Buyer’s Checklist – Steps To Purchasing Your New Home

Buyer’s Checklist

Buying a new home is exciting, but it is important to plan ahead. An experienced realtor can explain how to figure out what you can afford, show you homes that fit your needs and guide you through the negotiations.

1. Choose the Right Realtor

A licensed real estate agent can help you find your dream home and guide you through the homebuying process every step of the way. Your realtor should be:

• A state licensed Buyer’s Agent
• Knowledgeable about the local real estate market
• Capable of showing you homes according to your schedule
• Experienced in negotiating

2. Determine How Much You Can Afford

Decide how much you can afford before you look at houses. Here are things you can do to figure out how much to spend on your new home.

• Understand different types of mortgages (adjustable rate, fixed rate, etc.)
• Factor in PMI (Private Mortgage Insurance) and association fees if necessary
• Know your credit score and your Debt-to-Income ratio. As a rule of thumb, you should not be paying more than 43% of your income for housing each month to get a mortgage.
• Learn about closing costs
• See if you are comfortable with the monthly mortgage payment amount
• Have a down payment

3. Get Pre-Approved by the Lender

A Pre-Approval Letter from the lender states that you are likely to qualify for a mortgage. A Commitment Letter that offers official proof that you qualify for the mortgage loan is even better. These documents can help you convince the seller to accept your offer to buy.

• Contact a variety of lenders
• Understand financing options and terms
• Choose a lender and get a Pre-Approval or Commitment Letter
• Let your agent know you have the letter

 4. Find your Dream Home

When it is time to look at houses, it is important to differentiate between your wants and your needs.

• Determine your “must haves” in terms of location, the number of bedrooms and baths, the type of community and the type of home
• Look at nearby amenities like transportation options, restaurants and schools
• Give your realtor a Wish List of features you would like to have, like a fireplace or a basement
• Identify homes that meet your basic criteria

5. Make an Offer

When you see a home you are interested in buying, discuss the next steps with your realtor.

• Ask for a CMA (Comparative Market Analysis)
• Consider the condition of the home
• Find out about market trends
• Discuss the right amount to offer
• Think about including common contingencies in your purchase agreement, like the right to a home inspection and mortgage financing approval
• Understand the negotiation process
• Know about down payments and if they are refundable

6. Get a Home Inspection and Title Search

Most contracts to buy have a home inspection contingency so you have the right to a professional home inspection. You may have the right to renegotiate your offer or cancel the contract based on what the home inspector uncovers. You will also want to have a professional title search to determine the true owner of the property and if there are any liens on the house

• Hire a trusted home inspector
• Know the definition of “as is”
• Budget for home repairs that may not be covered by the seller
• Have a title search performer

7. The Home Appraisal 

You will want to know how much the home is worth, and your lender will issue a mortgage based on the home value shown in the appraisal.

• The appraiser should be certified and familiar with the neighborhood
• Obtain a copy of the appraisal
• Ask for a second appraisal if necessary

 8. Agree to the Right Mortgage Loan

It is important to know the difference between common mortgage types, such as a fixed-rate mortgage, an adjustable rate mortgage (ARM) and a government insured mortgage.

• Check out multiple loan providers for the best rate and terms
• Be aware that the lender will run your credit report
• Obtain a good faith estimate of costs associated with your loan
• Find out if and for how long you can lock in your interest rate

9. Provide Information to the Lender

After you sign a purchase and sale agreement with the seller, you may have to provide the following information to the lender before the mortgage is issued.

• • W-2 forms from the past two years
  • Recent pay stubs and bank statements
  • Past two years of tax returns
  • Your profit/loss statement if you are self-employed

10. The Closing

The closing is the final step in the purchase process.

• Set a date and time for the closing
• Understand closing fees and whether they can be included in the loan amount
• Know about escrow and what it is used for
• Obtain homeowner’s insurance
• Obtain title insurance
• Ask your agent and/or attorney what to bring to the closing
• Do a final walk-through of the home

 

Congratulations! You are now entitled to the keys to your new home!