Buying a home is most likely the largest financial transaction you will ever make. To ensure a smooth transaction, it’s a good idea to get as much information about the basic buying process as possible. The following steps should be used as a guide when purchasing any type of home.
Step 1 – Educate yourself
Begin by doing some online research to familiarize yourself with some of your options when buying a home. For instance, should you buy a home or a condo? Also start thinking about what town you want to live in. When you choose a community, there are a few things to think about. How long will your commute to work be? What the schools are like? Find out if the town has features you want such as parks, cultural centers, or shopping nearby. Drive by homes currently on the market to get a feel for the neighborhoods in the town. Make a wish-list of which amenities you want in a home. Don’t make the mistakes some buyers make that can cause major headaches and cost thousands of dollars in the long run. Learn how to avoid these by reading 6 House Hunting Mistakes You Should Avoid.
One of the most important steps in the home buying process is figuring out exactly how much you are comfortable spending on a home. You should purchase a home not based on what a bank says you can afford, but rather what you are comfortable spending each month. Download our Home Buyer Worksheet to figure out how much home you can afford. To figure out how much your mortgage payment will be, visit our Mortgage Payment Calculator page which includes the latest mortgage interest rates. After doing some research, you’ll know whether buying a home is the best option for you right now. For more on this, watch our video on why you should only buy a home you can afford and when you are truly ready.
Step 2 – Meet with Your Buyer’s Agent
Choosing an agent is an important step in buying a home because this is the person that will guide you throughout the entire buying process. Some buyers believe it’s better to work with the listing agent directly, thinking they’ll get a better deal. But nothing could be further from the truth. The listing agent is obligated to look out for the seller’s interests. Remember, he or she is the only one who benefits when a buyer comes directly to them since they get double the commission! A buyer’s agent, on the other hand, will look out for your best interests, do all the legwork for you, and negotiate the best price for you. To learn more about this, watch our video about the Importance of Having a Buyer’s Agent When You Buy a Home. And don’t look for an agent who is too nice and just tells you what you want to hear. Hire an agent who will be honest with you and won’t try to push you into buying a house you aren’t sure about. An experienced agent will just want you to find the right home.
Once you find an agent you’re comfortable with, have some questions ready for your first meeting. This is a chance for the buyer’s agent to ask you about how your search is going and to answer the many questions that arise when buying a home. Your agent should help outline every aspect of the home buying process so you’ll have a better idea of what is involved.
This is also your opportunity to discuss in detail what type of home you’re looking for, your price range, and which town or towns you’re interested in moving to. Your agent will probably have some suggestions based on your criteria and you may have already begun searching for homes online which you can go over with the agent as well. After you discuss some of your preferences, your agent can begin some more thorough research on what’s on the market.
Step 3 – Pre-Approval Process
Getting pre-approved for a loan allows you to see how much a bank will actually lend you to purchase a home. This way you won’t waste time looking at homes priced out of your range. Getting pre-approved helps you find out how much a lender will give you, at what rate, and what the terms would be. This is also a good time to find a good mortgage broker. Working with a qualified mortgage broker is one of the best things a buyer can do to ensure a successful transaction. The mortgage broker should be very knowledgeable with all of the mortgage programs that are available to you and advise you on which documents you’ll need to provide for the pre-approval process. The mortgage broker will pull your credit report, review your tax returns, bank statements, and pay stubs to get everything in order. So be prepared to provide all of these. To learn more, watch our video on Getting the Right Mortgage Broker.
Step 4 - Property Search and Viewings
This is the fun part! Our Home Buyer Profiling System allows you to have FREE access to every home that is available for sale in Massachusetts and New Hampshire. You’ll also get priority access to the best home bargains in the area, including bank foreclosures, corporate owned homes, government owned homes, probate and estate sales, pre-foreclosures, short sales and recent price reductions. Our unique computerized buyer home profile system allows you to simply enter towns you’re interested in, price range, style of home and other particulars that are important to you. It then provides you priority access to all the homes that meet or exceed your criteria complete with addresses and photos of the interior and exterior of the homes. This system also lets you know about new listings as soon as they hit the market!
Your agent will also have homes they think will fit your criteria. Once you find some homes you like within your budget, you can contact your agent to schedule viewings. View homes with an open mind and don’t be too hard on yourself or the home if it is not a perfect fit. Homes are coming on the market each day, so the right home is definitely out there for you. And once you find the right home, don’t wait to view it! Have your agent show you the home as soon as possible and be ready to make an offer. We recently spoke to Fox25 Morning News about how more buyers are getting outbid on homes due to the low inventory levels. So when you see a home you love, act fast. You don’t want to get outbid and have to start your search all over again.
Step 5 – Make an Offer
One of the most common questions we get is, “How Much Should I an Offer on a Home?” Once you find the perfect home, and trust us you will, we will submit a written offer on the home. This is another step where you will be glad to have us on your side. Since our agents negotiate quite often, getting you the best deal is what they do. Keep in mind that contract negotiations are not limited to price, they also include timing, contingencies, rent-backs, and much more. View an example of what an offer on a home looks like. If you live in New Hampshire, a Purchase and Sale will take the place of the offer, but the same steps will apply. View an example of a New Hampshire Purchase and Sale Agreement.
Step 6 – Choose an Attorney
The reason for hiring your lawyer now is to get them in contact with the seller’s lawyer to draft the Purchase and Sales Agreement. It’s a good idea to find a good real estate attorney when you’re buying a home because unlike a rental lease where there are a lot of laws to protect a tenant, there are no laws that protect the buyer. A good real estate attorney will know what to include in the purchase and sale agreement to protect the buyer throughout the transaction. To learn more, watch our video, Why You Need a Real Estate Attorney When Buying a Home.
Step 7 – Get a Home Inspection
Now that you have secured a property, it is time to schedule the appropriate inspections on the property. We highly recommend buyers spend the money on a home inspection. The report alone is very much worth the cost. The home inspection will be done by a licensed inspector whose job is to make sure the home is structurally sound, all of its systems are working correctly, and if there’s any evidence of termites in the home or mold. Some inspectors do uncover some major issues that the seller may need to address. Watch our video Why You Should Get a Home Inspection to learn more. This is also a good time to have your home tested for Radon. Learn more about why it’s important for home buyers to test for radon. If you are buying a home with knob and tube wiring, have a licensed electrician look the system over to determine the overall condition of the wiring. Get more information by reading our blog about buying a home with knob and tube wiring. Remember, most issues can be worked out in some form or fashion and your agent can advise you on what to do.
Step 8 – Purchase and Sale (P&S)
Now that the inspections are complete, a purchase and sale agreement needs to be prepared by the attorneys and both buyer and seller must sign. The Purchase and Sale agreement spells out in more detail the home, the contingencies, and responsibilities of the buyer and seller. View an example of a Purchase and Sales Agreement. This is also where you will be expected to put down additional monies that will be held in the listing broker’s escrow account until closing. This amount is usually between 3-5% of the purchase price so make sure you have this money available. If you’re buying a home in New Hampshire, your second deposit is usually due by now and the Purchase and Sales Agreement has already been signed.
Step 9 – Closing
This is where all the hard work pays off and you become the owner of a home! Before closing, you should have your agent arrange a walk-through of the home to make sure nothing has changed in the property since the purchase and sale agreement was signed. The “walk-through” is usually done the day before or day of closing. During the actual closing, deeds, loan papers, and other documents are prepared, signed and filed with the registry. This includes the HUD Settlement Statement, which details all the costs related to the sale of the home. See a sample of what a HUD Settlement Statement looks like. And remember to bring your license and checkbook. At this point congratulations will be in order now that you are a homeowner!
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Buying a home can be quite daunting if you don’t have a real ally in this market. We always felt like Danielle was on our side and was always available to answer every little question we had!Amy P. and Jason A., Watertown, MA