Important Home Buying Steps & Tips
- Mortgage Pre-qualification and Pre-Approval. Get Pre-approved first so that you’re able to confirm that sufficient Financing is available and so that we know which Homes are appropriate.
- If the purchase will be a Cash purchase, you will need to obtain a Letter of Qualification/Proof of Funds Letter from your Financial Institution stating that you have the necessary funds (specific amount should be shown on the Letter—equal to the amount of your projected Home purchase) to complete the purchase.
- How much money do you have available for a Down Payment? At least 20% Down payment is typically required in our current market. The exception to this rule is for Buyers who are qualified for FHA Financing, which only requires 3.5% Down.
- How much money do you have available for the Deposit that’s required to be submitted when you place an Offer on the selected Home? This Deposit is also known as the Good Faith or Escrow Deposit.
- How much money do you have available to cover Closing Costs?
- Determine Housing Needs (Home Location, Type of Home, etc.)
- View Homes and select a Home
- Submit an Offer along with 50% of the “Good Faith” Deposit. If the Offer is accepted by the Homeowner, it will then become a Contract and you will submit the remaining 50% of the Deposit. This Deposit is usually equal to at least 2% of the Offer Price. Your Pre-approval Letter will be required to accompany the Offer.
- Order Home Inspections and related Insurance Inspections
- If Financing a purchase, the Lender (your Lender) will order an Appraisal and you are responsible for paying for the Appraisal.
- A Title Search will be ordered to determine if the Home’s Deed is clear and acceptable for purchase by a new Buyer (Title Search also includes search for appropriate Lot Surveys and Open Permits for work completed on the Home such as Remodeling, Repair, etc.).
- Home Insurance. Contact a Home Insurance Agent to provide a Quote for you. Home Insurance amounts vary significantly from one property to the next (factors that affect the amount of Insurance include, but aren’t limited to, the Home’s size, the Home’s type of Construction, type of Roof, age of the Roof, its’ location within a Flood Zone or outside of a Flood Zone, a Home’s Waterfront location, the amount of Insurance for your personal contents within the Home, etc.)
- If the Home is located within an area governed by an Association (Homeowner’s Association or Condo Association), you will be required to apply for and receive Approval by the Association prior to occupancy (typically, most Associations require a face-to-face Interview as part of the approval process).
- Note that Lenders require Condos to meet certain criteria before they approve Financing for a purchase in the building. Some Buildings do not meet the criteria and, in most of those cases, Cash purchases are the only ones allowed even if you are personally qualified for Financing.
- Note that if you’re a Buyer who’s approved for FHA Financing and you’re planning to purchase within a Community Governed by an Association, many such Communities will need to be ones that are approved to accept Buyers with FHA Financing. Unfortunately, many Communities have not applied for nor received FHA Approval, in which cases, most will have to be eliminated from consideration in your Housing choice. If you’re an FHA approved Buyer, I will check the List of approved Communities to see if the ones you’re interested in have been approved or will otherwise qualify.
- Note regarding the timeframe for closing: With a normal purchase (NOT a Short Sale), you can typically estimate 30-45 days from the time of placing an Offer until Closing. During this time, the items completed include, but aren’t limited to, Home Inspection, Appraisal, Title Search, securing of Financing from your Lender (IF you’re financing the purchase), arranging and securing Home Insurance, and obtaining Association approval (if you’re purchasing within a Community that’s governed by a Homeowner’s or Association or Condo Association. Keep in mind that if the Home is occupied by its’ current Owners, they will typically request a minimum of 30 days to vacate the Home once there is an accepted Contract for the purchase of the Home.