The Home Buying Process
There is a little bit of preliminary homework to start the home-buying process. In a previous article I gave some insight into how to define your housing needs and consider the lifestyle that you are hoping to live in you next home. Are you casual? formal? Is neighborhood important? Are you urban?
Once you have established the essence of the next home you purchase, you get down to the nitty gritty: do you want a ranch or a 2-story? Are you looking for a 1920’s home, a mid-century or newer construction? How many bedrooms, bathrooms, family room, etc? (I have a pdf list I can email if you contact me.) Do you have a favorite street? Do you belong to Wellbridge and want to be near one? Are visits from the grandkids a priority?
Now begins the home-buying process:
Before starting the home-buying process, it is necessary to talk to a lender and get a pre-qualification or pre-approval letter. This also makes good sense from the standpoint of knowing how much you can comfortably spend on a home. The lender will require the following information: last 2 pay stubs; last 2 year’s W-2’s; last 2 year’s Federal Tax returns; last 2 month’s bank statements for a pre-approval. The lender will then order a credit report from the three credit bureaus. For a pre-qualification, they will take your verbal information and then run a credit report from the three credit bureaus. (Note the documentation may vary with lenders.) This pre-approval letter is attached to the offer that is presented to the seller in your behalf. Click here for some lender tips.
When you find a house that you want, a purchase agreement is drawn up. The St Louis Association of Realtors has a standard contract that is used by its agents. What is offered on a property depends on a dnumber of factors, including its condition, length of time on the market, buyer activity and the urgency of the seller. Circumstances dictate a bit of your offer as happened this spring when it wasn’t uncommon to have multiple offers the first day on the market. Sometimes a low offer will work, other times it will be an insult to the seller and/or cost you the purchase. If you have been looking for a while and think you have found the perfect home, you may need to bite the bullet.
If you can be flexible on the possession date, the seller will be more apt to choose your offer over the others. Often, the seller plans on leaving major appliances in the home; however, which items stay or go is often a matter of negotiation.
Typically you will not be present at the offer presentation. The buyer’s agent will be the person presenting it to the seller’s agent or the seller. Typically this is presented via email or fax. The seller will then do one of the following:
- accept the offer
- reject the offer
- or, counter the offer with changes
Generally speaking the seller will counter offer. At this time buyer’s find out the goals of the seller. This counteroffer can be accepted by the buyer, rejected or countered again. I find that, once again depending on the circumstances, the negotiations can go back and forth up to 5 times before the contract hits the wall. It is important to keep your head during the negotiations and not lose sight of your goals.
Upon reaching price agreement, the lender comes into play again. The lender will need copies of the price agreed contract. It may be that they will also need updated documents depending on the date of your pre-qualification. At this time, the lender will order the appraisal and verify the buyer’s employment and assets. The loan package is then sent to the underwriter for approval. Other items the bank will be looking for are clear title and a clean survey.
For a complete breakdown of what goes on from contract to close click here. For additional information on what not to do prior to closing, click here.
Closing day marks the end of the home-buying process. You will need the following at closing:
- A certified check for closing costs and down payment. Make the check payable to the title company.
- An insurance binder and paid receipt
- Photo ID’s
- Social security numbers
Transfer of title moves ownership of the property from the seller to the buyer. The 2 events that make it happen are:
- Delivery of the buyers’ funds by check or wire provided by your lender in the amount of the loan.
- Delivery of the deed – A deed is the document that transfers ownership of real estate. The deed names the seller and buyer, gives a legal description of the property and contains the notarized signatures of the seller and witnesses. At the end of closing the deed will be taken and recorded at the county clerk’s office. It will be sent to you after processing. The closing usually takes place at the title company of your choice.
Hope this gives you some insight into the Home Buying Process.
Contact Barbara Heise for all your real estate needs – call or text 314-503-4856
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