1. Financial health- is your finances ready? Do you know what you want? Building a house requires foundations to be poured. As with this example, you need to know what you want and also have the stability to pay for it in order to begin the real estate search. In addition to down payment, there are also closing costs associated with the transaction. It’s important to know that there are some lending institutions that have programs where you put little to no down payments at all. However it’s important to keep in mind that the less you put down, the more the monthly payment for your loan. So if you are able, it’s better to put more down. Make sure you have good credit, and it’s important to have all payment in the past year to be paid on time.
2. Shop for a mortgage- There are several reasons to go shopping for a mortgage. First you’ll find out how much money you can actually borrow. Which has a lot to do to with how much you can buy. Be careful not to let lenders push you into a monthly payment you do not feel comfortable with. Stay away from “alternative” loans, like interest only mortgages. This is because if the value of your house goes down after you purchase it (which is not unreasonable in this marketplace), you’ll end up owing to the bank more than what your house is worth. Shopping around will also get you the “pre-approved” for the amount you would like to borrow. Besides all of this, sellers like pre-approved buyers because there’s less risk of the deal falling apart. Try to come up with 15-20 percent of the down payment. You may not have to put much down in some cases some lenders will lend you 0% down. But these loans are more risky and usually more expensive. Besides without the down payment you don’t own any piece of the house, the bank owns the whole thing.
3. Find a lawyer- Ask Around, check out lawyers on websites. Make sure to at least talk with them to see how they charge. This is typically a fixed fee. Ask a lawyer as many questions as you can, but know they will probably only give you 5-10 minutes. Lawyers get paid by the hour. So they don’t like to give time for free. Find someone who is honest, direct and takes time to explain things.
4. Do your research- find out what houses are selling for in your area? Look for selling prices, not asking prices. You can get these from your realtor or online. After finding the house you want, ask your realtor for comparable of recent sale of housing around the area, or same subdivision- if applicable.
5. Find a realtor- Having a realtor possesses many advantages. Realtor’s know the market conditions as well as the market price for your home, and can save you a lot of money down the line. It is true that you can find most of these online today and also finding the right home at the right price. However the basic rule in real estate is that no two properties are alike, even if they are on the same street. Because of this, homes differ from contracting terms, financing terms can be different, as well as inspections terms and closing costs. In the grand scheme of things, negotiating, inspections, financing, marketing, and pricing, it makes sense to use an expert who is experienced in dealing with all of these matters. Please feel free to reach out to me directly to ask me any questions you may have, 626.757.4484 | Elliot@Elliot-Lee.com.
6. Finding your new home- When you have found your dream house, it is important that you don’t fall in love with the house, as you might not get it. You do not have to offer the full asking price, however you do not want to “lowball” an offer either or the seller may tell you to take a hike. Find out the sellers circumstance and the reason they want to sell. If they’ve been waiting for years and want the highest possible price then it will be tough to negotiate the offer. If they already have another home, then they would be inclined to be more flexible on the negotiation.
7. Call your lawyer- send your contracts for your lawyer to review. Be sure to read it carefully yourself. There are certain “standard clauses”, but there is no such thing as a standard real estate contract. Understand what each clause is, even if you don’t follow the language. This is why it is important to have an attorney who takes his or her time explaining you the details.
8. When offer is accepted, you will be asked to put a “binder” deposit. Let’s say the equivalent of 1% until the contract is signed. Depending on state, some states give you a grace period of a few days to change your mind with no fault.
9. Submit your mortgage application along with its application fee. Try to get your lenders to lock your rate before closing date. By law, lenders are required to give you an estimate of closing costs which can run anywhere from 1,000-10,000 dollars. Review all of these fees before you sign the loan contract. Some common closing fees include: attorney fee, title insurance, appraisal fee, home inspection, partial property taxes (if closing in the middle of the month), courier fees, mortgage points, government recording fee, transfer taxes.
10. Bring checks to closing- bring extra checks to the closing.