Few purchases we make in a lifetime are as significant as purchasing our own home, and when it’s our first, it’s a life-changing milestone. For most, the process seems intimidating, replete with new jargon and introductions to new sectors of the business world we may have never utilized before.
The team at Trustworthy Title is just one of the service providers with whom you’ll become acquainted during your home buying process, and since this is our life’s work, we can demystify the journey and guide you through the adventure that lies ahead.
Can I Move Next Week?
The chances of being able to work through the steps of buying a home in a week are next-to-none, and while we’d love to tell you exactly the number of days it will take you to go from starting your quest to owning a new home, the home buying process involves too many factors can impact the time involved.
What we can advise, with absolute certainty, is that the process can be expedited considerably when the buyer is well-organized and well-prepared, so let’s begin with some steps you can take to get yourself ready to buy a home.
- Reduce your debt-to-income ratio. Pay off as many debts as possible and look for ways to consolidate those that remain.
- Procure your credit reports, learn your credit score, and assess the accuracy of any issues revealed there. Resolve any discrepancies with the credit bureau and do what you can to improve your score.
- Get a prequalification letter that provides an estimated overview of your financial picture, including income, debts/assets, and credit score. Often this form is available online and does not require any verification. It does not guarantee you will qualify for a loan. It serves as an endorsement or letter of introduction to get sellers to take you more seriously.
- Begin dreaming of what kind of home you want to buy, but keep those dreams tethered to reality by considering your budget, square footage needs, location preferences, and the length of time you anticipate staying in one place.
- Create a wants/needs list for the home you want to find and use this as aguideline for narrowing down your options.
- Use tried-and-true methods to estimate a reasonable budget for your new home. The 28% rule asserts you should not spend more than 28% of your gross income on home expenses. You may also gain a reliable estimate by taking your annual pretax income and multiplying it by three.
- Save up for a down payment. While the traditional standard down payment has always been 20% of the cost of the home, many people opt for far less. Contact a local mortgage lender to discuss the types of loans for which you may qualify and this will give you an idea of the savings goal to work toward.
Diving into the Home Buying Process
With all of the preliminary work you’ve done before shopping for a house, your home buying process will go much smoother and more quickly. The first, and most important team member, is your real estate agent, who will guide you through every step of the journey. Choose your agent wisely; look for one who is knowledgeable, experienced in this area, and has an accurate pulse on the local market.
- With your budget, prequalification letter, and a wish list of needs and wants in hand, start looking for houses. Each home you tour will help you fine tune what you do and don’t want in your home.
- Begin the process of procuring pre-approval for a home loan. Fill out the paperwork and provide documentation to verify your financial information. The mortgage company (or bank) will conduct a credit check and issue a statement of the mortgage loan for which you qualify.
- When you’ve found a home you love, work with your agent to craft an offer of purchase. Limit the number of contingencies you write in and the demands you place on the buyer to increase your chances of acceptance.
- Once the haggling over terms is concluded, and the terms of the contract agreed upon, it is legally binding. You will write a check for earnest money (1-3% of the home’s purchase price), showing your commitment to the purchase of the house, and it will be held in escrow by the title company until closing.
- Schedule a home inspection. The inspector will evaluate the entire structure, including plumbing, electrical, foundation, roof, appliances, and more to make sure all is in good working order. You will receive a report of his findings, and any structural issues that are revealed will help you gain leverage in negotiating for repairs or a reduced purchase price. Some sellers will give you a sum of cash at closing for the buyer to apply as he will to getting the repairs done.
- During this time, Trustworthy Title will be conducting a thorough search for any counter claims of ownership on the property, unpaid taxes, and liens placed against the house, all of which would inhibit the ability of the house to be sold. Additionally, we offer title insurance, which protects the home from claims on the property that could emerge after the transaction is completed.
- During this time, a home appraiser will also conduct an inspection of the home to determine the real value of the home in the current market. The wait time to schedule an appraiser can vary widely depending on the busyness of the current market.
- Once the title search is complete, the home repairs have been made, and the appraisal is done, and a mortgage is procured, your home purchase is really happening. A closing date is scheduled, and the seller moves out. You and your real estate agent will go through the emptied house, inspecting it carefully to make sure no new damage has occurred, the house is left in good order, agreed upon repairs have been completed satisfactorily, and the features of the home have been left intact.
- It’s closing day! Through the signing of a copious number of documents, transferring of funds and keys, the home officially is yours. You’ll walk out of the office a proud homeowner who’s ready to go to work making that house your home.
One Final Thought
According to HomeLight, it takes approximately four years to break even on a home purchase. Knowing this can help you decide if it’s the right season of life for you to venture into home ownership. Then, consider both your current and future accommodation needs. Is an elderly parent going to move in with you? Is a high school child graduating and launching into the world? Are you a newlywed looking to start a family?
At Trustworthy Title, we love helping families fulfill their dream of home ownership, and whether your journey through the home buying process is a long or short one, we’d love to be a part of your home purchasing team. Give us a call for all your title search and title insurance needs.