Home Buying in 5 Steps
Is it Time to Buy?
Buying a home, and particularly a first home, can seem like a daunting prospect for many people. Can you afford it? Will you get the financing? Will you be able to find the home for you? Is now the right time? And, what's actually involved in buying a home? are all questions that people face everyday.
With so many big questions to face, it's easy to talk yourself out of making this big step in life and remaining with the status quo. The truth is that buying a home doesn't have to be a complicated process. In fact, with the right help from the right professionals, it can be completed in five steps in a relatively short amount of time!
Five Steps to Buy a Home
From when you first think about buying to actually being in your new home, there are five steps that you are likely to go through:
- Decide to Buy
This first step is probably the most important step in the whole process. The funny thing is that many people may not even include it when they are on the road to home buying. Deciding to buy, or motivation, must be considered by all buyers, as it is the driving factor behind the rest of the steps. Buyers who lack motivation, or don't have a clear reason for buying, will find the process difficult as they will lack clarity when they begin their home search.
Before moving on to step 2, think about why you are buying, and if you really want to buy now. There are solid financial reasons for people to buy a home, including financial security, building equity, benefiting from property appreciation, and tax benefits. If you are renting, deciding to purchase means that you gain all the advantages of home ownership, instead of your landlord.
- Obtain Financing
This is the step where most home buyers fail, and not because they can't get financing, but because they complete this step later. There is nothing more disheartening than finding your dream home, and then being told you can't afford it. Not only have you lost that home, but every home after that just doesn't stack up.
To avoid this happening to you, you should consider financing before starting your home search. It's important to find out what you can afford, as well as if you can obtain financing from your bank or mortgage provider.
- Hire a Realtor
A realtor is professionally trained and experienced in orchestrating real estate transactions. Not only do they help you find your home, but they also work with the many other professionals to ensure that the deal gets done. On top of that, realtors are trained negotiators, and they are acting on your behalf. A realtor acts as your advocate and protects your interests throughout the entire home buying process. Choosing the right realtor for you can be difficult with so many to pick from, so use the following guidelines:
- Have family, friends, and colleagues suggest good realtors they have used
- Ask real estate agents why they got into the business
- Ask about services the realtor provides, and why you should work with that person
- Look at testimonials from past clients
Pick the agent that you feel comfortable with and think will provide you with the best service you can get.
- Find Your Home
This can be the most time-consuming of all the steps. Once you find your home, the rest of the process is relatively easy in comparison. Finding your home is not as easy as just visiting open houses, looking at MLS, or driving around to look at homes for sale. Without clear criteria of what you need and what you can afford, finding a home can become extremely frustrating in a very short time.
Your real estate agent can help find your home by completing the searches for you. By providing your price ranges, needs, and wants to your realtor, homes that meet your criteria will be the ones you take the time to visit. Having a clear understanding of what you want to buy will make this process a lot easier, and take a lot less time. Factors you should consider include:
- Price range
- Size of home (number of bedrooms, bathrooms, etc.) and yard
- Type of property (condo, townhouse, detached house, etc.)
- New home build or resale
- Move-in ready or fixer-upper
- Features of the home (garage, air conditioning, fireplace)
- When you want to move
Your agent should ask you about most of these factors, and probably more. Keep in mind those features that are definite needs (for example, 3 bedrooms for a family with 2 children) vs. wants (an in-ground pool, a fireplace). In other words, what are deal breakers, and what would be nice to have. Make sure your agent knows what your deal breakers are.
- Purchase Your Home
There are three phases to purchasing your home. First, you have to make an offer (and have it accepted). Second, perform your due diligence. Third, have the sale close. Once you find the home for you, your real estate agent will prepare the paperwork for your offer, and negotiate the best terms for you. Before you make an offer, you should have a firm idea of what you are willing to pay for the house, and what you want.
When the offer is accepted, there is a period of time for you to perform due diligence on the property. This is important, as you cannot return a house once you have bought it. During this time, you will re-visit your mortgage provider to ensure they will finance the purchase, contact your insurance company about insuring the home once it's purchased, and go through a home inspection with a home inspector. When these steps are completed successfully in the allotted time frame, the house will be sold to you.
The closing date is the date you actually take possession of the home. This is at least a few weeks to a month after the offer date (usually, although it can go shorter or longer). During this time, you and the seller will be preparing to move, plus your lawyer will be carrying out legal searches on the property on your behalf. At close date, your lawyer sends your payment (made up of the money from your mortgage provider plus your down payment) to the seller and you get the keys!
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