Here is a short outline of the home buying process...
In the last few years, the process of buying a home has been altered by the mortgage crisis and the continued evolution of online real estate tools. We will take a fresh and modern look at the process of buying a house. More specifically, we outline the general process in twelve clear steps.
1. Check Your Credit
Credit scores have always been important for home buyers, but they are more in the wake of the mortgage meltdown of 2007 - 2009. According to industry experts, home buyers in 2006 needed a credit score of at least 620 to qualify for the best interest rates on a loan. Now, borrowers needed a score of 760 or higher to get the best rates. That’s a much stricter requirement!
So your first step should be to review your financial situation. Order your credit reports from Experian, Equifax and TransUnion, and check them for errors. Order your credit score (different from your reports) to see how you stack up against the national average. If necessary, focus on improving your score by paying down credit card balances, making all future payments on time, etc.
2. Determine Your Budget
Don’t make the mistake of letting a mortgage lender tell you what you can and cannot afford, in terms of a monthly mortgage payment. In reality, the only thing a lender can tell you is the amount you qualify for - not the amount you can realistically afford. In other words, you should determine your home buying budget for yourself. There are a lot of free mortgage calculators online that can make this process easier for you.
3. Research and Choose a Type of Mortgage
Do you know the difference between a fixed-rate mortgage and an ARM? How about a conventional loan versus and FHA load? These are just a few of the things you need to understand before applying for a mortgage loan. Because of increased competition in the lending industry, there are more types of home loans today than ten years ago. The key to success when choosing a mortgage is to consider your long-term plans and find a loan that matches those plans. To do this, you must learn the pros and cons of the primary loan types.
4. Get Pre-Approved for a Loan
Pre-approval is a process in which the mortgage lender reviews your financial and credit history to determine your "creditworthiness" an industry term that means: "How much of a risk is this person, and how much are we comfortable lending?" When you get pre-approved for a certain loan amount, there’s a good chance that you’ll receive final approval for that amount as well, when the time comes.
Having a pre-approval letter in hand is mandatory when making an offer on a home in this market as most of the homes for sale are bank owned or short sales. Banks won't waste time with unqualified buyers. This shows sellers that you are serious about (and capable of) purchasing their home. This can make a big difference in hotter real estate markets, where the seller may receive multiple offers from competing buyers.
If you are looking for a loan, we recommend a trusted mortgage broker, Greg Bechelli, from First Priorty Financial. He has helped many of our clients find loans that fit their needs. If you are looking to purchase a home and need a loan, please click here for Greg Bechelli's Contact Information.
5. Using an experience and trusted REALTOR.
We've represented over 125 bank owned, short sale, and regular home owner property deals in the past 3 years. We've had much experience working with banks and asset companies (an asset company manages the home selling process for the bank). You will need our experience to wade through the process of buying a bank owned home or a short sale which in our service area represents about 80% of the active listings available. For more information about us you can go to the Why Use Us or the About Us sections of this website.
6. Narrow Your Search
The neighborhood you choose is nearly as important as the house itself, because both have a direct bearing on your quality of life - not to mention the future resale value. We specialize and have represented both buyers and sellers in Solano, Napa, Contra Costa and Sonoma Counties. Use our advanced search option to search for specific areas or subdivisions. You can also sign up for our FREE "My Listings Manager" where you can save search requirements, save property profiles, and have new properties emailed to you as they come on the market.
7. Begin House Hunting
This is where we visit properties in order to find one that matches your needs. Here are some helpful tips. Take a digital camera with you to get pictures of each home. This will help you recall the details later on. Bring a notepad as well, and for the same reason. While you’re at it, you might want to bring a friend along for an unbiased opinion of each property - you know, that outspoken friend who calls it like it is.
8. Evaluate the Asking Price
It’s referred to as the “asking price” for a good reason. Just because a property is listed at $350,000 doesn’t necessarily mean it’s worth that amount. This is another area where it helps to have a real estate agent. Most agents are expert at validating sale prices against recent sales in the area, and that’s the best way to find out if the price is realistic or inflated. Since we've represented so many bank owned homes, we've done over 500 Broker Price Opinions and Monthly Status Reports for the asset companies. This is an ongoing requirement report that outlines 3-4 Active comparables and 3-4 Sold Comparables that establishes a value range for the properties we represent. We've had much experience zero'ing in on value range for specific properties.
9. Make an Offer
Once you’ve determined that the price is fair and reasonable, you are ready to make an offer on the property. Always make the offer contingent upon the home inspection (see next item). That way, if the inspector uncovers an issue that you consider a deal breaker, you have a way out of the contract. On bank owned properties, banks will work with buyers on on making repairs, especially if the lender requires the rehab.
10. Get a Home Inspection
Most inspections only cost a few hundred dollars. That’s a small price to pay for the peace of mind you get in return. A home inspector will review the structural and mechanical aspects of the house, including (but not limited to) the roof, foundation, electrical, and heating / cooling system.
11. Attend the Closing / Settlement Process
So, you’ve made it through all of the inspections and the process is still on track. Great! The next step will be the closing / settlement process (it goes by different names in different parts of the country). Actually, you can prepare for this process early on by putting extra money aside. This is when the title to the property is transferred from the seller to the buyer. You’ll also be signing a lot of paperwork and paying any other fees that are due.
12. Tie Up Loose Ends
After your move, you’ll have a few more things on your task list. Transfer your utilities if you haven’t done so already. Complete a change-of-address form with the post office. Get a safe deposit box for your home insurance policy and other important documents. Set up a mortgage payment schedule or an online auto-pay system. And give yourself a pat on the back … you’re now a homeowner!
If you have any questions about buying real estate please call us at 707-297-6580.
Buyers Resources
Are You Looking To Buy?
We realize there are a lot of websites where you can search for properties including our websites noted below. Remember it is not how you found the property but more about how you purchase the property. We will provide you with honest and up-to-date information every step in the process. We will work hard using our years of experience to earn your business.
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