The Step-by-Step Guide to Buying a Home:
Buying a home is a complicated process but by following these steps you will find yourself more at ease.
1) Find a loan broker and get a preapproval letter: You will want to talk to different brokers to find the one with the best conditions. Try large banks, such as Wells Fargo or Credit Union. The lender will then check your credit, verify your income and employment, and commit to lending a certain amount of money. You will receive a letter stating everything you agreed upon.
2) Find a real estate agent: You will want someone who is honest, patient, and has integrity. Feel free to check their references and credentials. Make sure you have a similar communication style and that they have good negotiation skills to ensure your success. Overall you want your transaction to be smooth and prevent headaches.
3) Go house hunting: Prioritize your needs and wants as well as no-go’s, so that you will be able to organize your thoughts on a property, such as bedroom-bathroom formation, square footage, school district, pool, distance to train tracks, etc. Find out first which neighborhood you like the most and then plan your route wisely so that you will be able to see as many favorites as possible. Take photos and notes to keep track of what you have seen and immediately eliminate houses that you just don’t like to keep you from getting overwhelmed. I personally recommend not seeing more than 5 houses per day for that reason.
4) Get offer accepted: When putting in an offer, consider possibly waiving loan and appraisal contingencies, putting in a larger down payment, and offering above asking-price if it will appraise, especially in a hot market. Doing so may put you ahead of other offers and show the seller that you mean business. You can also add an escalation clause which means that you will outbid other offers up to a maximum amount, to keep you in the game for as long as it is comfortable for you. Above all, make sure you act fast and submit a clean and complete offer WITH a loan preapproval or fully approved letter!
5) Go into escrow: Once your offer is accepted you will need to do these four things right away:
- Call and schedule a home inspection.
- Call your loan broker and have them rush the appraisal.
- Submit your loan application, along with the accepted offer.
- Call your escrow officer and wire the initial deposit into escrow.
6) Go to city hall and verify with your title company: Check on code violations and obtain any public records about your property. Then call your title company and ask them what to watch out for on the title report and if the title will be clear for transfer.
7) Finish inspection and appraisal: While your loan is being reviewed by an underwriter, you should have your inspection and appraisal report already. It is time to submit a request of repair to the seller. Once you have agreed on the requested repairs, you can remove these two contingencies.
8) All contingency removed: Once you have the approval of the loan, you can remove the loan contingency and by now all your contingencies will be removed and you are committed to purchase this property. This is the point of no return! If you back out after this time, the seller is entitled to liquidated damages.
9) Close of escrow: Before the loan is funded, you will have to wire the remaining balance of down payment and then the back will wire the loan amount into the escrow. The title officer and the escrow will record the deed and transfer title on the next business day.