Purchasing a home is one of the biggest decisions most people will make in their life. It involves a long-term commitment financially and emotionally, but it can also be a very exciting and rewarding experience.
When buying a new home, there are a few things to consider :
- What monthly payment can I afford?
- What am I looking for in a home?
- Should I work with a REALTOR®?
- Once I find a home to purchase, what do I need to do next?
- How much will inspections cost?
- What inspections will I need completed?
- What is the cost of insurance?
- How much cash do I need at closing?
- How do I obtain a mortgage loan?
Before you actually begin the process of looking at homes, you should complete the following :
Unless you are able to pay cash for your home, most buyers will need to go through the process of applying for a mortgage. By contacting a mortgage loan specialist before you begin your search, you are able to determine the amount of loan for which you qualify. Typically, a borrower is pre-qualified for a loan that amounts to 28%, or less, of their gross monthly income. In addition, if you know the amount of the monthly payment you would be comfortable paying, a mortgage specialist can calculate the price range for your home search. Getting pre-qualified for a loan also increases your chances of your offer being accepted. A seller is more likely to accept an offer from a buyer who already has funding versus one who still needs to get a loan.
Prior to getting pre-qualified, you should obtain a copy of your credit report so that there are not any negative surprises when you are ready to apply for your loan. Correct any errors that you may discover on your credit report. Also, you will want to reduce your consumer debt as much as possible by paying down credit card balances.
It’s imperative to know that during the buying process of a new home you can not incur any new debt. This includes major purchases (cars, boats, opening a new credit account, etc.).
By going through the pre-qualification process, your mortgage specialist can provide you with an estimate of how much cash you will need for the sales transaction. Cash is needed for the down payment, earnest money, and closing costs of the transaction.
For Lenders that may be able to assist with your Lending needs please refer to our Area Information tab. Please note that we do not endorse or prefer any lenders. We are not responsible for any outcomes associated with mentioned or named persons.
Decide what features are most important to you in your new home as well as which locations you would prefer to be in. By establishing your criteria, you will save time shopping for homes that do not meet your needs. When making an amenities list, determine which criteria you absolutely cannot live without and which ones you are willing to budge on.
Some typical criteria may include :
- Price range
- Neighborhood or subdivision
- School districts
- Proximity to work
- Proximity to shopping, restaurants, hospitals, etc.
- Number of Bedrooms
- Number of Bathrooms
- Storage space
- Lot sizes
- Water views, Bay front, Canal side or water proximity
- RV and/or Boat Parking
- Would you be okay with an HOA?
Once you have decided on the price range and the features you are interested in, your next step will be to decide whether you will search on your own or use the services of a Real Estate Agent. If you choose to use an agent, make sure you enter into a Buyer’s Agency Agreement. This ensures that the agent will represent you, as the buyer, in the selling process, and not represent the interests of the sellers. Please note that if you have a signed agreement with an Agent that no other Agent will be able to assist you without the termination of that agreement.
Talk to friends and family for their referrals of agents they have worked with. Once you have some names, interview several agents before making a final decision. Select a REALTOR® that you trust and with whom you feel comfortable working.
Any of Spears & Co Real Estate’s Agents would LOVE to assist you. To find an Agent that is suitable for your needs please visit our “Spears & Co Team” tab to read short biographies, see photos and gather contact information.
Remember, there are no out-of-pocket fees that you pay to the buyer’s agent. These costs are incurred by the seller. Your agent will research property listings for potential matches to your criteria and schedule showings for you at a convenient time. In addition, they will provide guidance to you during the contract negotiation phase of the selling process. Many times, they will also coordinate and schedule the home inspection, appraisal and closing for you, as well as provide documentation needed to secure your closing.
Once you have selected an agent and determined what you are looking for in a home, it is time to begin your active search for homes that interest you. Based on your criteria that you provide your REALTOR®, he/she will be able to search their listing database for homes that meet your needs.
While visiting properties that are on the market, compare homes. Every home is unique! Even if every home you visit has all of the main criteria you are looking for, each will have different characteristics. Bring your Amenities Checklist with you to all homes that you visit. Check off which features each house has. Make notes on each home of what you like and dislike. Don’t be afraid to ask questions about a property! If your Agent is unable to answer a question right away they will certainly obtain that information for you.
Additional things to consider when touring homes :
- Cost of upkeep and utilities
- Amount of maintenance required
- Cost of updating or decorating
- Homeowner’s dues
- Traffic patterns in the neighborhood
- Pet Friendly or Kid Friendly neighborhood
- Cost of insurance based on proximity to water
Taking notes and using your checklist will help you later when you can sit down and compare properties. By comparing notes, this will help to prevent you from making an emotional and impulsive decision.
Once you have found your dream home, it is time to prepare an offer to purchase. Your buyer’s agent can provide guidance on what is an acceptable offer, what you should notate or include in an offer, etc.. Your Agent will most likely compare the property to recently solds in the area to come up with the best offering price.
In addition to the selling price, the other items to include in the terms of the Offer to Purchase include :
- The amount of earnest money (deposit) to offer.
- Concessions that you want the seller to make such as a flooring or paint allowance or payment towards the closing costs.
- Home inspection contingencies.
- Financing contingencies.
- A clear definition as to what is to be included with the home, such as appliances or window treatments.
- A closing date.
Don’t be surprised if your initial offer is not accepted. Your REALTOR® will represent you in all contract negotiations until an agreement is reached between the seller and you.
Once your offer has been accepted, it is time to work on the final details of purchasing your home. There are several tasks that will need to be accomplished during this phase of the sales transaction :
Arrange to have a professional come out to inspect your home. They are able to spot electrical, plumbing and structural problems that may not be noticeable to you at first glance. The home inspection is not required, but it is in your best interest to have one done on the home so that you do not receive any surprises once you move in. This is an expense incurred by the buyer. Inspections may include: Home, Termite/Pest, Septic, Bulkhead or Hydrostatic. Some inspections may require the use of different inspectors. For a list of local inspectors please visit the “Area Information” tab on our website. Please note that we do not endorse or prefer any inspectors. This is simply a list of those we have used in the past and we are not responsible for any outcomes resulting in hiring one of the inspectors listed.
Once an offer has been accepted, you will need to contact your mortgage specialist to officially apply for a loan.
Items that you will need for your loan application include :
- W-2s and/or tax returns from the past 3 years.
- Proof of gross monthly income for the past 30 days.
- Proof of investment income, including rental incomes.
- A list of creditors, including account numbers, balances, and monthly payments.
- Two months worth of banking statements.
Prior to closing, you should be given access to the house so that you can walk through and give it a final inspection. This should be done as close to the closing date as possible, preferably on the morning of the closing proceedings. When you go to do your final walkthrough, your home inspector will not be with you. It is your responsibility to inspect the home and ensure that everything meets your approval. You will be required to sign a Buyer’s Walk Thru and Acceptance Form.
Things to look for during your walkthrough :
- The seller has repaired items included on the purchase agreement.
- The house is in “as-was” condition (everything is in the same condition as it was when you signed the purchase agreement).
- The house is vacant and clean. The home does not have to be spotless, but there should be no remaining trash or junk left behind in the house or in the yard.
- Tenants have moved out prior to your closing unless you have agreed for them to stay.
- Exterior items are as they should be.
Usually at the time an offer is accepted, or after you have a commitment from your lender, a date and time will be arranged for your closing. The closing procedures will be handled by an attorney of your choosing. The day before, you will be told the total dollar amount you will need to bring to closing by the closing attorney. They will also provide you with any additional information you may need to prepare yourself for the proceedings.
On the day of closing, remember to bring :
- A certified check for the total amount of your closing costs.
- Two forms of Identification. These may include Photo I.D., Passport, Social Security card and/or Birth Certificate
- Your personal checkbook.
- Evidence of mortgage insurance (if this information has not already been requested).
During the closing, details of the sales contract will be explained to you. If everything meets your approval, you will sign the contracts to finalize the deal.
Once the contract has funded you will officially be a NEW HOMEOWNER! Congratulations!!