How to Buy a Home

 

The Home Buying Process: A Step by Step Process

 

 

STEP 1: Pre-Approval vs Pre-Qualification

 

What's first thing you need to do when buying a home? You need to speak with a mortgage lender who will help you get a pre-approval letter. That’s much different than a pre-qualification.  A pre-qualification is when you just submit the lender docs and the approve you based on what you “say” you have. A pre-approval, on the other hand, is a document that states you submitted your 4 - 2’s. That’s your last 2 months of bank statements from ALL accounts, past 2 paystubs or retirement income letter, and finally your past 2 years of W-2’s & tax returns. Once you have submitted all this documentation you will have an official pre-approval letter.

 

Why do this? First, legally you have to. Second, if you like a home this process takes 48-72hrs so the house could go under contract with another purchaser who has already completed this step. Third, if you don’t have this letter we can’t submit and offer. Finally, how do you know what you can officially afford if you don’t have all your ducks in a row?  So get your pre-approval and let’s get you into a new home.

 

 

Step 2: Scheduling Appointment and Team Work

 

Once you have your pre-approval we are officially ready to look for homes. As a TEAM we work together to find homes to schedule appointments for possible homes you like.

 

 

Step 2A: The 85/15 Rule & Feels Like Home

 

How do you buy a home? How do you decide which home is the right one whether there's a large or small inventory? Use the 85/15 Rule plus it feels like home. The 85/15 is simply this. It's 85% of what you're looking for, 15% of what you can do without or manage without AND it feels like home. If it meets those criteria that's the home!!! Don't wait, don't think, let's place your offer in. Why? Because someone else's criterial might meet that 85/15 rule and they are ready to pull the trigger then. So don't let someone take your home because you waited too long to make a decision. I've seen this happen many times and it's a hard site to see. No home seems to compare to the one you really liked. So go for it with the 85/15 rule AND it feels like home.

 

 

Step 3: Negotiations

 

Once we find a home you need to be ready to negotiate terms. Depending on the market you will need different tactics. Rely on your real estate professional, such as myself, to help you with this. Depending on the market you may need to offer over asking price to get closing costs, you may offer over asking price and not get closings, or you may offer under asking price and ask for all your all your closing costs. Supply and Demand and the market will determine what tactics you will need to use. And remember. Use the 85/15 and feels like home rule (85% of what you want an, 15% of what you can do without, and feels like home).

 

 

Step 3A: Earnest Money vs Due Diligence Money

 

One important thing to know is the difference between Earnest Money vs Due Diligence Money. What's the difference? One you can lose and one you can't. However, you can lose both. Find out the difference here.

 

 

Step 4: Start Scheduling Inspections

 

Once we have a contract you need to be ready to rock and roll. What you need to expect. It’s time to start the work. You need to expect to scheduled a home inspection, although this is optional, termite inspection and appraisal. 

 

 

Step 5: Home Inspection/Termite Inspection and Appraisal

 

If we get a home inspection we will hire a professional home inspector to complete this work and provide us with a thorough inspection of the home. Once we receive this we will determine what items we need to ask the Seller for. The Seller has the option to decline repairing these items. If they choose not to complete those items you have two options. One, you can continue with contract; or two, you can choose to walk way. Of course there are consequences to this such as losing your due diligence money. If inspections go well we continue onto the appraisal, which may occur at the same time as inspections because this process is quick. An appraisal, on average, takes 2wks to get back. This appraisal will determine the value of the home. If the appraisal comes in at value or above we are good to go and move forward to closing. IF, however, the appraisal comes in lower than asking price we have to re-negotiate our contract.

 

 

Step 6: Closing Day

 

GREAT NEWS!!! you made it to closing. You will need to bring the amount of money to closing required whether or not you’re doing a cash or finance deal. You will need to refer to the attorney or lender for this cost. At closing the keys will be provided to you. Congratulations! you have a new home. 

 

 

And of course you can find more info on buying and selling a home on my personal website at and my YouTube channel