It all starts at the minute you have a dream to own a home.
No doubt, home ownership is not for everyone. There may be cases or moments in your life when renting could be a better option for any one of various reasons.
But once you have the seed in your mind, it all starts to sprout.
This is time to make a reality check.
So the next step is to find out what your financial and economic situation is and how soon you can make that dream a reality.
Many times it helps to consult with a financial adviser. This expert can help you figure out not only how and when you can buy a home but also he/she can give you great advice about how you can do it in a financially healthy way for you and your family.
How much house can I buy?
If in so far it all indicates this is a doable dream, it is the time to hire a real estate agent.
Your real estate professional will guide you through the process all the way looking for your best interest with loyalty.
The first thing your real estate agent will suggest you to do is to get a pre-approval.
It is okay, For most people it is necessary to obtain a loan for the bulk of the money to buy a house. This is a mortgage loan because the house will be the asset to secure the loan. That is, if for any reason you are unable to repay the loan, the lender will take the house to secure payment.
But we know now that this is not your case. Therefore, you will be getting a mortgage loan from a lender. And as always, it is good idea to shop around for the best loan terms, etc.
But at this initial time it is only necessary that you get a preapproval from any lender.
A preapproval is just a statement (not a commitment) that this lender will lend you money to you to buy a house based on an analysis of your current financial situation. That is, so far the lender has been able to see that yes in fact you would be able to repay the loan.
Now you are ready to start your quest to search and find the home of your dreams.
At this point you will confer again with your real estate agent on regards to what types of homes and what areas of town you will want to live and that you can afford.
You will plan your house hunting efforts in earnest. Chances are you would have to go through several properties before spotting the house that meets most of your needs and wants. It would have to be a compromise that satisfies you best. So you will need to put time aside for house hunting with your real estate agent.
As soon as you see a house that meets the majority of your requirements you will make an offer to the seller to purchase it.
Based on the strategy that you and your agent have planned you will decide the price you are willing to pay for this property and consider what other conditions to include with the offer.
As you can see the offer is a statement in which you notify the seller your intentions to buy his /her house, the price you will pay and some protections for yourself (or contingencies) that would allow you to make the offer contract void without any penalties for you if need be.
The seller’s reply to your offer it may be an acceptance, a rejection or a counter-offer. But once both sides agree on the terms and sign the offer it becomes a contract.
By the way, the two most common contingencies included in an offer are the home-inspection and the mortgage protection. You will have the option to bring a professional home inspector to determine the condition of the property and the mortgage protection releases you of the contract in case the lender decides not to approve the loan for any reason.
Since the offer is a contract, the seller is committed to sell you the property and you in turn demonstrate your commitment by including some dollar amount, called earnest money, with the offer that is part of the payment you will make in buying the house.
Also in the offer it is stated a date and time when all contingencies would have to be fulfilled and when a purchase and sales agreement (P&S) must be signed. Your attorney will preparer the P&S agreement and confer with the seller’s attorney to get it approve and signed by both parties. Your attorney, also looking after your wellbeing, will conduct a title search to confirm who else has a stake on the property (the seller may have had his/hers own mortgage from when he/she bought the property), etc. You will also include some earnest money in the P&S to show your seriousness to this contract.
Once every single condition stated in the P&S agreement is fulfilled, a date is determined to perform the closing and finish the execution of this contract. In fact the closing date is actually already stated in the P&S document itself although there could be extensions for any lagging issue not being ready so far.
The closing is the time when the property title is transferred to you and the act registered at the Registry of Deeds for the county that the property lies in.
It is also the time when monies are given to whoever should get it based on a document called HUD-1 that your attorney will also prepare beforehand (usually the day before closing). In this document are listed dollar amounts and charges and to who is paying what and to who is receiving how much, etc.
All this processes are going on under the watchful eyes of your real estate agent who at every step makes sure all t’s are crossed and every i’ie is dotted. He/she coordinates that everybody does its part on time so you can get up to this moment with no problems.
This is also the moment when you receive the keys to your dream home. You own now your own home. Congratulations!