Many of us weren't really explained the process of buying a home. I feel that it's important for younger people who plan on buying a home now or in the future to understand the steps. There's much more to buying home home than many people think. This blog post will explain the process in simple terms. Hopefully you gain some knowledge and become a little smarter when you're done reading this post!
Step 1: Find a Realtor
It's so important that you have a great Realtor on your side. Your agent should explain everything you'll be signing, negotiate to get you the best deal, and keep you level headed during times of stress. You have to trust your agent and know that he/she will work in your best interest. It's also important that you understand when you hire a Realtor, you don't pay any commission. The seller of your future home always pays commission. So find a great Realtor if you're ready to buy, and trust that they will do a great job!
Step 2: The Loan Process
A pre-approval letter is always step one for getting a loan. Your agent should have some mortgage companies that they recommend. You'll have to submit an application along with documents like W2s, pay stubs, bank statements, etc. Once the mortgage company crunches some numbers, they will be able to give you a reasonable loan amount that you can approve for. It's very important that you know what you can afford before you start seeing homes. You'll also need to know your down-payment amount. A lot of people are under the impression that you need 20%-30% to put down on a home, but there are plenty of 3%-5% options. Michigan also offers down payment assistance through MSHDA(Michigan State Housing Development Authority). With just a 1% personal investment, Michigan will loan you up to $7,500 for a down payment(reach out to me to learn more about MSHDA). Once you have an agent and are working with a mortgage company, you'll be able to start seeing homes!
Step 3: The Hunt
For all listed properties, you must have an agent present to go inside. Once you start seeing homes, it can take days or weeks to find a one you love. It's important to stay patient and trust that you'll eventually find the right home. Your agent will handle the scheduling for the showings. You guys will meet at many different houses until you're ready to put an offer in.
Step 4: Submitting an Offer
There's more than just a phone call and an agreed upon dollar amount for a home. Your agent will type up a purchase agreement that has many different negotiable aspects. The amount you offer for the home is obviously the most important number, but there are many more factors. Mortgage type(conventional, FHA, or VA), occupancy days and rate, inspection period, earnest money, etc. When there's a multiple offer situation, buyers may offer the same exact amount. If that's the case, they will look at other aspects of the purchase agreement to decide on an offer. Your agent will guide and explain to you the best routes to go when submitting an offer.
Step 5: Inspection Period
An inspection is super important when buying a home. It's your job to find a trustworthy inspector to come in and give and honest report for the quality of the home. Usually after acceptance of an offer, you'll have 7 days to have the property inspected. Once the inspector hands over his results, it will be your decision to go through with the deal, back out because you're unsatisfied with the results, or negotiate to have the seller fix the possible issues. Usually you'll have 3 days to decide what route you will take.
Step 6: Appraisal Period
After satisfaction with the inspection, the process will move forward with an appraisal. The appraisal is to make sure the home's value is the same, or greater than the agreed price. The lender wouldn't want to loan you $200,000 for a house that they believe is worth $180,000. An appraisal is an opinion of value. One appraiser may think a property is worth $180,000, another may think it's worth $185,000. Your real estate agent should have an idea of a home's value before you make an offer.
Step 7: Closing
Once the appraisal comes back good, you'll then be on your way to closing! At closing, you'll sign more paperwork to complete the transaction and eventually move into your new home. Some sellers ask for occupancy days like I mentioned earlier in the post. This means that after you close on the home, they may need anywhere from 15-60 days to move out. You will be the new owner on the home, and they will pay a daily occupancy amount which was agreed upon in the purchase agreement. Think of it as a short term landlord tenant relationship. Sometimes sellers ask for occupancy, and sometimes they don't. It all depends on their situation. After all documents are signed at closing, you'll be the owner of a new home!
I hope you became a little smarter after reading this post.
Please don't hesitate reach out to me if you have any questions or need anything explained more thoroughly. My contact info is below.