Am I Ready to Buy a House?
To determine whether or not you’re really ready to buy a house, you need to ask yourself some serious questions:
1. Do you have an idea of what you want, and does it exist?
Regardless of whether you’re owned a home before or you’re a first-time buyer, you should iron out the details of why and what you want to buy: What do you want to buy? Be clear when you answer this question, and make a list of all the minimum qualifications for your next home. Additionally, make a wish list of items that you’d like for the home to have, but aren’t required for you to move. Why do you want to buy? Is it a lifestyle change? If so, make sure that your list of requirements addresses all the needs of your lifestyle. Does your ideal house exist? Unfortunately, many people dream of a home that doesn’t exist, or is extremely rare. If your list of requirements equals a home that doesn’t exist in the area(s) you want to live in, you may have to consider either changing your list of requirements, or building a custom home instead.
2. What’s your timeframe for moving?
This is the part of the process where you consider things like whether or not you have to sell your current home before you can purchase another one, or when your current lease runs out and whether or not you’re willing to break it if/when the right home comes along. Many people think that the timeframe isn’t that important, but it definitely is – failing to consider your timeframe can result in you carrying the financial burden of TWO living spaces at once, or worse – having nowhere to go for 30+ days! Timing is very important.
3. How much house can you afford?
This is why getting a mortgage pre-approval (discussed in step #3) is so important – you have to know how much you can afford, and truly consider your current financial situation. You have to consider what mortgage payment you can afford, what down payment you will have, and don’t forget to add things like insurance, closing costs, moving expenses, and other expenses you will incur. Unless you’re paying for your new home using cash, you should begin paying close attention to your credit for at least 12 months before your home purchase; make sure all payments are on time, pay off debts that you can afford to pay off, and avoid major expenses (such as a new car) that can wait until after your home purchase.
How Do I Choose a Buyer’s Agent?
You better believe it – this is an important step in your home buying process.
Buying a home is complex; there is a lot to be aware of and many things can happen along the way that could cost you thousands of dollars, or even result in making a poor purchase decision. Choosing the agent that represents you in one of the largest transactions you’ll ever make is not a decision to be taken lightly.
So how do you choose the agent that’s right for you? It’s true that there are likely hundreds of agents in our area to choose from; I know many of them personally and I can tell you that Orlando and Central Florida in general has some outstanding real estate agents! But I’ve also encountered some that are lacking in skill, knowledge, and time.
For starters, I would say always strive to choose an agent who is totally and completely devoted to the industry. If they have another job or use real estate sales as “extra money”, it’s unfortunately a red flag and can lead to working with an agent who can’t or won’t spend the necessary amount of time on your transaction.
In addition to that, I would encourage you to seek out agents that have great reviews on a verifiable website such as Zillow (Zillow has systems in place to ensure that reviews can’t be faked). Of course, it goes without saying that the agent you choose should have at least a few years of experience; hopefully inexperienced agents are shadowing a pro to build their experience, but a lot of agents actually work on their own right out of real estate school.
Last but not least, choose an agent that listens to you and understands your needs and goals for your new home. That might seem like it should go without saying, but some personalities just don’t “get” each other. When you meet with the agent that ends up being your agent, you’ll know it!
Mortgage PreApproval – Why/How?
Don’t save this step for later! Do it now, as step 3 in your process, and ask your agent for advice on the best mortgage lender(s).
Your pre-approval proves that you have purchasing power, and it often dictates whether or not you are taken seriously as a buyer. Many home sellers won’t even allow agents to show their home to buyers who aren’t pre-qualified, so it’s a very serious barrier to entry that can waste a lot of time if not done up front. Also, even you might be surprised at the amount you are pre-approved for; there’s no need to spend time searching for a home that is substantially above or below what you can afford.
It’s so easy, you won’t believe it; especially when you’re working with a mortgage lending team as great as mine! A pre-approval is not a final loan commitment, it’s just a document that says that a mortgage professional has reviewed your preliminary financial information, and estimates the amount that the lender would give you towards a home purchase. For that reason, it typically takes less than 15 minutes for someone to get a pre-approval letter; you just answer some simple questions, and provide a few personal documents as verification.
It’s ideal to get your pre-approval as soon as you’re ready to start shopping for a home. In some cases, it could take the lender a few days to get your pre-approval completed and sent to you. Also, be sure to ask your Realtor for some lenders that they recommend; an experienced Realtor has worked with most of the lenders in town, and they can tell you who has the best underwriters, customer service, and even special financing that you may qualify for!
I’ve been asked before if it’s a conflict of interest for a buyer to use the mortgage lender that their Realtor recommended, and I can say without a doubt that it’s not. It’s actually illegal for Realtors and mortgage professionals to exchange funds or pay each other referrals, so when a Realtor refers you to a mortgage professional (or vice versa!) it’s because they have had good experiences with that person, team, and company.
What Are Some Home Shopping Tips?
Remember in step 1 when you wrote down a list of requirements, and a wish list for your new home? It’s time to put those lists to use! Now that you have your pre-approval and you know what you’re looking for, it’s time to start the search for your next home.
Neighborhood scouting is something I really recommend, because it can save you weeks and even months of viewing homes that you liked when you saw them online, but not when you saw the location. Get an old-fashioned map, or print out a few Google maps pages, and highlight the areas that are close to your job/family/kid’s schools or are just where you want to be. Now get in the car and drive those areas, and when you find your favorite areas, circle them, and when you find areas that you would not buy in, cross them out. It also helps if you make notes of some neighborhood names or street names that you’re circling and crossing out.
A Needle in a Haystack?
Since you have a map of the areas you want, use an online MLS search that has map search functionality. This will help you narrow down properties. Make a note of every property that you love and like, and give the list to your agent ASAP.
The agent should also put you on an automated search that will email you properties that match your search criteria as soon as those properties come on the market.
Time for Showings!
When you go out for home showings, be sure to bring your list of requirements and your wish list with you, as well as a notepad. For every property that you see, check off all the items on the requirements list, and check off the wish list items that the home has as well. Lastly, make notes about the home, and don’t be afraid to take photos of features that really stand out either negatively or positively. This will make later decisions much easier.
After you’ve seen what’s available, you can narrow down your final decision to 2 or 3 homes, and view them again to refresh your memory.
How Do I Choose a House?
You don’t want to spend a lot of time making a decision – there are other buyers out there doing the same thing you’re doing, and it’s not uncommon for the house you want to go under contract before you get a chance to submit your offer. But you don’t want to rush the decision either; the timing can be tough, but you can do it!
When you’re making the final decision on what house to make an offer on, think about the lists that you made before you ever saw any of them. Don’t make an emotional decision; make a decision based on the needs and wants that you outlined before you started your home search.
Think about the pricing of the house, too. Is it worth what the seller is asking for it? Your agent can help you with comps and data that either support the price, or support a lower/higher price. You must decide what your top dollar is for that home. That doesn’t mean your top dollar has to be your first offer, but you must have a top dollar in mind.
Should I Present Pre-Approval to Seller?
Absolutely! To recap step #3, your pre-approval is proof of buying power. The seller is much more likely to take your offer seriously if they see a pre-approval.
Put yourself in the seller’s shoes: would you want to take your home off the market, potentially missing other showings and offers, for a buyer who might not even have the income or the credit to purchase the home? Neither would I!
Submitting your pre-approval with your offer is the right move, and the smart move.
How Do I Make An Offer?
There is a lot more to making an offer than just the purchase price. The other terms of the offer are very important when it comes to whether or not your offer will be accepted (or countered) by the seller.
When considering the price that you’re offering, consider the selling price of nearby, similar homes that have sold in the last 30 to 60 days. Also consider whether or not the property has multiple offers already. Your agent will type up your offer, have you sign it, and submit it to the seller’s agent. The could reject the offer, accept the offer, or counter the offer.
Your agent will guide you through each step of getting the offer accepted, including the other terms of the contract, such as the inspection period, the closing timeframe, repair requests, and more.
Homeowner’s Insurance – Why/How?
Why do you need homeowner’s insurance? Oh there’s so many reasons! The biggest reason is because you want to be protected in the event of a catastrophe; whether it’s a natural disaster that causes expensive home repairs, or an unknown issue within the home suddenly wreaks havoc, homeowner’s insurance is your protection. In addition to wanting to be protected, homeowner’s insurance will be required by your mortgage lender, and therefore rolled into your monthly mortgage payment.
How do you get homeowner’s insurance? Well, you’ll start by getting quotes, choosing a provider, and giving that information to your Realtor and/or mortgage lender. They’ll make sure that the policy is set to activate when you close on the home, which is the day that you take over the keys and the house is officially yours.
There is also title insurance, which is purchased at closing with a one-time fee and protects you from title issues, but for the most part, it’s not something you “shop around” for, and it’s a necessary cost at closing, so homeowner’s insurance is the important one for you to be aware of so you can get quotes to ensure you get an insurance policy you like.
How Do I Prepare for Closing?
What is closing? Closing (also known as “settlement” sometimes) is the actual formality of the transfer of ownership of the property to you. Legally, it finalizes all agreements, begins your mortgage, releases your escrow, and officially transfers the deed and title (and therefore ownership) to you. That sounds like a lot, but in reality, you’ll just sign paperwork and get the keys to your new home! As you sign each document, the closing agent and/or Realtor will explain to you what it means, and answer any questions that you have.
How do you prepare for closing? It’s typically held during business hours in an office setting, but if that doesn’t work for you, ask your agent about a “remote closing”, where the documents are overnighted to you and you sign them in front of a notary and overnight them back, or a “mobile closing”, in which the closing agent comes to you. At a traditional closing, sometimes both buyer and seller are present, but not always. Your agent will tell you where to be, what time to be there, and if you should bring any additional items with you.
Any Tips for Moving In?
Congratulations, you’re officially a homeowner! Of course, if you haven’t moved anything into the house yet, you might not feel like celebrating for long, because moving in is presents its own set of challenges.
First and foremost, take this opportunity to properly collect and label all of your closing documents. Most of your possessions are likely in a moving truck somewhere, and in the general chaos of a move, important documents like this could easily get misplaced. Make sure you put them somewhere for safe keeping.
Your agent should have provided you with all the information for the utility companies that service your new house, and hopefully you’ve already got the ball rolling in the right direction for the connection and/or transfer of water, sewage, electricity, Internet, cable, gas, etc. Additionally, you’ll want to pay attention to what your garbage pickup days are – most people find that they have a ton of trash in the week after moving into a new home.
Before you actually place the first item in your new home, you might want to do any cleaning/painting/repairs that are needed, even if this means putting your things in storage and staying with friends or family for a few days. Once you’re moved in, it’s much more difficult to do some things, so try to think ahead.
When you’re ready to start putting your things into your home, start by moving in furniture first. Put the furniture together and place it where you want it before you start bringing in boxes and personal items, otherwise you may end up moving some items multiple times!
I always recommend unpacking toiletries first – that way you have access to the things you need daily such as toothpaste, toilet paper, shampoo, etc. The other primary thing that you should try to get set up pretty quickly is your electronics; it’s likely that your television and Internet provider will be at your new home pretty quickly to install equipment and begin your services, so you want to make sure they have the electronics needed to do the job properly, otherwise you might be stuck rescheduling them.