The process of buying a home may seem a bit daunting, but it doesn’t have to be. My goal as your Realtor is to help you not just find the perfect home, but to help make the process a fun and enjoyable experience. To better prepare you for the process that awaits, here is a short synopsis of the steps in the process:
1. Contact me for a free consultation
When buying a home you need someone that will represent you and your interests and has the experience to provide you with the right advice. Contact me so that I can start putting my experience to work for you to find the right property!
2. Determine how much you can afford
One of the first questions first-time home buyers ask is “How much house can I afford?” If you’re asking a bank the answer is “No more than 36% of your monthly income when including any other monthly debt repayments (e.g. school loan payments, car payments, etc.).” This is due to the lending requirements imposed on them by the bank regulators. A couple questions I always ask my clients when considering the upper limit on the purchase price range are:
- If you lost your job could you continue to pay the mortgage for the next 6 months? While people generally do not like to think of this scenario when venturing into home ownership, there are more than a few out there who have bought a house and shortly thereafter, for reasons sometimes outside of their control, are out of a job and unable to continue to pay the mortgage.
- Are any life changes expected in the near future that would change the current household economics (e.g. expecting a baby, going to one income earner in the family, retiring, etc.). What a bank wants is today’s financial snapshot so that the bank can satisfy the regulators that it followed the rules. My advice is to consider the future circumstances and not just the present when determining what you can afford.
3. Get pre-approved.
I can provide you with a list of lenders. Many Sellers’ agents will advise their clients not to accept an offer unless there is a pre-approval letter with it so this is definitely worth getting done early on. One thing to note here is that I recommend all of my clients to run their own credit report using annualcreditreport.com to determine if there are any errors in their credit history before applying for a pre-approval letter. It is always best to do this and have negative items corrected prior to having banks run your credit for pre-approval.
4. Buyer Consultation
Once pre-approved, we can discuss your wish list with respect to neighborhoods, property amenities, etc. and the likelihood of finding all of the items on that list within the price range allowed. I think this conversation is always best to have after being preapproved so that you do not have to guess about what type of house and market area you can afford.
5. View homes
Based on the buyer consultation meeting, I will set up a customized search so that you are receiving a listing of new properties that fit your criteria as they come on the market. Also, I will assist in previewing homes in advance on your behalf, personally touring homes and neighborhoods with you, and providing you with insight on what homes have sold for recently and for how much. If you prefer to have a new build I can provide insight on the builder’s reputation, preview model homes with you and negotiate terms with the builder. I am dedicated to working with you until we find the perfect home!
6. Make an offer
I will walk you through the Texas Real Estate Commission (TREC) forms that have to be filled out based on the type of property so that you are clear regarding what terms are negotiable and who generally pays what costs. After making the offer it can go one of several ways:
- You receive a request to resubmit your highest and best offer (which happens only when the Seller receives multiple offers)
- Seller accepts your offer as-is
- Seller counteroffers with revised terms
- Seller extends an invitation to submit a new offer with proposed revisions
The main difference between #3 and #4 is that when the Seller counteroffers the Seller can’t accept another offer until you respond, whereas with an invitation to submit a new offer the Seller has no obligation to await a response from you and can accept a new offer.
7. Perform due diligence during the option period.
For all of the items listed below I can provide my clients with quality third-party recommendations.
- Have a home inspection performed
- Review Title Commitment to identify any exceptions.
- Obtain 3rd party quotes for any items that require repair
- Obtain insurance quotes
- Determine whether the property is located in a flood plain
- If any remodeling or addition was done to the property, obtain evidence from
the City’s permitting office
- Perform drive-bys of the property at different times of the day and during the
week and weekend to assess noise, congestion, street parking issues, etc.
- Verify school district information
- Review survey to determine if there are any right-of-ways that would prevent
future planned construction on the property
8. Review closing statement prior to closing
Based on the new rules, the lenders must give you disclosures about your loan three business days before closing. I will review it with the Buyer as there have definitely been times when the title company did not have everything correct.