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Home Buying Process
Answering the eternal question: to rent or to own
I have attended plenty of real estate seminars that extoll the benefits of home ownership as a means of wealth creation, as a means of personal fulfilment and expression, and as a means of getting a bigger tax deduction. These are good arguments but this is a personal financial decision.
Figuring out how much house you can afford
Based on their years of experience, financial institutions have developed a reliable system to calculate what share of your income should go towards your mortgage payment. An easy way to calculate how expensive a house you can afford without putting yourself into extreme financial strain is to use an online calculator.
Figuring out how much house you need
An interesting twist to the previous question. There are those who argue that you should buy the most expensive house you can afford because your income is likely go up than down and the 6% annual appreciation of a $500,000 home is five times more than the 6% annual appreciation of a $100,000 home. In terms of financial returns, the more expensive the better. But in terms of the quality of our lives, perhaps it is worth asking how much house we really need, don't you think?
Getting pre-approved by a financial institution
You will save a great deal of time if you know the price range you can afford. Many sellers do not accept an offer without pre-approval documentation. So go to a lending institution and get yourself pre-approved before you set out looking for a home.
Visit open houses
Pick up the Sunday Kalamazoo Gazette and go through the 'Home Life' section. You will see page after page of open house ads. Going to open houses give you an idea of what is out there. You get feel for various neighborhoods, archetectural styles, floor plans, and options. It will help you decide where you want live in what type of house.
Select a realtor to represent you
At this stage in the home hunting process, it is wise to choose a realtor to represent you. Afterall, it doesn't cost you a dime to get the services of a realtor. Realtor commission is a percentage of the sale price which is determined by the contract between the seller and the seller's agent. Buyer's agents get a portion of that commission when a sale is completed.
Working with your agent to find your dream home
The best thing about having a buyer's agent is that you don't have to wait for an open house. You know that only a very small percentage of houses on the market are open on any given Sunday. You can get information about any house in the market and view them on any day of the week with help of your realtor
Making an offer
When you have found a perfect home, the next step is to move quickly to make an offer. Well kept homes that show well and priced right catch the attentiion of many buyers. Hence it is necessary to move quickly. Inform your agent immediately that you are ready to make an offer. Your agent will at once inform the listing agent that an offer is forthcoming
Dealing with counter offers
Sellers want the best price for the house - listing price. Buyers want the best deal - the offered price. Somewhere in the middle is the fair price that both seller and buyer can agree on. If your offer is the only that the seller has and if it is not a ridiculously low offer, you are likely to get a counter offer
Applying for mortgage
One of the first things to be done as soon as the offer has been accepted is to apply for a mortgage loan. You can go back to the institution that provided you with pre-approval or your realtor or search for another lender.
Arranging for home inspections
The next thing to do is to get the house inspected by a licensed home inspector. There is often a deadline for completing inspections - usually within ten days of the seller accepting the offer. Your agent can help you arrange for the inspection
Final preparations for closing the sale
After the negotiations that follow home inspections if the buyer and seller can finally reach an agreement and sign off to that effect, you finally have a purchase agreement in hand. Now you can start the preparations for the closing of the sale.
