When you are weighing the decision of when the time is right to buy your first home, make a move-up purchase, invest in a rental/flip property or downsize to fit your adjusting needs, there are always questions galore. Below we've outlined the home buying process and offer advice to make your next move a rewarding experience.
Step 1: When to Buy
How do you know if and when the time is right to act?
There is never a wrong time as long as you focus on finding a good buy and taking the time to carefully evaluate your finances.
Making that first purchase, or reinvesting your equity in the next, is an important step in the path to long-term wealth. Real estate ownership provides specific financial advantages, including equity buildup, value appreciation potential and tax benefits. It’s also an automatic savings plan that you cannot get from renting!
It’s important to realize you don’t have to know everything. Step by step, you’ll learn along the way and by utilizing the knowledge and background of a seasoned, full-time REALTOR®, you can rest assured you’ll be making the best, educated decisions to help you achieve your real estate goals.
Step 2: Finding the RIGHT Agent
When searching for Buyer representation, you should focus on finding a REALTOR® that not only has the experience and local market knowledge necessary to achieve a successful purchase, but also one you feel comfortable communicating with, and above all else, you know that their singular goal is to put your needs first. This is your dream, and your agent is your advocate to help you make your dream come true.
You should expect your agent to:
- Educate you on the current conditions of the market.
- Help blend your real estate expectations and wants with smart, resale-friendly reality.
- Guide you to homes that fit your criteria.
- Coordinate the work of other needed professionals throughout the process.
- Negotiate your offer with the Seller’s representative or Seller (FSBO).
- Review post sale contracts to assure key deadlines are met.
- Explain and help solve any bumps that may arise along the way.
Step 3: Obtaining Financing
As you work on the beginning stages of obtaining a loan, it’s important to keep in mind that your lender will attempt to get you preapproved for a loan amount you’ve requested, but ultimately you need to decide what you’re comfortable paying every month. How much are you willing to stretch your budget in order to get into your dream home?
Be sure to follow these six steps to financing your home:
- Ask your Realtor® for lender and loan officer recommendations.
- Brief phone conversation to confirm you’re comfort with the chosen loan officer.
- Review loan programs to find the one that fits you best.
- Submit your formal loan application to the lender and obtain preapproval letter.
- Follow up on any additional lender requests as quickly as possible.
Step 4: Find Your Home
So you are preapproved and ready to begin your search. The right home will meet most of your important needs, and as many of your additional wants as possible. There will normally be a compromise or two. Can that compromise be changed down the line? You’ll learn as you look at homes that your priorities may adjust along the way. Some questions you might ask yourself include:
- What do I want my home to be close to?
- How much space do I need and why?
- Which is more critical: location or size?
- Would I be interested in a fixer-upper?
- How important is home value appreciation?
- Is neighborhood stability a priority?
- Would I be interested in a maintenance-provided property?
- What features and amenities do I want? Which do I really need?
Step 5: Make an Offer
You’ve found the right one. It’s talking to you…buy me, buy me! Your next step is making a compelling offer. While emotions are probably in high gear once you’ve found a home you love, it’s important to remember that this is an investment. Your agent will research similar properties in the neighborhood to help you determine the market value and fair price for this property.
The three basic components of your purchase offer are price, terms and contingencies.
- Price is the dollar amount you are approved for, willing and able to pay.
- Terms cover the other financial and timing factors that will be included in the offer.
- Contingencies are clauses that allow you to cancel the contract if unacceptable conditions are found during the inspection process, or loan issues arise, causing the house or you not to qualify for financing. These contingencies specify any event that will need to take place in order for you to fulfill the contract.
Step 6: Perform Due Diligence
Just because you love a particular property doesn’t mean that it’s perfect. In fact, this is where reason has to trump emotion. Property inspections will help you see the home objectively, allowing you to determine the total condition, good and bad. This way you’ll know what you are getting into before you sign closing papers.
Some of the main inspection concerns would be the foundation integrity, the larger dollar components, such as the roof, HVAC, etc.
Don’t sweat the small stuff. It’s the inspector’s job to mark everything discovered no matter how large or small.
Step 7: The Closing
Once you’ve made your offer and have completed the inspection process, you’re in the “home” stretch! In order to ensure that you don’t put your closing date, or your mortgage at risk, you have a few pre-closing responsibilities that you’ll need to be mindful of. These include:
- Stay in control of your credit and finances. If you are tempted to make any large purchases during this time, it’s best to talk to your lender first.
- Keep in touch with your agent and lender, returning all phone calls and completing requests promptly.
- Call the utility companies, placing the electricity, gas and water accounts in your name.
- Conduct a final walk-through of the home with your agent a few days prior to closing.
- Confirming with your agent, home insurance professional, and lender that you have the settlement statement, certified funds, and evidence of insurance lined up prior to closing.
Step 8: Protect Your Investment
Congratulations! The home-buying process is complete, but just like any big process, there’s a maintenance plan. It’s now your responsibility, and in your best financial interest, to protect your investment for years to come. Performing routine maintenance on your home’s systems is always more affordable than having to fix big problems later. Be sure to watch for signs of leaks, damage, and wear.
Remember, just because the sale is complete, your relationship with your agent doesn’t need to end. After closing, your agent will still be available to help you – providing information for your tax returns, finding contractors and repair services, and even tracking your home’s current market value.
If you're ready to start interviewing for a Kansas City real estate agent, we'd enjoy visiting with you over a cup of coffee to discuss your goals and provide you with more details about our services. Contact us to schedule an appointment.
