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The 12 Step Guide to Buying a Home


Below you will find the twelve steps you will need to make when purchasing a home. It is important to realize that you are about to embark on a very serious and important matter.  Make sure to ask plenty of questions! No one ever purchases a home wishing that they had asked fewer questions once the transaction has been completed.  Another key to having a successful purchase is surrounding yourself with a good team of professionals. 

1.   Find a Realtor
When purchasing a home it is a good idea to have a Realtor representing you.  Purchasing a home is in all likelihood one of the biggest financial decision that you can make.  For that reason it is important to have an expert on your side.  A good Realtor doesn’t just help you find a home, he/she holds your hand and guides you through the often tricky and emotional process of purchasing a home.  You may even want to interview several Realtors so that you can find one you have complete confidence in and a good rapport.  Another reason to use a Realtor when purchasing a home is that his/her services are free to you in that a Realtor gets paid by Seller’s Agent.

2.   Define Your Need
There are a few questions that you should ask yourself now that you have made the decision to purchase a home.  It is important to write these answers down so that you can reference them once you start your home search.  Why is it that you have decided to purchase a home?  When do you plan to move into your new home and how long do you plan on living in this home? Where is it that you would like to live (close to work, in a certain community, good schools etc..)?

An important exercise to create is the “wants and needs” list.  This involves creating two lists, what you want in your new home and what you need in your new home. Most likely you have a mental picture of what your new home will look like. Start off by jotting down all the object that you have in your mental picture.  This is your “want” list.  The second list that you will create is your “needs” list.  This list should include all the things that you must have in your home.  In a perfect world, your new home would have all your wants and needs.  In all likelihood you will end up blending these lists together and prioritizing them once you have seen what is on the market, but creating the lists is a starting point.

It is a good idea to share your answers and lists with your Realtor as this will be helpful once you start searching houses.

3.   Get Pre-Approved and/or Pre-Qualify for a Mortgage
Now that you know have an idea of what you want in your new home, you need to find out what you can afford.  There are two ways to approach this step.  You can either get pre-qualified or pre-approved for a mortgage.  If you do not know of a mortgage lender it is a good idea to consult your Realtor. 

The pre-qualification process is the simpler of the two approaches.  This step involves having a general talk with a lender about how much money you make, your debt load, and how much money you might have for a down payment.  The mortgage lender will not ask for any verification for the numbers at this point.  With this general information the mortgage lender will give you a rough estimate of how much of a loan you might qualify for.

Getting pre-approved is a much more involved process.  The lender will take all pertinent information regarding your finances perform an extensive check on your current financial status.  With this more extensive approach a mortgage lender can better come up with a figure as to how much of a loan you can afford. 

Since the pre-approval process is the more in depth approach it shows sellers you are more serious about buying a home because you have taken the extra step.  Either process that you choose is a good idea because it gives you a better idea as to how much you can afford. 

4.   Get Out and Find a Home
At this stage you should have a good idea of what you can afford, what type of area you want to live in, and what you want inside your home. Most home buyers find this step to be the most enjoyable step because you get to search for your new house.  The most efficient way to find a property tends to be the Multiple Listing Service (commonly known as the MLS).  A Realtor will have access to the MLS and should keep you up-to-date on the available properties that meet your criteria in the areas that you have specified.  Once you have found properties that intrigue you, your Realtor will arrange for a tour of the property.  

5.   Make an Offer
Now that you and your Realtor have found the home you would like to purchase, it is time to make the offer.  An offer is a legally binding statement of your interest in buying a property.  Your Realtor will be of great help during this process.  With your Realtors help you will come up with an amount of money you are willing to pay and a time frame as to when you are going to purchase the home.  You should know that your offer will be contingent on completing a satisfactory inspection of the property and your lender approving the loan.  With your offer you will also need to provide some Ernest money.  Ernest money shows the seller that you are interested in purchasing their home and if the contract is accepted will be applied to the purchase price. 

6.   Negotiate the Offer
Negotiating an offer to purchase a home is a very emotional process and using a Realtor can be extremely beneficial.  A Realtor has experience negotiating, doesn’t have the emotional ties, and has a vast knowledge of Real Estate which is why they tend to be better at handling the negotiating process. There are many variable besides price that may need to be negotiated.  They may include, closing date, financing, closing costs, repairs that need to be made prior to closing, appliances and fixtures, landscaping, and painting. 

It is important to know that the negotiating period can involve many counter offers which can be very draining on home buyers.  A successful negotiating doesn’t necessarily mean a winner take all attitude.  Treat this stage like a business transaction and realize that a give and take approach will make both parties happy and will lead to a successful close.  It is easier to close on a home when both side good and not cheated.

7.   Contact a Real Estate Attorney
It is important to know that a Realtor is not an attorney and thus can not give legal advice.  Purchasing a home is a huge financial and legal transaction so it is a good idea to hire a real estate attorney.  Once you have a signed contract you will want your real estate attorney to look over the contract and any other documents that may apply to your purchase.  If you do not know of a real estate attorney it is a good idea to consult your Realtor.

8.   Conduct a Home Inspection
If you’re at this stage it means you and the seller(s) have come to an agreement on terms and price.  It is an important step to have a home inspector, inspect the home you want to purchase (at the buyers expense) even if you are purchasing a newly constructed home.  Make sure to hire a licensed professional to inspect the home.  A good inspector will find problems or issues with the home which you and your realtor may not be able to see.  The inspector will be able to explain the problems and solutions so that you have a complete understanding.  Once an inspection is done you will discuss the inspection with your Realtor and Real Estate Attorney to decide your next step.  There are four approaches to take after a home inspection.  They are: have the seller take care of the issues raised before the closing, have the seller give you a credit for the repairs which will be made after you take possession of the home, you, as the buyer, will take care of the issues after closing at your expense, and last you will have the option to walk away from the deal (if you give adequate notice to the seller).  It is important to know that like people no home is perfect even a newly constructed home, so if a problem arises with the home find out how serious they are before you proceed.  

9.   Purchase Adequate Home Insurance
Homeowners insurance is another item that will need to be taken care of prior to the closing.  It is important to purchase adequate insurance so that in the event of a disaster you will not be left without a home.  The mortgage lender will also require you to purchase Homeowners insurance prior to the closing.

10.   Pre-Close Preparation
As the closing date draws near you will want to make sure that everything will go smoothly.  Call your attorney and lender to make sure that all the necessary materials have been completed so that you can close on your new home.  In many cases the buyer will need to bring some money to the closing.  Your Real Estate Attorney will most likely be able to give you this figure.  The money you will bring at closing is the down payment and any unpaid fees.  Find out what form of payment is accepted (most often a personal check is not acceptable).  Also, on the day of the closing it is a good idea to conduct a “walk-through” with your Realtor.  A walk-through is necessary so that when you take possession of the home after the closing you are assured that the seller(s) did not leave the house messy, completed any repairs that they were suppose to prior to closing, or take anything that was suppose to stay with the home. 

11.   Closing
The term closing refers to the meeting where ownership of your new home will be legally transferred to you.  In all likelihood this meeting will be held at a title company.  Your Realtor, Attorney, and possibly your lender will be present.  At the closing your transaction will have a closing officer.  The closing officer’s job is to coordinate the signing of all the documents, and to collect and distribute all the funds. 


12.   After Closing
Congratulations on the purchase of your new home!  At the end of the closing the seller handed over the keys to your new house, but it is a good idea to either change or rekey the locks.  It is also time to call your local service providers and make sure that you have your local services turned on and billed to you (electricity, cable, phone etc).  If you need any help your Realtor should be able to provide you with the necessary numbers to make your move as easy as possible.

If you are looking for a new home in the Cleveland Area... check out www.ParkviewHomes.com

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