When you begin thinking about buying your first home, try not to get too caught up in the day-dreamy wonderland of happily ever after. Of course, you may very well be able to sink your teeth into a portion of the All American Dream pie, but before you reach that stage, you must deal with the reality of the home buying experience. Here are six steps to home buying to guide you on your journey to home ownership.
1. Credit Counts
If you’ve never before relied on a high credit score or absence of negative marks on your credit reports, now is the time to make sure all your ducks are in a row. Your lenders will look quite critically at your credit history, derogatory statements, and your employment history to satisfy themselves of your ability to repay your home mortgage loan. Before you begin shopping for that dream home, make sure you have dreamy credit first. Avoid changing jobs before applying for your home loan, and do not make any major purchases or apply for credit during your home buying experience.
2. Pre-Approval is Essential
Many first-time home buyers fall head over heels and deeply in love with the home of their dreams before applying for their home loan. Sadly, those are also the people who often find themselves in heart-break when their funding didn’t come through fast enough and their dream house went to other happy campers. Pre-approval can do a few things for you. First, it satisfies the question of whether or not you’ll be approved. Second, it lets you know realistically what your home buying budget might be. Third, it conveys to your real estate agent and to sellers that you are a serious contender with purchasing power in the real estate market. This can also give you the upper hand in a case where multiple offers are made on the same property. Pre-approved usually takes the cake.
3. It’s not over until the Title Company sings.
Do not become emotionally tied to your property until you’re at the closing table. Your first step is to place an offer and have it received. This is not typically a quick process, especially when there are multiple offers on the table, or when a bidding war not only adds time to the clock, but tension in potential buyers. Until you’re at the closing table with pen in hand, anything could change, so be patient and expect turbulence.
4. Appraisals and Inspections
Once your offer is accepted, the house goes through a title check to make sure there are no liens or holds on the property. Then the bank requests an appraisal to make sure the home is worth what you’re borrowing, and an inspection to verify the good condition of the property. At either of these phases, appraisal or inspection, things could to awry. There are room for negotiations in price if the appraisal doesn’t match, and room for negotiations in terms or price if the inspection turns up problems such as termites or roof damage.
5. Final Walk Through
When the home has passed appraisal, inspections, and title check, you’re almost at the finish line. But before you sign that contract, you’ll have an opportunity to go back through the property to make sure everything is in the same condition it was during your viewing. This is your last chance to make requests for repairs or negotiations. Once you give the house the okay, you’re saying you’ll accept it as-is and handle all forthcoming maintenance and repairs as the new homeowner.
6. Closing Day
Now you can put on your happy pants and do the happy dance. At closing, the title is transferred from seller to buyer, the loan is made effective for the home mortgage, the appraiser and inspector are paid for their services, as are the real estate agents, and any other professionals involved in the real estate transaction. The seller is not required to be at closing. However, by closing day, the seller has already turned over their keys and removed all of their belongings form the property. You are ready to move in as the new homeowner.
Call the Team Douglas today at 951-529-9159 to tour available homes for sale in Ponoma and surrounding areas.