BUYING A HOME
So you’re thinking of buying a home, and want to know where to start? Here are a few things to consider.
Step 1: Find the Right Lender and Real Estate Agent
Well that was easy- You found Me! I have sold hundreds of homes over the 18 years I have been in Real Estate, and I KNOW what it takes to find your next home. I understand the ups and downs on being on the buying end. Did you know there are 197 tasks to buying a home? We look forward to smoothly guide you through the process. Now that you’ve got that covered...lets get you to a lender.
Although, I’m particularly biased to recommend you to my favorite lender (seen below), ultimately to find the right mortgage lender it’s best to shop around. Get recommendations from your friends and family and check with the Better Business Bureau. Talk to at least a few lenders. They are not all made the same.
My biggest fear is that a lender will tell you you’re pre-approved, and then ask for extra cash at the end you weren’t expecting to pay (this particularly happens with online-only lenders). So be sure to ask lots of questions and make sure they have answers that satisfy you. And at the very least, interview Walter Howard at Fairway Mortgage!
Once you have the right mortgage lender, make sure you at least get a Pre-Approval. Qualifications are only a guess based on what you tell the lender and are no guarantee, whereas a pre-approval will give you a better idea of how big a loan you qualify for. The lender will actually pull your credit and get more information about you. However, you could even take it one step further by getting an actual Underwriting Approved Pre-Approval, before you start home shopping. That way, when you’re ready to make an offer, it will make the sale go much quicker. Besides, your offer will look more appealing than other buyers since your financing is guaranteed.
Step 2. Understand Agency Law and Review our Exclusive Contract
A lot has changed in Washington State. Going forward from January 1, 2024, all Brokers must initially consult Buyers prior to showing a home or any agency activity. We will review and sign an Exclusive contract clearly defining that I will work exclusively for you, you will work exclusively with me, and the how I am compensated.
Before any agent can even show you houses you need to receive the Law of Agency, and will need to sign our legal agreement together... with that knowledge make sure you working with an agent with plenty of experience, and an agent who wants to educate you, not just open doors.
This meeting is a wonderful time to look at properties, your criteria, wants and needs and provide any education you need on how to successfully buy a home. It is a fun meeting!
Helpful Broker Tip! Make a list of the things you’ll need to have in the house. Ask yourself how many bedrooms and bathrooms you’ll need and get an idea of how much space you desire. How big do you want the kitchen to be? Do you need lots of closets and cabinet space? Do you need a big yard for your kids and/or pets to play in?
Once you’ve made a list of your must-have’s, don’t forget to think about the kind of neighborhood you want, types of schools in the area, the length of your commute to and from work, and the convenience of local shopping. Take into account your safety concerns as well as how good the rate of home appreciation is in the area.
Step 3: Investigate with Your Lender- How Much You Can Afford
You can calculate how much you can afford by starting with online calculators. There are several online mortgage calculators that will help you calculate an affordable monthly mortgage payment. Don’t forget to factor in money you’ll need for a down payment, closing costs, fees (such as fees for an appraisal, inspection, etc.) and the costs of remodeling or furniture. Remember that you don’t always have to put down 20 percent as your parents once did. There are loans available with little to no down payment. An experienced home loan expert can help you understand all your loan options, closing costs and other fees.
*Hint check out my trusted lender link above.
Step 4: Investigate with the Lender- The Right Mortgage for Your Situation
There are many different types of mortgage programs out there, but as a first-time home buyer, you should be aware of the three basics: adjustable rate, fixed rate and interest-only.
Down payment varies from 0%, 3%, 3.5% and up depending on what you have or want for down payment. Under 20% down usually requires PMI which is a variable cost mortgage insurance that your lender can explain.
Fixed-rate mortgages (VA, Conventional, FHA) are more traditional and offer a fixed interest rate (and thus a fixed monthly payment) for a longer period of time, usually 15 or 30 years, though they’re available in 20 or 25 year terms. These are good for people who like a predictable payment and plan on living in their home for a long time. A lender can verify if you qualify for a VA 0% Down loan or special loan program that
Adjustable rate mortgages (ARMs) are short-term mortgages that offer an interest rate that is fixed for a short period of time, usually between one to seven years. After that, the interest rate can adjust every year up or down, depending on the market. These are good for people who don’t plan on living in their home very long and/or are looking for a lower interest rate and payment.
Both fixed and adjustable rate mortgages can have an interest-only payment. What this means is that for a certain amount of time during the loan term, you’re allowed to pay only enough to cover the interest portion of your payment. You can still pay principal when you wish, but don’t have to if your budget is tight. There is a myth that with interest-only mortgages, you don’t build equity. This is not necessarily true, since you can build equity through home appreciation. The benefit to interest-only mortgages is that you increase your cash flow by not paying principal.
Ultimately, ask your mortgage lender or mortgage banker lots of questions about which mortgage is right for you and your situation.
Step 5. Investigate with Your Lender- Closing Costs, Initial Costs and Total Costs
All lenders should clearly explain additional up front expenses to buying a home. Money you’ll need for a down payment, closing costs (typically 2.5-3% the cost of the home, including but not limited to prepaid interest, insurance, escrow fees, title insurance), fees (such as fees for an appraisal, inspection, etc.),
Step 6: Look for the Right Home
Wahoo, after your pre-approval, we are ready to make appointments!
We will want to set appointments as soon as possible, if you love it, many other buyers may too! Appointments only take around 15 minutes per house so we can buzz out after work, or on the weekends and make sure you don’t miss an opportunity.
Helpful Broker Tip- You may find you are completely obsessed with searching for homes, feel free to send them either in a screen shot or MLS number to your agent! We are able to look at least once a day for homes that fit YOUR EXACT CRITERIA, but you may find you change your criterias, locations and exact needs as you start to search. We respect your limits, you may advance your criteria. Keep us in the loop!
Step 5: Make an Offer on the Home
Now that you’ve found the home you want, you have to make an offer. This is where I shine, and am vital to you! I will help educate you on the exact market and other homes that have sold recently so you know you’re making a great investment. I will make sure you know what you are signing and talk about your safety nets, contingencies and options in your contract. Once you’ve made your offer, don’t think it’s final. The seller may make a counter-offer to which you can also counter-offer. But you don’t want to go back and forth too much. Somewhere, you have to meet on a mutually beneficial offer. Once all parties have agreed, you’ll make an earnest money deposit, which is money that goes in escrow to give the seller a sign of good faith.
Step 6: Earnest Money, Inspection, Appraisal and Escrow
Earnest Money will be due within the time designated on your offer. It will be paid by check or wire transfer directly to the escrow company. They hold it securely until that money is applied to your final balance at closing. Should we need to back out due to inspection or denial of lending it is typically returned within 48-72 hours by the escrow company after the correct release documents are signed by all parties.
Even though the final stage of the homebuying process can let loose a lot of feelings, it is really all about checking off boxes. In your closing stage, your agent and lender will be focused on verifying that everything is as it should be: making sure your finances are in order, finishing any paperwork, and doing some final checks on the house. They will also confirm the home’s value and legal status with the lender, which includes an appraisal, title search, and a final check of your credit, employment and finances.
Your agent will keep you posted on how each is progressing, but unlike the previous hands-on stages of your home-buying adventure, your work is pretty much done. At this point, you don’t have much to worry about other than packing, keeping your finances tight and your credit clean. You’ll also need to confirm with your agent that you’ll have all the necessary documents and funds you’ll need so you can move smoothly into your closing day – and into your new life as a homeowner.
Final Verifications for the Lender
Just as you confirmed the value of your future home through a property inspection, lending institutions also take certain steps before finalizing a mortgage to make sure they are backing a sound investment.
These include the following:
- An appraisal to confirm the value of the property
- A title search to verify the ownership of the property
- Title insurance to protect against mistakes in the title search
Chances are good that these final steps – which, incidentally, you will pay for as part of your closing costs – will go smoothly. The whole point of these pre-closing verifications is to look for problems that occasionally arise.
If you run into a patch of trouble, think of it this way: You’ll feel lucky if a title search or survey reveals a property’s questionable ownership or boundaries before closing, rather than after the house is already yours.
Countdown to Closing
Once you and the home have checked out, you’ll receive your final loan commitment. Only then will the closing company schedule a time and place for the closing. (In Canada, this should be discussed with your lawyer.)
As the big day approaches, confirm with the appropriate parties that you have everything you need in order to close and transition smoothly into your new home.
This will include the following:
- Settlement statement
- Certified funds
- Evidence of insurance
In your closing stage, your agent and lender will be focused on verifying that everything is as it should be: making sure your finances are in order, finishing any paperwork, and doing some final checks on the house.
Step 7: Final Walk-through
The day before signing, you’ll get the opportunity to stroll through the home that will soon be yours. Take a deep breath. Feel proud. And then, look around carefully. The final walk-through provides your last chance to make sure the home is clean and all requested repairs have been made. If by some chance something is left undone, let your agent know immediately so she can negotiate with the seller’s agent.
Step 8: Signing Day!
Closing day is a life-changing event: you walk in a renter and walk out a homeowner. Whatever you feel the morning you wake up to close, there’s one thing you can count on – you’re prepared. On closing day, you can expect to sit at a table with a bunch of pens and sign your name so many times you feel like a movie star.
The settlement agent who runs the show will be a representative of a title company, or notary in their employ.
During this process you will:
- Finalize your mortgage
- Pay the seller
- Pay your closing costs
- Transfer the title from the seller to you
- Wait for the sale to be legally record as public record
You will not get the keys immediately. The key handover will take place only after the funds clear and the transaction is legally recorded, usually on the contract date.
Helpful Broker Note- We try to get the keys around 5pm when the county records and sends verification, but the Seller has until 9pm, or what date they have in the contract to move.
Step 9: You’re a Homeowner!
Suddenly, it’s all over. You’re no longer a home seeker or a home buyer. You’re a homeowner! That means you’re building up equity, enjoying tax benefits, and reveling in the freedom to paint your dining room any color you please.
Step 10: Move In!
Happy dance! You own a new home (or maybe you now have an investment property)! Move in, enjoy, and be sure to thank your Realtor/Lender team!
