Buyers

I advise that you be as practical as possible when considering what the absolute “must-haves” are in your future home. Although having that extra bathroom or a sprawling master suite is great, it might not be in your budget. There are many different options to consider when purchasing a home, so I hope this brief list will be helpful when making those decisions:

Home Logistics:

Do you want a home with multiple acres and plenty of land? Or, are you comfortable with something on less than an acre and close to neighbors? Is a driveway a must-have? Do you prefer a condominium apartment over a house?

Location:

How far are you willing to travel to work? Is it important to be close to restaurants and nightlife or do you prefer to be in a secluded area? Are there certain school districts you want to live in? Are you comfortable with city traffic noise or do you want to be in a quiet neighborhood? Do you want to live in an area with families and young children or do you prefer to live near a younger or older age group? Location is the most important part of buying a home.

Please note that getting pre-approved is not the same as getting pre-qualified. Pre-approval is a fairly easy process and will tell you exactly how much house you can afford based on your income, expenses, and more. Pre-approval carefully reviews your credit and is far more thorough than pre-qualification, which only provides a rough estimate of how much you may be able to afford.

Will getting a mortgage pre-approval affect my credit?

Yes, obtaining mortgage pre-approval will knock your credit down a few points because the lender will run a hard credit check. But bear in mind that this is an extremely important step in the purchasing process and one that will set you apart because it helps sellers know that you are a serious, motivated buyer and have the mortgage backup information to prove it. Additionally, many real estate agents will require that a buyer obtain mortgage pre-approval (unless they are a cash buyer) so that they will know the price range in which they can afford to buy.

As mentioned previously in this post, buying a home is one of the most important transactions you will ever make. A lot of money is at stake and you will put yourself at major risk of leaving considerable cash on the closing table if you do not work with a real estate agent. It is also important that you do not hire a discount agent. Most discount agents do not have the tools necessary to expedite the buying process. A full-service agent, on the other hand, will try to make the purchasing process as smooth and seamless as possible and will provide insightful knowledge about neighborhoods, school districts, average home prices in the area you wish to buy, current market conditions, etc.

They will also put you in contact with other professionals who are involved in the purchasing process, such as a trustworthy mortgage broker and reliable home inspector and will prepare all legal documentation and other necessary paperwork. There is a lot of legal terminologies you will be expected to understand if you do not work with a real estate agent and the seller’s agent will not have the time to explain the processes to you. Working with a full-service real estate agent will help guide you through the paperwork and will ensure you aren’t signing anything that you are not 100% comfortable with.

Prior to putting in an offer, I recommend asking your agent for a sample of the offer to purchase and contract documents to get an understanding of the terms and conditions both you and the seller will need to agree upon. Your real estate agent will be responsible for handling the negotiations and will ensure you are getting the greatest value. Negotiating a deal can sometimes take several days (or longer) until all parties are in agreement, so I advise exercising tremendous patience during this time. Be polite and courteous to your agent, the seller’s agents, and the sellers, and remember that your agent has your best interest at heart. Once you are under contract here are the next steps.

If all goes well at the inspection and you don’t find any major problems in the home you wish to buy, it is now time to obtain a mortgage. You will meet with a mortgage lender to discuss the various loan options that are available and assess which one makes the most sense for you. If you have a credit score of at least 620, decent income, and can afford a larger down payment, you will most-likely qualify for a conventional mortgage. Home buyers with lower credit, a small down payment, and limited income may qualify for a government loan.

A lender will almost always require a property appraisal when approving a home loan. This process typically involves examining recent home sales in the area (otherwise known as “comparables”) and comparing the sale prices to the home you wish to buy. Using the same example I mentioned earlier if you wish to purchase a home listed for $250,000 but similar homes in the neighborhood sold for $220,000, your lender might only be willing to loan you $220,000. If that is the case, it may be your responsibility to pay the remaining $30,000 out-of-pocket if don’t want to back out of the deal and the seller doesn’t want to budge on price.

If there were any problems that came up during the home inspection that the seller agreed to fix, the final walk-through is your opportunity to ensure that everything was repaired adequately. Here is a brief list of some items that should be checked during the final walk-through:

1. Turn on and off all lights.
2. Run water in all sinks and check for leaks.
3. Test all appliances.
4. Check garage door openers.
5. Open and close all doors and windows.
6. Flush all toilets.
7. Inspect ceilings, wall and floors for any signs of water damage.
8. Run garbage disposal and all exhaust fans.