You did it! You put in the work to build your credit. You tightened your belt to save the down payment, and now your time has come. It’s time to buy a house!
Now, you may be thinking “whoa, not so fast. Am I really ready for this?” I get it! On the surface, the home buying process can seem overwhelming, especially to a “first timer.” However, I believe that if you better understand the process, you will see that it’s usually very easy, and can be quite fun!
Before you get started, it’s important to determine who you’re going to be working with. Choosing a Realtor® is very important step in ensuring that your first experience is a good one. No transaction is identical. Having an experienced Realtor® to help you navigate the potential pitfalls can be invaluable.
If you haven’t already chosen a lender, your Realtor® will likely be able to refer one to you. This can be very helpful because their referral will likely be someone they’ve worked with, and had a positive experience with, in previous dealings.
Before you go “house shopping” you’re going to want to get pre-approved through your lender. This will require a little bit of paper work, but will give you an advantage over competing buyers, and may save you from heartache/headache (it’s no fun to find your perfect home, only to find that you aren’t qualified to buy it). In getting pre-approved, you and your lender will work together to determine how much home you can comfortably afford.
You’ve found it, you’ve found THE house (or at least the one that meets most of your “must have’s”). Now what? How do you know what to offer? What concessions do you ask for? Ask your Realtor® and trust their response! Markets vary, and depending on what type of market you find yourself in, your approach to making an offer will vary too. Your Realtor® is going to equip you with what you need to make an educated decision.
So, you’ve worked a deal out and have entered a contract with a seller, where do we go from here? The agents involved in the deal are going to deliver the contract to a local, and hopefully reputable title company. In California we “open escrow.” You will need to “put some skin in the game,” so this is when you deliver your earnest money, or the deposit amount that was negotiated. A properly constructed contract will have protection in place for your earnest money (i.e. making it contingent upon inspection and appraisal).
Inspections. Not required, ALWAYS recommended! This is your opportunity to uncover any potential defects with the property. For most people, buying a home is the largest investment they’ll ever make. The last thing anyone wants is to buy a money pit. By having a licensed property inspector comb through the property, you are better equipped to decide if/how you proceed.
*Important Note: Inspectors are paid to find things. They will ALWAYS find things. A big report doesn’t mean you have a lot of problems, and it’s unrealistic to ask the seller to fix everything on the report. Narrow down a list to just the major items, and send it off to the seller. Chances are they weren’t even aware of them. With cool head and creative approach, a deal can usually be made.
You’re approaching the end of the transaction. You’ve done your diligence, and your lender has done theirs. This is the home stretch. Not much left to do but to sign title/escrow docs that are required to transfer title into your name. Though it may feel like the work is done, and you can coast across the finish line, it is important to note that many deals have fallen apart right before closing. This may happen for a myriad of reasons, but more often than not it’s a buyer that makes a decision that affects their credit. This is why I tell all of my clients to not do ANYTHING that would affect their credit, until after closing. So no cars, boats, planes, or vacation homes.
That’s it, docs are all signed, monies are all wired, and title has released the file to the county recorder’s office. You did it. Congratulations, and welcome home.