So you’ve decided to take the leap and most likely take on the biggest financial investment of your life by purchasing your first home. But what does the home buying process entail? Below is a detailed outline for those, who like me, like to know the bigger picture and what to expect along each step of home buying process.
- Contact a Realtor. Find a realtor with whom you are comfortable, trust and enjoy. Ask friends and family for recommendations.
- Get Pre-Approved For a Loan. Obtain a copy of your credit report and your FICO score. Contact several lenders, and determine which one will give you the best deal.
- Determine Your Price Range and Desired Neighborhood(s). Once you’re pre-approved for a loan, you will know how much home you can afford. This will help you narrow down your home search. Research neighborhoods in which you might want to live – remember each neighborhood will likely reflect your budget differently.
- Make a List of Desired Amenities and Features How many bedrooms and bathrooms do you want? Would you like a garage, porch or finished basement? Which features would you be willing to give up if you were to find the otherwise perfect home? Realistically identify your needs versus your wants.
- Begin Looking at Homes. Given your criteria and budget your realtor will schedule showings for properties that you are interested in viewing. Be sure to look at homes with a critical eye – it might be a good idea to take notes at each home you visit. What are your likes and dislikes?
- Make an Offer to Purchase. When you’ve identified the home you want to buy, it is time to prepare an Offer to Purchase with your realtor. The Offer to Purchase states that the buyer is willing to pay a certain price for the property when certain conditions are met (contingencies). Your realtor will guide you through the terms that should be addressed in the offer. You’ll be asked to submit an earnest money deposit as consideration for your offer. The seller will accept, reject or counter offer.
- Your Offer is Accepted. Once negotiations are completed, the terms are agreed upon and the seller accepts you offer; your agent will draft a full agreement called the Purchase and Sales Agreement. Once the agreement is fully executed you will be officially under contract.
- Officially Apply for your Loan. Once you’ve submitted the loan application, the bank will need all sorts of documentation. Both you and your agent will work with the bank to ensure that nothing is overlooked.
- Appraisal. Your agent will send the bank a copy of the fully executed Purchase and Sales Agreement and the lender will order their appraisal of the property. This is done by an independent party who comes in and confirms that you are paying market value or below for the house.
- Inspections. If selected as a contingency in the Purchase and Sale agreement, you’ll want to schedule your home inspections as soon as you have a fully executed Purchase and Sales Agreement. We recommend that the buyers are present for the inspections as they are a great learning experience and will help you to understand the way the property functions.
- Acquire Homeowner’s insurance. Once your under contract, you’ll need to begin shopping around for homeowner’s insurance as you lender will need proof of insurance for your financing.
- Closing Preparation. There are many issues that need to be addressed by both parties prior to the closing. Many of these issues are mentioned above and include applying for a mortgage; conduction of the agreed upon inspections; notifying the seller of any material deficiencies discovered by the inspections; selection of an attorney for the closing (in Rhode Island, you have the right to elect your own closing attorney to operate on your behalf); obtain insurance; contact the electric and gas company(s) contact other service providers (i.e. telephone, cable, etc.); and inspect the property prior to the closing.
- Closing. Closing is the act of signing on the dotted line that will officially transfer title to the buyer, verify homeowners’ insurance on the property, commit in writing to the terms of the mortgage and put the keys to the house into your hands. You leave the closing the proud owner of your own new home. In Rhode Island the buyers and sellers, their Real Estate Agents and Attorneys (if applicable), and the Lender’s Attorney all attend the closing.
The Geo Properties Team offers diverse and complementary professional backgrounds in real estate. Established in the market place, we have a comprehensive list of real estate related professionals including lenders, inspectors and attorneys with whom past clients have had positive experiences. Geo Properties’ agents are ready to assist you through the entire process of purchasing a home and will be with you every step of the way.