A Guide To Smart Home Buying: Part 2

home buying

In previous blog post, we discussed some tips for smart home buying. But that was only the beginning. If you’ve already gotten your cash together and searched for a home, it is now time to purchase the home of your dreams. This may seem simple, but there are quite a few steps left in the process. Here is a continuation, starting at step 6, of the step-by-step guide to buying a home:

6) Make an offer on the home
After you find the house you want, you’ll want to make your bid quickly. You’ll want to get advice from your buyer’s broker, if you are working with one, to figure out the initial offer. If you’re working with a seller’s agent, you will need to figure out your offer strategy on your own. Find the data on at least three houses that have recently sold in the surrounding neighborhood. Generally speaking, do not make a bid that snubs the seller. This may lead the seller to give up due to sheer annoyance. The amount of leverage a buyer has depends on the market’s pace. You have a lot of control in a slow market, but in a hot market, you have almost none at all. It will probably take some creativity to satisfy the needs of the seller. For example, you can ask the seller to throw in some of the appliances if you meet his or her price.

7) Enter a contract
After reaching a price that both the buyer and seller can agree on, the seller’s agent will draw up an offer to purchase. Run this document by your lawyer and buyer’s agent in order to make sure that:

  1. You will obtain a mortgage.
  2. The home was inspected and has no significant defects.
  3. It has been guaranteed that you can conduct a walk-through inspection 24 hours before closing.

You are required to make a good-faith deposit which will typically go into an escrow account. This is typically 1% to 10% of the purchase price. After the deal has closed, the seller will receive this money.

8) Secure a loan
You will now have to call your mortgage broker or lender in order to agree on terms. You will decide whether to choose a fixed rate or adjustable rate mortgage. You will also have to decide whether to pay point. At this point, you should expect to pay $50 to $75 for a credit check, as well as an extra $150 on average for an appraisal of the home. The appraisal price could, however, be anywhere up to $300. The majority of other fees will be due at the time of the closing of the house.

9) Get an inspection
The mortgage lender will make an appraisal of our home, but it is also a good idea to hire your own home inspector. On average, an inspection costs around $300, but big jobs can cost up to $1,000. An inspection takes two hours or more. You should ask to be present during your inspection. This way, you can learn a lot about your house, such as its overall condition, wiring, construction material, and heating. If the inspector finds significant problems, such as a roof that needs replacement, you should ask your agent or lawyer to discuss this with the seller. The seller should either repair the problem before you move in, or deduct the cost of the repair from the home’s final price. If the seller does not agree to do either of these things, you may walk away from the deal without penalty as long as you have a properly written contract.

10) Close the deal
Approximately two days before the closing of the house, you will receive a final HUD Settlement Statement from your lender. This will list every charge you will have to pay at closing. It is important to review this document carefully. It will include important information such as the cost of the title insurance. This is the insurance that protects you and the lender from any claims people may make regarding who owns the property. The cost of this insurance is typically less than 1% of the home’s price, through it varies a good deal from state to state. You may also need to establish an escrow account. The lender can tap this account if you fall behind on your property tax payments, or on your mortgage. The closing itself will not have any surprises, but you should ask your real estate agent or your lawyer to brief you on the specifics.

Buying a home doesn’t have to be overwhelming and confusing. If you follow this step-by-step guide, you will be on your way to buying the home of your dreams in the smartest way possible. Happy home buying!