The Process of Buying a Home – First Time Home Buyer Tips

Here’s an outline describing the process of buying a home with some first time home buyer tips.

First thing’s first, relax. I know how you feel. I bought 2 homes before I became a real estate agent. I look back and if I could say one thing to myself then, I would say, “Relax and enjoy this. Have fun!” So in the process of buying a home, remember, relaxing and taking things one day at a time is paramount!

Here’s the “nuts and bolts” of the process. Remember, first thing is…R E L A X. Now I will take you through the rest of the typical process. I’m going to just focus on when you make an offer and go from there. However, before any of this, you must do three things. One, determine how much you can afford on a monthly basis (write down your monthly income and write down your expenses, including some for savings), this will give you what you can afford to manage the home (Principal, Interest, Taxes, Insurance, Heat, Electric).

Two, meet with a mortgage professional and get pre-approved for a mortgage. Without this, you are driving blind, because you have no idea which direction you should be going. Without knowing what you’re qualified for, how do you know what price range you should be looking in? The mortgage pre-approval is the foundation of your entire search.

Three, discuss your needs and preferences for the home and neighborhood you’d like to buy. Be realistic. Remember, this is a starter home most likely and over 70% of home buyers move after 7.5 years. Things change, families grow, money is greater, etc, so people “upgrade” or just move to another area.

Okay so we’ve got those basic items out of the way. Now you find the home (easier said than done…make it easier!). You make an offer. Once the offer is accepted, your offer will most likely be contingent on an engineer inspection of the property. To this point, no money is put down and you are not in contract. The purpose of the engineer inspection is to allow you to have a professional look at the home before going into contract.

Normally, any issues that are noticed during the inspection, are discussed up front, before the seller’s attorney sends your attorney a contract of sale. This allows for a smooth transition for the lawyers to execute a contract.

Once the inspection process is completed and any issues are addressed, you will be meeting with your attorney to sign a contract. Just a few notes here are needed.

One, the purpose of an engineer inspection is not to renegotiate the offering price. During your time of viewing the home before the inspection and before the offer, it’s important to pre-inspect the property the best you can and make notes of any little items that may need attention such as a leaky faucet or old water heater that needs replacement. All this should be taken into account before you make your initial offer. The purpose of an engineer inspection is to review electrical, plumbing, heating, and foundation/structural components of the home and not for a running toilet or a sliding glass door that’s hard to close.

Secondly, understand that during this process where your offer has been accepted by the seller and you move to get an inspection and work things out with your contract, that the home could still be sold to another party. You are not in contract until you (the buyer) and the seller(s) have signed a complete contract that is agreeable to both parties. So moving somewhat swiftly is advisable.

In moving on, once you’re ready to sign the contract, your attorney will review items in the contract and protect you legally. Both the seller and you, the buyer, have to be represented equally. Things like certificate of occupancy, survey, title work, mortgage contingencies, etc. will all be worked out in this contract.

As a Licensed Real Estate Salesperson, I only show homes and help people buy and sell them. I do not render legal advise, so it’s important that you hire an attorney you are comfortable with, who can handle your legal representation to your satisfaction.

Once you’re in fully executed contract, where both you and the seller(s) have signed an agreeable contract, you will then move to acquire an appraisal of the home you’re purchasing. This is required by you bank, to establish the value of the home. The appraised value usually always comes in very close to the agreed upon sales price. However, with changes to Home Valuation Code of Conduct (HVCC’s), there has been an increasing number of homes that have received low appraisals (a symptom of the tightening in the industry). Something I am well aware (lucky for my clients).

Once you’ve gotten this completed, it’s very important that you follow up with your lender to assure that you receive your mortgage commitment in a timely fashion. It’s also very important that your attorney do his/her part in ordering the title work and seeing to it that it is acceptable and that there are no issues to be addressed in the last minute. Being prepared and on the ball is the key.

Last minute items that you will need to address will be your money at closing and your home insurance. You should get quotes from companies ahead of time, during the beginning stages of your contract period. This way, in the last two weeks before your closing, you know exactly who to contact to get your proof of insurance.

Things to prepare yourself for include the need for a new survey. Sometimes, a survey on a home can be old or not acceptable due to any number of issues. So at times, you will have to pay for a new survey or an updated one from the company that did the original survey (if they’re still in business). This can be an unexpected cost, but in my opinion, a good expense. I believe every buyer should pay for a brand new survey of their land. But that’s my opinion.

Now in a worst case scenario, your lender may be laxed in underwriting your loan. This is where things can get very uncomfortable and tense. It’s important that you not focus solely on the “best rate”, but rather focus on a the “best bank”. What do I mean by “best bank”, give me a call and we can discuss that further. But I’ll give you a hint, a bank that underwrites its own loans and has comprehensive services (not just basic qualification of your credit and work history) is the bank to seriously consider.

On the day of the closing, you will have hopefully gotten “the numbers” from your attorney and you will get any money you need for closing in a certified check from your personal bank. You will bring that along with your check book and some cash to the closing. The cash is for the title agent at the closing, as it is common to tip them.

It is an exciting experience and with a good team of professionals helping you (real estate agent, attorney, lending institution), the process of buying your first home should be both a little “terrifying” and mostly fun! Good luck!

The Reality Of Home Inspections

Home inspections are one of the most necessary steps in the purchase of any home, new or old. as a home is a major purchase, likely the most major purchase, and the most expensive purchase you will ever make, it only makes sense to ensure that you are getting what you paid for. Make sure that when you have the home inspected it is by a reputable and in dependent home inspector. It is their job to examine every aspect of the home and to make sure that not only is it safe, but that the seller has been earnest with their disclosure about the home. They can also help to find things that the seller may not have been aware of themselves. This is especially true in homes where the seller has not owned the home for an extended period of time.

Inspections are are a required aspect of real estate sales. They are in place to ensure that the home that is transferring hands is safe and livable. Inspectors visually check many aspects of the home during an average inspection. The most notable things are the home’s systems like plumbing, heating, electrical and so on. Another major aspect of a home inspection is the checking of the foundation and home itself for structural stability. If there is a problem like cracks in the foundation or leaks in the basement an inspection will identify these problems so that they can be dealt with before the sale is complete.

One thing that many regular inspections don’t look at that should be looked at is the possibility of mold in the home. Some inspectors are not fully versed in the identification of mold so it would benefit you greatly to find an inspector who is trained in the identification of mold. This will be particularly important in any home that is in close proximity to a water source such as a lake or river. Is is important to know about mold in a home as certain types of mold can be extremely harmful. Mold of any sort can inflame allergies and conditions of the respiratory system.

Don’t sell yourself short on a home purchase and be wary of any seller who seems to want to have the inspection step skipped. Maybe they are trying to hide something? Unless you get the inspection you may never know for sure.

Older Home Inspection Tips – Replace Your Knob and Tube Wiring

One area of significant concern with older home inspection is the wiring. During the period between 1930 and 1950, when household demands for electricity were much lower, most home wiring included a type of wiring called knob and tube. Today’s homes use much more current to run all of the newer appliances families require to live a comfortable lifestyle. In older homes with this type of wiring fires are much more of a risk.

A simple trip to the basement of your house can reveal if you have this type of current system. If you see white knobs attached to the joists with wires running through them, chances are this is knob and tube wiring. The knobs acted as insulators from objects while the ceramic tubing provided the support for wires as they travel through floor joists.

Older home inspection today requires catching this type of wiring system with recommendations of complete replacement in order to avoid costly or life threatening fires. This includes replacement of not only the fuses but the wires as well. Simply put, If you upgrade the panel, then replace the wiring as well.

An important side note is that a lot of insurance companies will not write or renew policies where there is existing knob and tube wiring. Nothing can be more frustrating than finding out your proud real estate purchase will not be covered prior to closing.

Rather than hoping your house passes inspection, make sure your professional older home inspection includes the wiring system and recommendations for replacement before it causes undue headache.