Steps Involved in Buying a Home – Part 1.

 

Small House in Visby, Sweden

The primary steps in buying a home are listed below. 

  • ·        Getting preapproved for a mortgage;
  • ·         Finding an experienced Realtor;
  • ·         Searching for your home;
  • ·        Conducting due diligence;
  • ·        Writing an offer;
  • ·        Negotiating the contract;
  • ·        Conducting inspections and requesting repairs;
  • ·        Inspecting the repairs;
  • ·        Navigating the lender’s appraisal;
  • ·        Navigating the lender’s “clear to close;”
  • ·        Final walkthrough;
  • ·        Closing.

 

The Timeframe

The timeframe will largely be dependent upon your level of motivation, the supply of listed homes and the type of financing you wish to obtain. Assuming you are prequalified, have a Realtor, all participants in the contract (i.e., buyer, lender, Realtor, seller, title company) are highly motivated and the transaction is neither a short sale nor a foreclosure, the approximate time to complete the process starting from the Search step, will vary as noted below.

  • ·        FHA/VA – insured mortgages: 90-120 days
  • ·        Conventional/fully conforming (20% down) mortgages: 45-60 days
  • ·        Cash deals: 20-30 days

 

I will now summarize the key aspects of each of these twelve steps.

 

Getting Preapproved:

Before you begin to look for a home, you need to know how much you can afford to spend, which means meeting with a lender and becoming preapproved for a mortgage. A “pre-qualification” is not what you want, since only a pre-approval involves a review of your credit history, along with a thorough analysis of your monthly cash inflows and outflows. Subsequent to the financial meltdown of 2008, all lenders have significantly tightened their credit standards. Here’s a link on the Mortgage Approval Process. Consequently, even if you were pre-approved a year or two ago, don’t automatically assume you can qualify for the same amount today. At a minimum, your lender will require pay stubs, bank statements, tax returns and a complete list of your financial obligations. From the standpoint of the lender, the most appealing candidate will be someone who has had steady employment with only a few employers over a period of years. If you are self employed, be prepared to provide extra documentation concerning your earnings history. In addition, you may be preapproved for a smaller mortgage and/or a higher interest rate, as compared to a peer who isn’t self employed. This is especially true for those just starting out and before a solid track record of success has been established.

Photo courtesy of Flickr.com and Edgygrrrl’s Photostream.

More to come………. in a future post.

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