10 Step Guide To Finding & Purchasing Your New Home
Step 1: Check Your Credit Score & Report
If you don’t already know your current credit score you should. You are allowed one free credit report per year according to federal law and if you don’t receive a monthly report from one of your credit card companies or subscribe to one of the many credit reporting companies you can get your free annual report from Annualcreditreport.com. The higher your score, the better loan you will qualify for and be sure to check your report for and fraudulent reporting or errors. If you find any errors you need to report and dispute them ASAP because it can take months or even years before the dispute is resolved and your score reflects your true credit history.
Step 2: Figure Out What You Can Afford To Spend On A Home
Unless you are a cash buyer, you will need to finance your purchase. You may have a pretty good idea what you are able to borrow, but it’s very important to speak with several lenders to verify this. A good lender will ask you to provide them with information that will result in their ability to give you a price range that you will qualify for and approximately what the interest will be. They will also be able to give you an approximation of what closing costs will be. Don’t forget to budget for extra fees and services including… attorney, appraisal, inspection, etc. With any lender you will be required to have title insurance as well as mortgage insurance. You will need to carry property insurance in accordance with the lenders guidelines. These all protect the lender’s investment. The lender will also be able to estimate your monthly mortgage payment for a particular purchase price.
Click here to view a list of lenders personally approved by the Sterling Teetor Realty
You are now ready to begin looking for your home. Are you looking for a condominium lifestyle or is a single family home more for you? Maybe a townhouse is the perfect compromise. Do you want to be close to work or where you socialize? Are the schools in the area something to consider? We will meet with you to determine your needs and preferences or you can fill out a buyer criteria form and one of our agents will contact you ASAP to schedule a meeting or set you up with an MLS auto search. Whichever course of action you think is best, we are here to answer any questions you may have so that you will be 100% confident in your decision because our expert staff has provided you with the knowledge and tools to make the right choice for you no matter what type of property you ultimately decide to purchase.
If you have school-aged kids, check out our search tool for Broward County Schools.
Step 4: Making An Offer
Once we have helped you find a home you want, it’s time to make an offer. We will walk you through the offer process and negotiations. If accepted, your earnest money deposit is normally due at this time. The EMD is held in escrow and is a sign of good faith for the seller.
Step 5: Determine What Type Of Mortgage Is Best For You
There are all kinds of mortgages available these days but the three most commonly used for non-investor, residential home buyers are: adjustable rate, fixed rate, and interest-only.
Adjustable rate mortgages (ARMs) are short-term mortgages that offer an interest rate that is fixed for a short period of time, usually between one to seven years. After that, the interest rate can adjust every year up or down, depending on the market. These are good for people who don’t plan on living in their home very long and/or are looking for a lower interest rate and payment.
Fixed-rate mortgages are more traditional and offer a fixed interest rate (and thus a fixed monthly payment) for a longer period of time, usually 15 or 30 years, though they’re available in 20 or 25 year terms. These are good for people who like a predictable payment and plan on living in their home for a long time.
Both fixed and adjustable rate mortgages can have an interest-only payment. What this means is that for a certain amount of time during the loan term, you’re allowed to pay only enough to cover the interest portion of your payment. You can still pay principal when you wish, but don’t have to if your budget is tight. There is a myth that with interest-only mortgages, you don’t build equity. This is not necessarily true, since you can build equity through home appreciation. The benefit to interest-only mortgages is that you increase your cash flow by not paying principal.
Step 6: Inspection
You will likely want to have a home inspection and wood destroying organisms ( WDO ) inspection, although this is not required by lenders for most loans. The buyer pays for this as well. If there are any problems as a result of the inspection, we can ask that the seller remedy these. The seller may agree or this may become a negotiation. Whatever the outcome, the decision is yours whether you proceed with the purchase as long as that decision is made in a timely manner, consistent with the contract.
Click here to view a list of home inspectors personally approved by the Sterling Teetor Realty Group because of their history of superior customer service.
Step 7: Appraisal
We usually try to work with your lender or directly with the property appraiser to schedule the appraisal after we get past the inspection period. We do this because we don’t want you to spend money on an appraisal until we know the inspection is satisfactory. If the property appraises for the same or more than your purchase price, then this lender condition has been met and you are ready to proceed with the closing. If the property appraises for under the contract price, you will have a choice of authorizing us to renegotiate, cancel the contract, or you can make up the difference between the sale price and the appraised value to satisfy your lender and proceed with the closing.
Step 8: HOA or Condo Association Approval ( If Necessary )
If you are under contract for a condominium or any property that has an association requiring you being approved, this would be the time to submit your application. If for any reason you are not approved, your contract will be cancelled and all deposit money will be returned returned.
Step 9: Pre-Closing
Once we make it past the first 8 steps we will need to successfully clear the lender’s requirements for both you and the property. If that is successful, you will be all set to close! Although you may be asked to provide some additional information about yourself or your finances at this time, this step is almost entirely handled by the closing agent and your Realtor.
Step 10: Closing On Your New Home
This is the exciting part. Now that you have successfully made it through the home buying process all you have left to do is sign the paperwork and plan your move.
This all sounds like a lot of work but in reality most of the heavy lifting is handled by your Realtor. When you work with Sterling Teetor Realty Group our agents and brokers are always available to answer any questions, comments or concerns you may have about the home buying process so you can rest easy knowing that you are not going through this alone but with the help of an industry leading professional by your side.