewarding and exciting experiences in your life. However, it is quite a complicated process and requires a good amount of hard work and determination to find and purchase a home.
Getting Prequalified For a Loan
When you have decided that you are serious about purchasing a home, you will need to obtain a prequalification for a loan. You simply walk into any bank or mortgage lender to discuss the possibilities of obtaining a loan. A representative will ask for information such as your income, down payment (about 20 percent of price), and the price range of houses that you are interested in. He or she will let you know how much you can possibly borrow from the bank. With this information, you can better understand what you can afford before you start looking seriously. This is not to be confused with a preapproval for a loan. Getting a prequalified letter does not guarantee that the mortgage lender will approve your loan. The letter can be shown to sellers to show your seriousness in purchasing a house but is not indicative of anything else.
Looking For a House
After speaking with a lender and getting prequalified, you can now narrow your search and focus on a specific price range. The best way to look for a house is to go to a real estate agency. An agent will have much more knowledge of houses available that would fit your price range. It also does not cost the buyer anything to go through an agent; only the seller pays for the commission. Therefore, it is advantageous to find a reputable agent to help you do the difficult work. Try to be clear about what you want. Let your agent know the neighborhoods you are interested in, the type of housing (one-family, condo, co-op, etc.), the physical condition of the property, and the minimum and maximum price you are willing to pay. The more information you provide, the more likely your agent will find listings that match your preferences.
Expect to devote a good amount of time to attending open houses and viewing properties. It is unlikely that the first property you see will be the one that you will purchase. Sometimes it takes a few viewings to determine what you like or dislike. It is also possible that your preferences will change over time. Just remember to communicate your thoughts to your agent so that you do not waste time viewing uninterested properties.
Making an Offer
Once you have found your dream home, you are ready to make an offer. An offer is a written document sent to the seller indicating the price that you are willing to pay for the house. The offering price can be lower, higher, or the same as the asking price. The seller can accept your offer and seal the deal. However, the seller can also reject your offer, in which case you can either renegotiate the price or walk away from the sale. Negotiations can take a long time if both parties do not agree on a price. It is important to note that offers are not legally binding and either party can back out at anytime without an explanation. It only becomes official when both parties agree on a price and signs a contract.
Signing the Contract
When the time comes to sign the contract, you will need a real estate lawyer present to review all documents and make any last minute negotiations. Make sure all items that you request from the house is stated in the contract clearly. Once it is signed, the document is legally binding. A deposit (usually 5 percent) is made at the signing and is held in escrow by a third party.