Buying a home is an exciting time, but it can sometimes be confusing or even frustrating to finalize the transaction. The safe and efficient transfer of real estate involves a number of steps. This homebuyer checklist will help you buy your home with confidence.
The first step in buying a home is determining your budget. Calculate how much you can afford—you’ll want to factor in additional costs that are necessary when buying a home. Each homebuyer’s situation is unique, so you will want to work with your Real Estate Agent and Lender to determine your budget.
For example, if your down payment is less than 20% of the home’s estimated value, your Lender will likely require that you purchase private mortgage insurance (PMI). This helps mitigate the risk that the Lender is taking, and the cost is simply added to your monthly mortgage payment.
Closing costs include the title insurance and closing fees. The amount will vary based on the value of your home, but on average you can expect closing costs to be a few thousand dollars, or 2%–5% of the value of your home.
Before you decide which home you will buy, select your Lender and provide the financial information so you know your price range. It pays to get pre-approved for your loan. That way, you can save time getting your offer accepted by the seller. Once you do, it’s time to find the home that’s right for you.
Starting the search for your new home can be exhilarating and a bit overwhelming. That’s why Real Estate Agents are so important. They can help you weigh your options and select the home that best suits your needs.
Your Real Estate Agent likely has access to homes that may not be listed online, giving you an advantage over someone shopping for a home on their own. Many homebuyers choose to set aside a few hours each weekend and visit multiple homes with their Real Estate Agent. It helps speed up the process and allows you to compare your options while in the same state of mind.
A Real Estate Agent can also share comparison homes (comps) in the neighborhoods that you’re searching. This will to give you a better idea of what market value is, and the going price for similar homes on your list. In your spare time, you can also tour open houses that pique your interest. Ask your Real Estate Agent about open houses, or use one of the several convenient mobile apps out there that will tell you if there are live open houses happening near you at any time.
Once you find the right home and you’re ready to commit, your Real Estate Agent will help you make an offer.
Here are a few things to keep in mind when submitting an offer:
Timing is important. You don’t want to let a great home get away because you took too long; however, you don’t want to make a hasty decision that you will soon regret. The key is communicating openly with your Real Estate Agent about your needs, and feeling confident about your decision.
Submitting an offer is just the first step. You may have to go back and forth with the Seller to strike a deal that both sides feel is fair.
Once the Seller accepts your offer and you sign a contract, you’ll want to get a home inspection. Ask your Real Estate Agent for recommendations, or search home inspector reviews online. A good home inspector will charge a few hundred dollars, but they will be able to identify any structural issues with the home before you buy. After the home inspection is complete, the final stage of the home buying process begins. It’s time for closing.
We will perform a search to examine the public records for information related to the title of your prospective home. This search provides information about liens, debts, or title issues relating to the current owner before the property can change hands.
As your Closing Agent we are an impartial third party that plays an important role in overseeing the final details of the purchase of your new home. We follow an escrow process to ensure your closing follows the specifications of the contract you signed to purchase your property and the instructions your Lender provides to us.
Closing on your home usually takes 30–90 days.
First American will provide you with a title report after the title search. This report will show you if there were any liens or claims on the land. We will take care of all of this for you and provide an Owner’s Title Insurance Policy.
There are two types of title insurance: Owner’s Title Insurance and Lender’s Title Insurance. Owner’s Title Insurance is a one-time fee at closing that protects your property rights as long as you or your heirs own your home.
If there are any issues related to your home’s title, such as unpaid mortgages, property taxes, or child support liens, Owner’s Title Insurance provides legal protection. It also protects against items that could limit the use of your property, such as utility and sewer easements. If a title defect arises, such as a missed easement or forged deed with an Owner’s Policy of Title Insurance the issue should be covered and we seek to resolve it. Typically, the Seller pays for the Owner’s Policy.
Lender’s Title Insurance is similar except that it protects the bank or Lender’s investment in the property. So if there are any claims against your property, the Lender is compensated financially—just like Owner’s Title Insurance protects you as the homebuyer.
We also work with your Lender, Real Estate Agent and the Seller to provide you with a final summary of the entire transaction, prior to closing. As the Closing Agent, we can help explain the content of the documents you will then sign.
By the time you are ready for your closing day, all of the behind-the-scenes work has been completed.
There are only a few things that could delay your closing:
• The basic loan product changes (i.e. if you switch from a fixed-rate mortgage to an adjustable rate mortgage, or to a loan with interest-only payments).
•. Annual percentage rate (APR) increases by more than 1/8 percent for fixed-rate loans or 1/4 of a percent for adjustable loans.
•. A pre-payment penalty is added, making it expensive to refinance or sell the property.
On the day of closing, you come to our office and sign many documents.
We will record the documents in the county records and transfer the funds to all of the parties who provided services in connection with your closing. Generally, you don’t have to be involved in any of this, because we coordinate everything.
With the right Real Estate Agent, First American, and Owner’s Title Insurance, you can rest assured and buy your home with confidence.
Now that you are all settled into your new home, don’t forget to check the mail for your Owner’s Title Insurance Policy. It’s your written record that your property is protected.