05/25/2021
Long Read but well worth it!
This page and all of you are exactly why I got into Real Estate.
I love seeing each and every one of you taking the steps needed to obtain homeownership.
Even if you aren’t quite ready, just being on this page and asking questions is a huge first step!
Don’t let anyone tell you that you “CAN’T” own a home. Keep pushing forward and you will get there.
With that said... Often times I see posts asking for the “steps” or “process”.
So I wrote out a basic guideline as to what to expect from beginning to end below. Hope that helps!
Contact a lender. I always recommend a local, trusted lender. Go over your finances with them and they will tell you exactly what you need to know.
If pre-approved, you will know for what amount.
If you aren’t quite there yet, don’t give up. Listen to the lender and work on the items/issues you need to work on.
Once preapproved, find a local Realtor.
Use a Realtor that you feel comfortable with and that knows that local market.
Your Realtor will help you find homes that meet your budget and also that fit your needs/wants.
Go and see the homes.
If after seeing a home, you want to place an offer, your Realtor will write up the offer for you and submit it.
If the offer is accepted, you would let the lender know you have an accepted offer. I always call the lender, introduce myself and provide tax details, MLS sheets and anything else needed by the lender from me. You would then provide a check for something called EMD (Earnest money deposit). This lets the seller know you are serious. The amount of EMD is different for everyone. Your Realtor should discuss this with you and guide you as to the best amount to put down. In my market, $1,000-$5,000 is average range depending on the price of the home.
If you opted for inspections to be done in your offer, you will then begin to set up those inspections to be completed. Plan on anywhere from $300-2,500 depending on scope of inspections, size of home and market you are in.
If all goes well with inspections, you’ll move on to the appraisal.
If there are issues with inspections, as long as you opted for an inspection contingency, you can negotiate for sellers to pay for repairs, for sellers to credit you the amount of repairs or you can walk away.
Appraisal: Again, in my market, this will cost anywhere from $500-$750.
The appraiser will assess that the property is worth the amount you offered.
This is to help mitigate risk to the bank.
The bank will only lend what the house appraises for.
If it appraises at or more than the amount you offered, you are good to go.
If the house appraises for less than the amount you offered, you can 1)pay the difference out of pocket 2)Ask sellers to drop price 3)Walk away. This is why I always advise an appraisal contingency.
Once you’ve made it through inspections and appraisals and/or negotiations relating to the two, underwriting and your lender will finish up their process and issue you a clear to close.
Also note, your initial EMD money is held in an escrow account. The amount is applied to your loan costs at closing.
Some States have an attorney review period. My State does not so if your State does, I would discuss with your Realtor about that process.
In my State, we use Title/Abstract companies to close. They prepare all closing documents, notarize the documents and handle the closing. You choose the title/abstract company or ask your Realtor who they recommend.
Also note: You will get your EMD back if:
you have an inspection contingency and decide the repairs are too great to proceed.
2)You have an inspection contingency and sellers won’t negotiate to fix or credit you money to fix.
3)You have a financing contingency and cannot obtain financing.
4)you have an appraisal contingency and the home appraises too low, the sellers won’t drop price to appraisal amount or you cannot cover the difference. Any and all apply.
Hope this gives you a basic overview as to what to expect.
Your Realtor will guide you through all of this and explain each step in greater detail.
Don’t be afraid to ask questions. There is no such thing as too many questions or foolish questions. This is a major purchase. You should fully understand what is happening and why.
Deep breaths and try not to stress. Use an Realtor or agent and lender that you trust and who will guide you through this.
If anyone has any questions, please feel free to reach out. While I’m only licensed in Pa, I will guide you to the best of my ability if outside of my state.
If any of you would like my complete homebuyer’s packet, please leave your email and gladly send it to you. 🙂
Best of luck and I hope you all find your perfect home! 🏡🏡🏘🏠💕
