Step By Step Guide to Buying a Home

Buying a home will likely be the most expensive purchase of your life. The process can be confusing, long and complicated without the proper guidance, especially for the first time buyers. At Hughes Home Team we will help to simplify the process from beginning to end. As a first step, we provide you with this step by step plan that clearly describes what happens before, during, and after making a purchase. While even the most organized and experienced realtors cannot guarantee a hassle-free process, being properly informed and prepared will help to eliminate many of the preventable obstacles and hassles that can arise during the process.

01

OBTAIN A PRE-APPROVAL / PROOF OF FUNDS

This often overlooked step should be the first thing any serious buyer does BEFORE looking at properties. A pre-approval indicates that you have spoken with a mortgage broker, and based on certain criteria (credit, income, debt-income ratio, etc.) you have been deemed a suitable candidate for a mortgage. Getting pre-approved is a must before searching for a home because:

It will determine the maximum amount of the money the bank will loan to you.

There is nothing worse than falling in love with a home only to find out that you cannot afford it. By getting pre-approved, you will know the price range you can afford as well as the terms of the mortgage (down payment amount, interest rates, and length of mortgage). Importantly, for many buyers the monthly COST of any given home, rather than straight out house price, is the critical deciding factor in determining what homes are appropriate for you to consider and tour.

Almost all sales will require a pre-approval letter before the seller considers an offer.

Having a pre-approval letter ready will expedite the process of submitting an offer. This is especially important when working with a property that has multiple offers.

If you will be making a cash offer, then you will need to show proof of funds (POF) to accompany your offer.

This will show the seller that you have the funds to make the purchase. POF can be accomplished by a recent bank statement, letter from a banker, or sometimes just a screenshot of your current balance.

02

IDENTIFY YOUR TEAM WHO WILL HAVE YOUR BACK DURING THE ENTIRE PROCESS

You may have heard the expression:

You think hiring a professional is expensive... wait till you hire an amateur!

Rest assured, we at Hughes Home Team are professionals and we will have your back and best interests from start to finish. And, the good news is, in nearly all home/property purchases, the buyer does not pay the cost of using the realty professional. Realtors typically get compensated through the commission paid by the seller. For a buyer, a professional realtor (all of us at Hughes Home Team) who can help to navigate all aspects of home buying should be your dream come true.

To ensure our commitment to you and your commitment to us, it is recommended that we are both bound by an Exclusive Buyer Representation Agreement.

03

START YOUR SEARCH

With the help of a Hughes Home Team realtor, we ask that you complete a Home Buying Checklist in order to identify wants and need and to keep those top of min for us as we help navigate your search. Here’s where we want to be very organized and ready to move on properties that fulfill requirements for tours.

The market can move very fast, especially for those homes that are highly appealing straight away.
You may end up falling in love with one of the first houses you see or it could take weeks or months to find your perfect place.
Whatever the case, we will stay on top of what’s available that meets your specifications and keep you abreast.

04

Write an offer

Home sale contracts are long and involved and often times confusing. The “legalese” covers a lot of areas of purchasing and protection that you may not be familiar with, but it is the blueprint of your purchase. It will include deadlines, contingencies, tax proration, mortgage requirements, and more.

Each contract is written by a professional as a mistake can be quite costly. Each contract is tailored according to the buyer’s (your) situation.

Are there multiple offers?
If so, how can we make your offer more desirable to the seller?
What contingencies must be included?
Do you need to sell your property before purchasing?

It is also highly recommended to have your attorney and inspector at the read, and again, we can provide recommendations for you.

05

Fulfill terms of contract

This step of the process differs from deal to deal. We have highlighted some items commonly found in the contract that must be taken care of before closing:

Earnest Money (EM) : This is the money a buyer puts down to show a seller that they are serious about the purchase. There is no set amount, but it typically ranges from 3 to 5% of the purchase price. It is then deposited into an escrow account. If the buyer cannot fulfill a specified contingency, he/she must notify the seller before the deadline in order to get his/her deposit back. If the deal does close, the EM will go toward closing costs. An attorney should always be consulted for questions regarding the EM.
Home Inspection: This is a very important step in most transactions. A home inspector will test all major systems of the property to make sure they are in working condition. This usually includes, but is not limited to, the heating/AC system, electrical panel, roof, appliances, windows, and water pressure. They will also test to see if there is any active leaking, radon or mold in the home. Minor details are often inspected as well. Following inspection report, you will have the option to proceed, back out, ask for repairs to be made or a credit.
Secure Financing: This contingency is imperative for all sales unless purchasing with cash. Your mortgage broker should guide you through the process, which usually includes filling out an application, signing forms, and obtaining a necessary documents such a tax returns, income verification, and bank statements. A lender will order an appraisal of the property to confirm they are not lending more than they property is worth.

06

Final Walkthrough

This is probably one of the most overlooked yet crucial steps in the process. The final walkthrough is usually done 24 to 48 hours before closing to ensure that the house is still in the same condition as when it went under contract.

What if the home flooded during the interim? Maybe one for the appliances stopped working? Maybe movers knocked a hole in the wall while moving heavy furniture? Perhaps the sellers agreed to removed or include certain items in the sale.

The final walk through gives you, the buyer, a chance to make sure everything is still working and in proper condition before closing and that everything you did not mean to purchase was removed and everything you did purchase remains. If there is in fact an issue, you must immediately notify your attorney so remedies can be pursued before closing.

07

Closing

You made it! All contingencies and terms of the contract have been completed and a closing location has been determined. If you are unable to make it to the closing, you should notify your attorney ahead of time and you can usually give him/her the power of attorney (POA) to sign the closing documents for you. The closing costs are usually wired prior to the closing but it is recommended to bring your checkbook, state ID, and PATIENCE.

Your attorney will go through the closing statement (also called a HUD) with your and this document clearly itemizes all credits and debits of the transaction. You could request a preliminary HUG from your attorney prior to closing so you know what to expect. Any additional paperwork that has not been filled out or signed is complete at the closing table. Once the wire transfer has been confirmed and the closing is complete, you are given the keys to your new home.