The Process of Buying a Home

Determine how much money you can spend on a house. How much do you want to spend per month and how much, if anything substantial, do you currently have to use toward the purchase. If you are getting help from your family, now is the time to firm it up. Now is a good time to pull your own credit report. Using a service like myfico.com, you can obtain your credit report and all three, credit scores. It will cost you $40 -$50 but this is money well spent and here is why.
By knowing your credit scores and having your own report, when shopping for a mortgage, you can direct the companies that you are shopping among not to pull your credit. You provide them with the scores and the account balances and payments. They will then be able to provide you with accurate rate quotes. If they don't or refuse, it's time to shop another company. Too many credit pulls can lower your credit score. In fact, clients have told me that when they applied to companies like Lending Tree dot com, their credit was pulled a half dozen times in rapid succession. Depending on the timing of these credit pulls, they could have a negative effect on your credit scores.
Get Pre-Qualified for your mortgage. You wouldn't go to the mall with out your wallet, why would you house shop without knowing how much you can spend? Until you have applied and have been pre-qualified, you simply cannot know how much you can spend on your new house. In fact, many realtors will not accept/submit a bid without a Pre-Qualification Letter. If your mortgage company did not pull your credit, review your income and your assets, you should be suspect of the pre-qualification letter and process. Moreover, your seller will be suspect an not inclined to accept your offer. It is imperative that you obtain a strong pre-qualification letter or your offers may not be considered seriously.
Choose a Realtor and start looking for your new home. Once you have found a property you want to bid on, you will prepare a bid with your Realtor. Now is the time to include any financing concessions that you may need into your offer. Your Realtor will usually request at least a 1% deposit to accompany the offer. If you are using 100% financing, the 1% deposit will be credited back to you at closing.
When the buyers accept your bid, they will typically draw up a sale contract that should spell out all of the details of the transaction. This is sent to you and your attorney to be reviewed and modified to reflect your expectations of the transaction. For example, you expect to move in on a certain date, the refrigerator stays and the carpet in the living room is replaced. Oh and by the way, can you pay for the closing costs? This phase can really drag on. That is why you need to find the best attorney, Realtor and mortgage professionals available.
When you have a bid accepted, be prepared to have the property inspected and appraised. Inspection is not always required but is a good idea. For a few hundred dollars, you have the piece of mind of knowing that the structure is sound and pest free. The appraisal on the other hand, is always mandatory. The cost will range from $300 to $500 depending on the type of property, with the multi-family properties being more expensive. If you are planning on an inspection, it makes sense to have the property inspected before ordering the appraisal. If there are any property issues that cannot be overcome, there is no need to spend an additional $300 to $500 to appraise a property that cannot get past the inspection phase of the home buying process.
While the offer is being accepted, and the house inspected and appraised, you should be getting your mortgage company all of the documentation that has been requested. The faster you do this, the faster you can receive a commitment to lend and ultimately close on your new house. Usually, at this time, you need to provide your homeowner's insurance binder to your mortgage company.
Now that the house has been inspected and appraised, and all issues have been resolved with the sales contracts. Your mortgage company now has all of your necessary documents, it is usually at this time, that your attorney or title company will conduct a title search and provide a binder or commitment for title insurance. Once the search is complete and the insurance bound, your purchase loan should be ready to close. A closing date is scheduled.
Once a closing date has been set, a final walk through of your new house is scheduled. You and your Realtor will walk through the new property to be certain everything that was agreed upon in the contract phase has been completed. When all looks in order, it is time to go to your closing and close on your new home. Congratulations.