http://www.debts.org/index.php en info@debts.org Copyright 2008 2008-12-01T15:28:00+00:00 http://www.debts.org/11/index/house_buying_process/ http://www.debts.org/11/index/house_buying_process/#When:07:05:00Z Depending on which State you live in will determine how exactly the home buying process works. That said, there is a general path that all homeowners will need to follow before they can put the key in the door. Steps to buying a property begin with:1) Find a Buyer’s AgentLike any profession there are good and bad, trustworthy and untrustworthy and the same applies to buyer’s agents. How do I find a good buyer’s agent? is a question many people ask, and considering there is so much money at stake it is important you find a buyer’s agent that will have your best interests at heart.A good buyer’s agent will honor their legal responsibility to pursue your interests and not chase their own agenda. More.... The seller will pay the agent’s commission but you should shop around for an agent until you find one you feel comfortable dealing with. When you have found an area you would like to live in, interview buyer’s agents from that vicinity. They will know more about the area than an out of town agent and should have a wealth of information which you can capitalize on.2) Get a Preapproval letterA buyer’s agent may be able to suggest a good mortgage broker but do shop around for the best home loans. Don’t miss our mortgage comparison tables and apply online, or alternatively see what mortgage deals your bank or credit union can offer.Once you have found a lender with the most competitive home loan and a mortgage plan that is both affordable and easy to understand - ask for a preapproval letter.The preapproval letter will verify your salary and also automatically raise your credit report, so apply for your credit file first and check it for accuracy. Your mortgage lender will establish what your maximum loan potential but do make sure it is on a mortgage plan that suits you.3) House HuntThere hasn’t been much to get excited about in the house buying process up until now, but this is when the fun begins. Remember, the job of the buyer’s agent is to source homes that fit your criteria; in size, location, condition and budget. If you are looking for a fixer-upper then you don’t want to see new builds and vice versa. A good buyer’s agent will be able to compile a list of properties that fit your brief.It pays to keep an open mind when house hunting. There may be some overpriced properties that have been on the market for a long period. Check the Days on Market (DOM) stats because you may consider pitching a lower bid if the DOM is excessive. You could also consider foreclosures and fixer-uppers.Ask your agent for a copy of the Multiple Listings Service (MLS). An MLS is a document which lists all the properties on the market. The MLS is only available to buyer’s agents, however, there is nothing to stop them supplying you with a copy for your own use.4) Make an OfferIt’s time to deal your hand and write a purchase offer. The buyer’s agent will be able to advise you on how to proceed and what would constitute a fair offer. There are a couple of points to consider:a) Is the DOM excessive? If so you could consider a low-ball offer. b) What is the seller’s motivation for selling? If they need to move quickly you could factor that into negotiations.If it’s a good property in a popular neighborhood be prepared for some stiff competition.Listen to the Expert give advice on Making an Offer for more information.5) Negotiate Negotiations can be lengthy and a test of your nerve but when done properly they have the potential to save you thousands of dollars. The key to negotiation is to stay clear of insulting the seller and finding out why they need to move. If you can prepare an offer that’s both respectable and at the same time solves their problem, ie they need to move quickly, you will greatly enhance your chances of success.Do not be deterred if the seller counters your offer, this is a good sign as it shows they are willing to negotiate. As long as the door to negotiations remains open you have a chance to save money. If you have done your homework you could knock of the cost of maintenance off the asking price. For example, you may have seen other properties at the same price with better kitchens. Use what you can to justify making a low offer and avoid insisting, “it’s a fair price”.6) Make an Earnest Money DepositIf you have got to this step in the house buying process, congratulations your offer has been accepted!At this stage you will be required to make an earnest money deposit. This varies from state to state but in California for example, 3% of the purchase price is usually adequate. An earnest money deposit is not a down payment but rather a good faith gesture that says to the seller you are serious about buying the property. Remember to write contingencies into your offer that will see the return of your earnest money deposit should you cancel the contract.7) Escrow Once your earnest money deposit has been paid and all parties have signed the transaction papers, the purchase is said to go into ‘escrow’. An escrow officer will be assigned to your house purchase. Don’t forget to request his/her name, phone number and file number if your agent hasn’t already provided that information.8) Order AppraisalAt this stage in the property buying process your lender, ie bank or credit union, will want to have an appraisal performed on the property. This is to ensure the property matches the value and in a sense safeguards their loan should the property end up back in their hands through foreclosure. Your lender will want to be paid in advance for an appraisal to be carried out.You should be given a copy of the appraisal for you records. If the appraisal comes in lower than the agreed offer you should consult your agent on how to proceed.9) Don’t Use Credit!Now that the transaction is in escrow you should not alter your credit ratios by using credit. This means do not buy any expensive items such as furniture, home entertainment systems or garden equipment until the funds have been deposited and escrow closed. Many people have lost their home because they bought a car or something similar midway through the house buying process.10) Check Seller DisclosuresThe seller is by law required to submit a document known as Seller Disclosures. The details of the law vary depending on which state you live in but most disclosures include details on:EarthquakesNatural Hazards Flood Zones Fire Hazards Noise Pollution Ground Pollution Air PollutionAs buyer it is your responsibility to thoroughly check these disclosures and sign off on them once satisfied with the contents. Don’t be afraid to ask questions. If there has been a pest inspection you should request a copy of the report to ensure you are happy there are no unwelcome bugs or rodents.11) Get InsuredYou should order your homeowner’s insurance policy or get new coverage before the moving in date. Sometime previous claims can hamper your ability to get insured which could delay the process.12) Hire a Home InspectorIt’s time to have the home inspected by a professional home inspector. It is always advisable to attend the home inspection, as it will allow you to ask any questions or answer them as they arise. Even with new homes, there is every chance your property inspector will find some faults. The kind of faults which raise health and safety concerns should be passed to the seller. It may be that they address those faults themselves or reduce the cost of the house in line with the repair estimate. Listen to the Expert on Reasons Why Home Inspections Fail for some invaluable tips.14) Remove ContingenciesOnce the appraisal is acceptable to the lender and the loan is assured, you should consider removing contingencies. Contingencies may include pest control, septic tank maintenance or water hazards, anything that you would like addressed prior to signing off on the deal. It’s important to be reasonable as the seller can cancel your contract and demand a deposit if you ‘weasel’ out unnecessarily. 15) Perform a Last CheckIf you have the opportunity to take a final walk through the property you should take it. One buyer strolled by the house he was about to move into to see that a burst pipe had brought the ceiling down. It pays to ensure the house is in the same condition as you first saw it.16) Sign the loanThe big moment has arrived – it’s time to put pen to paper and sign your loan. At this time you may also be required to sign escrow papers but this will vary according to state.17) Transfer FundsYour escrow officer is responsible for handling the transaction. You should provide the escrow officer with either a certified check or alternatively have the bank wire the money.18) Close EscrowYou may be surprised at the amount of papers you need to sign at the final stage of the house buying process. The three main documents which you must sign are:Property deeds – this is a legal document which transfers the ownership of the property from the seller to the buyer.A Reconveyance deed – is an official document from a mortgage holder releasing the debtor from the mortgage. It is evidence that the mortgage has been paid in full.Deed of Trust – this is the document that is recorded in public records. The Deed of Trust involved three parties:1) The Trustor – which is you, the borrower. 2) The Trustee – which is an entity that holds “bare or legal” title. 3) The Beneficiary – the lender, ie bank or credit union. The deed of trust establishes: Loan amountDescription of the property being used as security for the mortgageThe parties involved, ie buyer, seller, lender and agents.Inception and maturity date of the loan Mortgage detailsLate fees Legal proceduresPhew! All the legal documents have been signed and now the title of the property will be recorded in public records. After your title has been recorded your agent will be informed that the property is yours. Congratulations! Make yourself at home in our Forum and find out what everyone else in America thinks about buying property. There is also our up-to-date News section for all the latest on personal finance. If you need help finding a provider or would like to review a company, please don’t go without checking out our A-Z directory. House Buying Process 2008-07-08T07:05:00+00:00