Buying your first home is likely the largest purchase you have ever made. But the process doesn’t have to be intimidating. The following information will familiarize you with the process by answering the most common questions asked by first-time home buyers.
1. What are the steps to buying a new home?
Pre-Qualify. First, pre-qualify for a home loan by meeting with a loan officer at a lending institution (ie. bank, credit union, mortgage company). Don’t know where to go? Contact us, and we will be happy to direct you. The officer analyzes your income, debts, and credit history to determine your loan amount.
Find a Home. Next, contact your REALTOR® to start looking at homes. Knowing your loan amount, your real estate agent can show you homes in your price range, which you qualify to purchase.
Make an Offer. When you find a suitable home, your REALTOR® will help you make an offer to present to the seller. The seller may accept your offer, reject your offer, or reply with a counter-offer (ie., a new offer made to you to negotiate on price).
Attend Closing. Once both parties come to an agreement, you prepare for closing. Your lender requires an appraisal to determine if the agreed price is reasonable. The title company performs a title search to guarantee the property is clear of liens (unpaid notes filed against the property). And finally, you sign the final papers.
2. When can I move in?
Once you have agreed to buy a home, it usually takes 30 days to close—the time is required for the appraisal, loan processing, title search, and so on. The actual number of days is negotiated with the seller. After closing, you can move in.
3. How much does it cost to use a REALTOR®?
Nothing! Real estate agents are paid a commission by the seller, so you don’t have any costs apart from obtaining the loan and purchasing the home.
4. What is earnest money?
Earnest money is a deposit you put down at the time you submit your offer to show the seller your intent to purchase the property. It is held by the real estate office and forwarded to the closing agency at the time of closing to apply toward your purchase/down payment. You only lose your earnest money if you breech the contract—back out of the deal with no legal basis.
5. How much did this house appraise for?
This question is among the most common asked by buyers looking at property. An appraisal is rarely performed at the time a house is put up for sale. Rather, the lender orders an appraisal AFTER the buyer and seller have agreed on a price to ensure the home is worth that amount.