Steps to Buying a Home

There is not one right way to buy a home. (We refer to home rather than house. This is to help you relate better to the purchase you are about to make. They live in a house; you live in a home). The exact steps may vary depending on where you live and your personal situation. Let’s review each of the steps.

Step One — Deciding whether to rent or buy

Earlier in this booklet we make some pretty strong arguments in favor of buying a new home. You are the one who has to make that decision. You have to decide if you want to keep floating along without settling down or start building a financial future. Your tax consultant needs to be the one to tell you about the tax advantages of ownership, and how your tax bracket will drop on the income remaining after deducting interest and taxes paid toward ownership of a property.

Step Two — What kind of home?

Here we are talking about the different types and sizes of homes such as single- family versus multi-family homes, as well as three bedrooms versus four bedrooms. What is your future family growth plans? Are you planning to expand your family? Then we reach the decision of older homes versus new homes, and all the issues dealing with that decision. Established landscaping, or neighborhoods versus new construction with new building codes, and the latest in appliances and design features. New home warranties have to be considered if you are not handy or know your way around the toolbox.

Step Three — Set yourself a payment goal

We will soon address financing and who qualifies for what depending on your income. But before you get to that point, you need to do a little self-research. Look at what you owe, look at what your take home income is, and compare all of that to what you feel comfortable in spending on a new home on a monthly basis. Some people will advise you that whenever you make the decision to buy, you can approach your employer to increase the number of dependents on your W-4 form so the company can withhold less, since you will have the additional expenses.

Step Four — Getting Yourself Pre-Qualified

If at all possible, get "pre-qualified" for a loan. This means the lender or their Loan Officer will informally qualify you for a loan by getting basic information on your income, debts and most likely your credit. By getting pre-qualified, you can usually get a good estimate of how much money you could borrow for a home. Also you will have a good idea how much out of pocket money you will need for down payment and various closing costs.

Step Five — Starting Your Selection

Begin looking for a home. To start off, you need to consider all your options. Consider new versus used, multi versus single family and where in the city you want to settle. What is important to consider is; do not go out and buy the first home you look at. Take a little time and be sure of your selection. We know of no simple rule, five may be enough, ten may be too many. What we are cautioning you about is making a quick decision, then regretting your choice, or trying to get out of an agreement to go buy something else. Most builders and all resale sellers treat contracts and offers very seriously and few are flexible about changes or cancellations after accepting an agreement.

Step Six — Make Your Selection

When you make your final selection, give it your self inspection. Go back through the home very slowly, mentally place each piece of furniture that you own now and what you plan to buy. Some families are going to be down sizing, and they'll need to look from the position of less rather than more.

Step Seven — Apply For Your Mortgage

If you have been pre-qualified this step is much easier. Now is the time to get the requested information to your Loan Officer. Usually you will need copies of your last two years tax returns, verification of your income from employment and verification of your cash available in bank accounts and original signatures from all parties responsible for the debt. Different companies will have different requirements and special loan programs may have additional required documents. Most companies will require written verification of any and all sources of income we want them to consider for qualifying and explanations for any extended gaps in employment.

Step Eight — Do Your Walk Through Inspection

After your new home has been completed, you will be asked to do a walk-through inspection. The purpose of this inspection is usually two-fold. One, is the opportunity for you to inspect the overall construction of the home and make a list of any deficiencies that will be completed within a timely manner to your satisfaction. And secondly, this is the time for the construction department to explain the entire home operation to you. You will be shown how to operate the A/C, the appliances and the necessary maintenance of your new home. Additionally, you should receive copies of service requests and telephone numbers of service people to repair any item in the future.

Step Nine — Close the Loan

Close the loan ( also called loan settlement). That’s when you pay the rest of your down payment, pay the loan fees, sign all necessary legal documents and get the keys to your new home. This generally takes place at a title company. The title company4 will have all the necessary papers prepared for your signature and will explain each and every document to you. It is important that you have at least a basic understanding of what each,. document is for and what it represents.

Step Ten — Move In!

The day has finally come. Now you can officially call this place yours. Don’t forget the service companies like light and water. Now you are finally settled into your new home. After not being able to find a thing that you own, and you have gotten over the feeling that everything you own in the world is now contained in cardboard boxes; yeah it’s worth it!