Buying a home can be a lengthy process. At minimum, it takes a little over a month to find a home, make an offer and go through the escrow or closing process. At a maximum, buying a Wheat Ridge home may take years - years to find that just right new home. Knowing what to expect at each step of the process can help the home buyer to prepare for their upcoming home purchase.
Real Estate Professional
Most home buyers start the process of purchasing a home by finding a real estate professional. The real estate professional helps the buyer to view properties, make an offer, negotiate the price and hit all the milestones of the home buying process.
Communication between the home buyer and the real estate professional is critical. Home buyers who are looking for a real estate professional at the start of the home purchasing process should interview each candidate to determine which professional is the best communicator. Asking each real estate professional the same questions can make it easier to sort out candidates from one another.
The search for a property usually begins by sorting through online listings. Your real estate agent may send or tag homes they may think you might be interested or you may search for homes online on your own. Most websites use what is called the Multiple Listing Service or the MLS. The MLS lists all properties for sale in the area. Usually these listings provide information about amenities, features and location. The listings in the MLS also show pictures of each home, so buyers can decide which homes have the right look for them. Once a home buyer has identified which properties they'd like to visit, their real estate professional can make arrangements to tour each property.
If using a mortgage to buy a home, the traditional loan requires the home buyer to put down approximately 20% or more of the price of the home. The mortgage will then cover the remaining price. Many home buyers, especially first-time home buyers, may find that they do not have the 20% in cash to put down on a home. Or perhaps they simply don't want to put that much of a down payment into a home for financial reasons. Fortunately, there are home loans that do require less than 20% down. One of these loan options is an FHA loan. FHA loans are backed by the Federal Housing Administration and offer a minimum 3.5% down payment. There are also other mortgage options for those not able or willing to put 20% or more down on a home.
Most of these types of loans have competitive interest rates. However, one disadvantage of not putting 20% or more down on a home is that most lenders will require home buyers to pay a monthly mortgage insurance. Over time, the premiums on these insurances will add up. Home buyers who want to stop paying for their insurance can talk to their lender after owning their home for several years. After equity is built up in the home, it may also be possible to refinance the original loan into a new one, depending on what the interest rates are at the time.
Escrow is the period of time that begins after a home buyer makes an offer and the offer is accepted by the seller. During the escrow period, the home buyer must reach many milestones.
- Home inspection. The home inspection helps the home buyer to determine whether or not the house they want has any major defects.
- Appraisal. The appraisal tells the mortgage lender that the home is worth more than (or at least an amount equal to) the purchase price of the house.
- Home insurance. The home buyer will secure a home insurance policy for their new home, to take effect on the day escrow closes.
Sometimes, and in most states, if the home inspection or the appraisal goes poorly, the home buyer may be able to renegotiate the purchase price with the seller. And in some cases, the home buyer may request the seller repair certain (or all of) the items found on an inspection report. Most home buying contracts have contingencies in place that allow the home buyer to do this.
Close of Escrow
The home is considered purchased and sold when escrow closes. In most states, unless the seller has negotiated for a rent back deal in the purchasing contract, the home buyer may perform a final inspection or walk through and then take possession of the home on the day of the close of escrow.
Working with a real estate professional throughout the home buying process is very important. If you're a home buyer who would like to purchase a home, get started today by contacting a real estate professional.