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How Buying a House Works

Home ownership is achieved through hard work and saving and it is the culmination of the American dream. But how does buying a house works? Then you should have some time learning the process of buying a home. It can be both thrilling and exhausting experience, but with the help of the right real estate agent and some useful tips, then you can own your beautiful and affordable home you wish to own. Real estate is a local game, and to be able to win you need someone who plays in the areas where you’re looking to buy.

As a home buyer it is important to understand the terms of your mortgage and choosing a home that suits your budget. Buying a home is a momentous occasion full of joy and achievement. And it is one of the most significant financial investments you will ever make. But before aiming your target house, make sure to check with your head and your wallet first.

In this article, we’re going to go through the steps involved in searching for your perfect home. Let’s start with the finances – getting pre-approval for a mortgage.

Getting Pre-Approved for a Mortgage

They say that the first critical step to buying a home is figuring out how much you can afford to spend. Almost no one buys a home with cash. Instead, homebuyers get a loan called mortgage from a bank. So, before you start looking for your house, you need to talk with a bank or several banks to get pre-approval for a mortgage.

Preparing for Your House Search

Before you even begin considering the list of houses available, sit down first and start to think about what you “need” versus what you “want” in a home that you desire. After thinking the things you absolutely need, then list your wants. By keeping these criteria in mind, you can easily focus your search on the homes that meets all of your needs and at least a few of your wants are included.

Above all of the decisions that needed to make before you begin your home search, the most important is location. Think about the facilities or buildings that you need to consider and by combining these requirements, you will no longer need to spare a lot of time looking in the wrong areas.

Real Estate Agents

Real estate agents provide a huge advantage because they know the process on the paperwork and they have relationships with lenders and understand the local market. They will represent you in real estate transactions. It is their duty to negotiate and arrange real estate sales. They have the skills and expertise to either to look for the property or home that suits your choice.

House Hunting

Your real estate agent will ask you a series of questions regarding on your choice to find out exactly what type of home that you’re looking for and where. She will use those criteria and search from the Multiple Listing Service (MLS) for the properties that matches your choice.

Making an Offer on a House

After spending time of searching and you’ve finally found the house that you want, now you are ready to begin the negotiation stage of home buying and it’s time to make an offer. Everyone wants to get a good deal but you have to think how much lower than the asking price you go. The starting point is your mortgage pre-approval letter. Be reminded that there is a limit on the amount that you can only afford to pay. Well your goal is to pay even less than the price offered.

Your Offered Purchase Price

An offer letter is like a legal contract and in some state, once the offer is accepted, the document automatically becomes the purchase contract. Your real estate agent will be the one to prepare a draft for the offer letter, but make sure you understand the details from the offer agreement before signing on the line. You may be asked to offer hand money along with the offer and this is normal. However, if the seller accepts your offer and you decided to back out of the deal, you will forfeit that hand money. Making an offer on a house doesn’t make it yours just yet you should prepare to negotiate to the seller.

Home Inspection

Home inspection is absolutely critical when buying a home; you’ll have to consider some few factors as a buyer. You may pay for the inspection which can cost between $200 and $500 if you need someone professional in terms of home inspection. You might encounter problems about the house that only a professional inspector can find.

If the inspection found out a really bad termite infestation or cracks in the foundation, you can back out of the contract, or you can have the seller repair the problem to your satisfaction.

Here are the major areas the inspector will cover:

  • Foundation
  • Construction
  • Plumbing
  • Heating and cooling systems
  • Electrical
  • Interior

A printed report showing everything that passed and the few things that didn’t will be provided by the inspector for you to look over. This report will be your basis if you need to renegotiate the purchase contract to include repairs and you’ll have to wait for the seller’s approval.

Closing on Your House

The next step is to lock in the terms of your mortgage; most banks are willing to lock in an interest rate for 60 days. Your real estate agent will conduct a title search to ensure that no one else claims ownership of the title. If everything is clear, then you are ready for the closing. At the closing, you and the sellers along with your real estate agents will meet for signing papers. When you leave, you will have a mortgage, a title, and the keys to your new home.

For a smooth closing you will need to gather the following documents:

  • Proof of homeowner’s insurance
  • Down payment on the mortgage
  • Closing costs

The closing itself will be handled by a closing agent. His or her job is to ensure that you understand each form you are signing and there are many of them. Here are some of the most important for the buyer:

  • Mortgage note
  • Settlement statement
  • Warranty deed

Make sure that all you documents are double-checked. So after the last document and check is signed, the agent will hand you a set of keys to your new home.

Source:

http://home.howstuffworks.com/real-estate/buying-home/house-buying.htm