Eight steps to buying

Eight steps to buying your home

1. Decide to buy

Although there are many good reasons for you to buy a home, wealth building ranks among the top of the list. We call home ownership the best “accidental investment” most people ever make. But, we believe when it is done right, home ownership becomes an “intentional investment” that lays the foundation for a life of financial security and personal choice. There are solid financial reasons to support your decision to buy a home, and, among these, equity buildup, value appreciation, and tax benefits stand out. Right now interest rates are at an all time low, and in Denver and Colorado Springs, it is a buyer's market.

Base your decision to buy on facts, not fears.

1. If you are paying rent, you very likely can afford to buy.
2. There is never a wrong time to buy the right home. All you need to do in the short run is find a good buy and make sure you have the financial ability for the long run.
3. The lack of a substantial down payment doesn’t prevent you from making your first home purchase. If you are a Vet, no down payment is required. There are special incentives for first time home buyers, or FHA loans only require 3.5% down payment. 
4. A less-than-perfect credit score won’t necessarily stop you from buying a home.
5. The best way to get closer to buying your ultimate dream home is to buy your first home now.
6. Buying a home doesn’t have to be complicated – there are many professionals who will help you along the way.

2. Hire your agent

The typical real estate transaction involves at least two dozen separate individuals – insurance assessors, mortgage brokers and underwriters, inspectors, appraisers, escrow officers, buyer’s agents, seller’s agents, bankers, title researchers, and a number of other individuals whose actions and decisions have to be orchestrated in order to perform in harmony and get a home sale closed. It is the responsibility of your real estate agent to expertly coordinate all the professionals involved in your home purchase, negotiate the best price and terms and to act as the advocate for you and your interests throughout the process.

A Buyer’s Real Estate Agent: 

Eight important questions to ask your agent

Qualifications are important. However, finding a solid, professional agent means getting beyond the resume, and into what makes an agent effective. Use the following questions as your starting point in hiring your licensed, professional real estate agent:

1. Why did you become a real estate agent?
2. Why should I work with you?
3. What do you do better than other real estate agents?
4. What process will you use to help me find the right home for my particular wants and needs?
5. What are the most common things that go wrong in a transaction and how would you handle them?
6. What are some mistakes that you think people make when buying their first home?
7. What other professionals do you suggest we work with and what are their credentials?
8. Can you provide me with references or testimonials from past clients?

3. Secure financing

While you may find the thought of home ownership thrilling, the thought of taking on a mortgage may be downright chilling. Many first-time buyers start out confused about the process or nervous about making such a large financial commitment.

From start to finish, you will follow a six-step, easy-to-understand process to securing the financing for your first home. 

1. Choose a loan officer or mortgage specialist.
2. Make a loan application and get pre-approved.
3. Determine what you want to pay and select a loan option.
4. Submit to the lender an accepted purchase offer contract.
5. Get an appraisal and title commitment.
6. Obtain funding at closing.

4. Find your home

You may think that shopping for homes starts with jumping in the car and driving all over town. It’s true that hopping in the car to go look is probably the most exciting part of the home-buying process. However, driving around is fun for only so long – if weeks go by without finding what you’re looking for, the fun can fade pretty fast. That’s why the Burt Team says that looking for your home begins with carefully assessing your values, wants, and needs, both for the short and long terms.

Questions to ask yourself:

1. What do I want my home to be close to?
2. How much space do I need and why?
3. Which is more critical: location or size?
4. Would I be interested in a fixer-upper?
5. How important is home value appreciation?
6. Is neighborhood stability and priority?
7. Would I be interested in a condo?
8. Would I be interested in new home construction?
9. What features and amenities do I want? Which do I really need?

5. Make an offer

When searching for your dream home, you were just that – a dreamer. Now that you’re writing an offer, you need to be a businessperson. You need to approach this process with a cool head and a realistic perspective of your market. The three basic components of an offer are price, terms, and contingencies.

Price – the right price depends on the approximate appraised market value of the home you want to buy, market conditions and seller motivation. Your agent’s market research will guide this decision.

Terms – the other financial and timing factors that will be included in the offer.

1. Schedule – a schedule of events that has to happen before closing.
2. Conveyances – the items that stay with the house when the sellers leave.
3. Closing costs – a good agent can negotiate that sellers pay your closing costs, which typically range between 2.5% and 3% of the loan amount.
4. Home warranty – this covers repairs or replacement of appliances and major systems. You may ask the seller to pay for this.
5. Earnest money – this protects the sellers from the possibility of your unexpectedly pulling of the deal and makes a statement about the seriousness of your offer.

6. Perform due diligence

Unlike most major purchases, once you buy a home, you can’t return it if something breaks or doesn’t quite work like it’s supposed to. That’s why home owner’s insurance and property inspections are so important.

A home owner’s insurance policy protects you in two ways:

1. Against loss or damage to the property itself.
2. Liability in case someone sustains an injury while on your property.

The property inspection exposes issues a home might have so you know exactly what you’re getting into before you go through with the transaction.

• A major concern is structural, roof, furnace, hot water heater, costly items.
• Don’t sweat the small stuff, except for new builds, the house is "used."
• If you have a big problem show up in your inspection report, you should bring in a specialist. If the worst-case scenario turns out to be true, you might want to walk away from the purchase.

7. Close

The final stage of the home buying process is the lender’s confirmation of the home’s value and legal statue, and your continued credit-worthiness. This may entails a survey, appraisal, title search, and a final check of your credit and finance. Your agent will keep you posted on how each if progressing, but your work is pretty much done.

You just have a few preclosing responsibilities:

1. Stay in control of your finances, do not increase your debt prior to close.
2. Return all phone calls and paperwork promptly.
3. You and your agent should communicate at least once a week.
4. Several days before closing, confirm with your agent that all your documentation is in place and in order.
5. Obtain certified funds for closing.
6. Conduct a final walk-through.

On closing day, with the guidance of a title company, closer and your agent, you’ll sign documents that do the following:

1. Finalize your mortgage.
2. Pay the seller.
3. Pay your closing costs.
4. Transfer the title from the seller to you.
5. Make arrangements to legally record the transaction as a public record.

As long as you have clear expectations and follow directions, closing should be a momentous conclusion to your home-searching process and commencement of your home-owning experience.

8. Protect your investment

Throughout the course of your home-buying experience, you’ve probably spent a lot of time with your real estate agent and you’ve gotten to know each other fairly well. There’s no reason to throw all that trust and rapport out the window just because the deal has closed. In fact, your agent wants you to keep in touch.

Even after you close on your house, you agent can still help you:

1. Handle your first tax return as a home owner.
2. Find contractors to help with home maintenance or remodeling.
3. Help your friends find homes.
4. Keep track of your home’s current market value.

Attention to you home’s maintenance needs is essential to protecting the long-term value of your investment. Home maintenance falls into two categories:

1. Keeping it clean: Perform routine maintenance on your home’s systems, depending on their age and style.
2. Keeping an eye on it: Watch for signs of leaks, damage, and wear. Fixing small problems early can save you big money later.

We hope this has been helpful.  The Burt Team is here to serve you!