Get Pre-approved! Unless you are paying cash you need to get approved for a mortgage before you start looking at homes. You will know exactly how much you can afford so you can look in the correct price range and you will need to submit a pre-approval with any offer. If you find the perfect home and you donít have a pre-approval letter you risk losing it. Get pre-approved first and when you want to make an offer you will be ready.
Once you have been pre-approved do not make any significant changes in your credit or employment. Do not change jobs or do anything to increase your debt load. That new car will have to wait until after you close on your home. Even a minor increase in your debt load may prevent you from qualifying for a mortgage.
When you are ready to make an offer on a home you will need to put down earnest money. You will need to put down a minimum of $1000 on most purchase offers and some sellers require a cashiers check. Be ready to provide this when you sit down to write an offer.
Let your Realtor help you decide what to offer by showing comparable sales data for the home you are interested in buying. By being informed on what similar properties are selling for you can make a good decision on how much to offer to get the best price without risking offending the seller. You want to open negotiations, not close the door on them.
If you are making an offer contingent on selling your current home, remember the seller will continue to market the property and may accept another offer from a buyer who does not have a home sale contingency. You will then have time period(usually 24 to 48 hrs) to decide if you would like to remove your contingency and purchase the house. If you choose to do that, you are obligated to purchase the house whether or not you get yours sold so your financing will need to be in place. You are effectively making a cash offer with no contingencies at that point. If you are unable to remove your home sale contingency, your offer will be cancelled and your earnest money will most likely be refunded to you.
Have a realistic time line for the process. Once you have an accepted offer it typically takes 4 to 6 weeks to get to the closing. If you have to be out of your rental in 2 weeks, you will probably need to make temporary living arrangements.
Consider having a home inspection. For around $300 a licensed professional will inspect your potential home and give you a report on the condition of the property. Keep in mind, this is for your information and does not require the seller to fix anything that may be an issue in the inspection report. If you know the roof is leaking when you make the offer, donít expect the seller to repair it just because the home inspector notes it on the report. If, on the other hand, the inspection uncovers a costly issue and the seller is unwilling to repair it, you may be able to cancel the contract and not be required to purchase the home.
Consider having an attorney represent you at closing. Buying a home is a huge investment and you should have legal counsel at closing to make sure everything is in order. Sometimes a problem may arise at the closing table and if the sellers have an attorney and you donít you will likely be on the losing end of the battle. Your Realtor is not an attorney and cannot offer you legal advice so consider spending a little extra money to make sure your investment is protected.
When you are ready to close you will need to keep the following in mind: you are responsible for having the utilities put into your name as of the date of closing. The water department requires a deposit if you are a new customer and they will need that before they will start service. Once you have a closing date you will need to call the gas & electric companies to have service put in your name. Sometimes it can take as much as a week to transfer service so donít wait until the day of closing to do this. If the seller has contacted the utilities you may be disconnected as of the closing date. You will need to bring a drivers license or state Id to the closing for identification. If you need to bring money to the closing you must have a cashierís check made out to the title company. They will not accept cash or personal checks. If your down payment and closing costs are more than $50,000 or if you are paying cash for the property and it is over $50,000 you will need to have the bank wire the money directly to the title company. This also can take several days so make sure this is arranged in time for the closing. If you are getting a mortgage you will need to bring proof of 1 year paid homeowners insurance to the closing. Your lender will remind you to get your insurance before the closing date. You will also need to do a final walk through 24 to 48 hours before the closing to make sure there have been no significant changes in the property condition since you wrote the offer. Once you sign the closing documents, you own the house so if there are any issues at the walk through make sure they are resolved before you close. You will not get possession or keys until all the closing papers have been signed. If your moving van is loaded 2 days before, donít expect to move in early. You will have to arrange your move for anytime after the closing is completed.
Knowing what to expect throughout the process will make you less apprehensive and more confident in your decision to purchase.