10 Steps to Homeownership
Step 1. Are You Ready?
Do you know what you want?
Do you have the money for down payment & closing cost?
Is your credit in order?
Step 2. Establish a proper business relationship with you Realtor.
Most buyers ASSUME that if an agent has been working with them and showing them homes, that agent is working for them and looking out for their best interest. This is not true! Some agents represent the sellers while others represent the buyer and still some are working as dual agents. In most cases, if you do not enter into a written agreement with an agent, the agent that shows you homes will be representing the sellers, even if another real estate company list the home. The agent can still make written offers on your behalf and perform all the duties involved to get the sale closed but they are actually promoting the interest of the seller. The Missouri Broker Disclosure Form states the types of agencies available to you. The Buyer’s Exclusive Limited Agency Employment Contract is the “written agreement” that needs to be filled out and signed by all parties, if you want your agent to be representing you.
Step 3. Get Loan Pre-Approval!
“Pre-approval means that you have met with a loan officer, your credit files have been reviewed and the loan officer believes you can readily qualify for a given loan amount with one or more specific mortgage programs. Based on this information, your lender will provide a pre-approval letter. Although this is not a loan commitment, the letter demonstrates your financial strength and shows the sellers that you have the ability to go through with a purchase. A pre-approval letter is almost always required in order to make an offer on a bank owned or foreclosed property. If you are not sure where to go, I can give you the names and numbers of some lenders that we have done business with in the past.
Step 4. Look at Homes
If you are set up on an mls search, you will be receiving emails as homes that match your search criteria are listed. If you see anything that looks or sounds interesting, just let me know and I can get more details on it and/or we can set up a time to go take a look at it. Keep in mind that some properties sell fast. The sooner you call me, the better chance that we will have to view it before someone else makes an offer on it. When looking at homes, it is a good idea to print out the listing and bring it with you. Then you can make notes for each property as to your likes and dislikes.
Step 5. Choose A Home!
After looking at a number of properties, decide if any of them are THE ONE! While it is nice to look at as many properties as possible, keep in mind that during that time, the property that you looked at several days ago, could already be under contract. You are looking at a moving target in a marketplace that is rarely static.
Step 6. Make an Offer.
Oral promises are not legally enforceable when it comes to the sales of real estate. Therefore you need to enter into a written contract. I will help you with all the form s need to make an offer. This “offer to purchase” will specify price and all the terms and conditions of the purchase. At this time, you will want to put down earnest money to show the sellers that you are interested. Your earnest money will be made payable to the title company and will be held by me until there is an accepted contract. I will present your offer to the listing/sellers agent and he/she will present it to the sellers. The sellers can do one of three things. They can accept it as it is written, they can reject it, or they can make a counteroffer, which will state their price, terms and conditions. If they choose to make a counteroffer, I will discuss the changes with you and you can then do one of the three things as stated above. This procedure goes back and forth until the sellers and the buyers agree on EVERYTHING. Once everyone has agreed, it is considered an accepted contract.
After the contract is accepted, your earnest money check will be delivered to the title company and you will be credited that amount at closing. In the event that your contract is not accepted, I will return your original earnest money check back to you.
Step 7. Fulfill Your Obligations of the Written Contract.
The first thing that you will need to do after you have an accepted contract on a home is to apply for the loan. Although you are already pre-approved, you will still have to get a copy of the contract to your lender so he can get started on getting you the finances. Your lender will have a specific deadline date, as stated in the sales contract, to issue loan commitment. Loan commitment is when your lender has written commitment stating that they will finance the purchase of this particular piece of property. While your lender is working on the finances, you and I will be arranging for any inspections that are needed. This may include termite, building, water & well inspections and surveys that you or your lender requires. I will also be working closely with the title/closing company and they will be doing a title search of the property and issuing title insurance for you and your lender. I will be in constant contact with you during this phase of the process to keep you informed on how things are proceeding.
Step 8. A few Days Prior to Closing.
The title/closing company will send over a HUD1 statement. This will list all credits and debits associated with the purchase of the property and will give you a total amount of what you will need to bring to the closing table. You will have to get a cashier’s check for this amount.
Prior to closing, you will have to get a homeowner’s insurance policy on the property. Most companies will require you to pay a one-year premium in advance.
The day before or the day of closing, you and I will do a final walk thru of the property. You will also want to have the utilities transferred to you name.
Step 9. Closing!
Closing is a brief process where all paperwork needed to complete the transaction is signed. The sellers and buyers will normally “close” at different times and sometimes even at different companies. Whatever the case, the result is that the title/deed to the property is transferred from the seller to the buyer. The seller receives payment for the property and the buyer receives the keys.
Step 10. Moving In!
Congratulations! You did it!
Enjoy your home. Owning real estate involves contract, loans and taxes but what’s most important is that homeownership should be a wonderful experience.