10 Steps to Purchasing a Home
For the majority of Denver home buyers, the home buying process can be complex and intimidating. We've put together a guide outlining the process, including what steps you need to be ready for, complete with very detailed advice.
1. Identify Your Needs in a Home
2. Mortgage Pre-approval
3. Neighborhood Information
4. Search and View Listings
5. Making an Offer
6. Negotiate The Final Purchase Price
7. Hiring and Finding Vendors
8. Closing Day Preparation
9. Closing on your new Home
10. After Closing
1. Identify Your Needs in a Home
Congratulations on your decision to pursue the purchase of a new home! Your first step toward buying your new home will be to identify your needs and wants in a new home. Your real estate agent can help you in identifying your needs so that you will be able to get a clear understanding of exactly how you are wanting your new home to function and the details of the style and looks of the new home.
First, write down reasons as to why you are looking for a new home. For example, are you tired of renting and paying off someone else's mortgage and would like to have a home where you can begin building equity? Maybe you recently had children and have outgrown your current place of residence. Maybe you have just gotten a promotion at work, which requires you to relocate to a new area or city. These factors will all affect how you approach your home search.
Second, put together a time frame that you will try to stay within for buying your new home. Depending on your situation and reasoning for buying a new home, you should be able to identify a rough guideline that will help you stay of track and ensure you meet your goals for buying your new home.
Last, more than likely you have a mental vision of what you would like your new home to look like and the floor plan, features, and upgrades you are seeking. It's a good idea to write these ideas down on paper to avoid any confusion later in your search for that perfect new home. Its a good idea to have two lists: one should describe your idea of that perfect dream home and the other list should have the features of the home that are an absolute must-have in order to purchase it. In a perfect world, the new home you ultimately choose would meet the expectations of both lists 100% completely. However you must be prepared that it is likely that you will end up combining the two lists into a single list of prioritized items as you make progress through the home buying process. This is a natural step towards meeting your goal of buying a new home.
2. Mortgage Pre-approval
Now that you have in mind what type of home you want, you are now ready to hit the road and start looking! Well, not quite yet. Your next step is to establish the price range you will be looking in. Probably the most important aspect of a new home purchase is getting your Pre-qualification or Pre-approval for your new Denver Home mortgage, this process will help you establish what your monthly payments will be and what price range you will need to be looking in.
You will need to contact a Mortgage company and have a consultation with a mortgage professional. There are some key differences between pre-qualification and pre-approval for a mortgage that you, as a buyer should be aware of. Loan prequalification is a simple and quick step. It takes into account some basic information regarding your financial status, credit rating and gives you an amount for which you may qualify for. This can be completed on a verbal level over the phone or electronically over the Internet with various companies. The pre-qualified amount is based on the information you provide to the mortgage professional. In today's housing market, pre-qualified buyers usually have a slight disadvantage when compared to pre-approved buyers. This is due to the fact that the information given to the mortgage professional during the prequalification process is not fully investigated in detail and therefore may be unreliable. A pre-approved buyer is 100% approved for a mortgage of a certain amount, a pre-qualified buyer is told that they could be approved for a certain loan amount based on the information given verbally to the mortgage professional.
The Pre-approval process is a much more detailed and time consuming process. The mortgage professional will take all pertinent information regarding your finances, credit history, liquid assets, and seasoned money for down payment and perform an extensive check on your current financial status. This process will ultimately give you the exact amount that you will be eligible for. Being pre-approved shows the seller that you a strong buyer that has gone through the extensive financial background check and there should not be any unexpected obstacles to buying the home. You can see how being pre-approved will make your offer stronger and will be more attractive to a seller than just being pre-qualified.
In order to make a serious offer to buy your new home, you must submit a sum of money known as "Earnest Money". This money will need to be easily accessible so it doesn't delay the process and will allow you to start negotiating.
3. Neighborhood Information
Now that you are Pre-approved and know how much you can afford to spend on that new home, its time to choose a neighborhood. People don't just buy a new home, they buy the neighborhood the home lies in. Think about it, if you find that perfect new home but it was in a neighborhood that did not meet your needs, would you still make an offer on it? For most buyers the answer would be, "No."
At this point you will want to start considering what you want and need in a neighborhood, compiling another list can help you narrow these down. The important items you might want to consider are things like how living in the neighborhood will affect your commute and drive time to and from your place of employment, what amenities does the neighborhood offer (open space, grassy parks, swimming pool, etc.), and, probably the most important aspect of a neighborhood, what school district your children will be in and how close to the schools you are.
At Urban Synergy Realty, we can help you consolidate the information from your list of needs and wants for your home, your pre-approval, and your list of needs and wants for the neighborhood. You can combine and use this information to start a broad home search profile, at this point it will then be narrowed down to specific areas and neighborhoods dictated by the area and neighborhoods you will be looking in. Urban Synergy Realty's experience in local markets will be a valuable resource during this step.
4. Search and view Listings
At this point you will know exactly what you can afford and the type of area and neighborhoods you will want to invest in. With the completion of the previous steps you are now ready to begin your new home search. If you have limited knowledge about the city and area you're considering moving to, you will want to start your home search by finding areas and neighborhoods that meet your list of needs and wants and then focusing your search to individual properties in the area and neighborhoods of choice.
Probably the most efficient and effective way to find properties is to allow your real estate agent to send you up-to-date information new listings and available properties that meet fit your needs and wants, and then allow your agent to screen these new listings and properties for you. When your agent sends you a property that interests you, your agent can then arrange for a private tour the property at your convenience.
Other tools that are affective to help you in your home search are searching for homes on dedicated local real estate web sites, real estate based print magazines, driving around and looking at individual neighborhoods.
5. Making an Offer
Now that you have found that perfect home you would like to purchase, it's time to present an offer to the seller. Analyzing the recent sales of comparable homes in the neighborhood which are comparable in size, quality and condition, upgrades, and amenities, what are you going to offer for the home? You and your real estate agent will look at the comparable sales information and put together an action plan to create an offer that will have a good chance of being accepted by the seller.
Urban Synergy Realty will ensure that you have all pertinent information in written form... verbal agreements are not considered binding and should not be used when buying a new home. After working with you to put your offer and purchase guidelines in a written contract that meets all the legal requirements to both local and national guidelines, Urban Synergy Realty will present the seller with a written contract fully detailing what needs to be agreed upon and done by both parties to execute and complete the transaction. The contract should be written to protect the best interests of both parties along with being comprehensive and detailed. Urban Synergy Realty will also ensure your strength as a buyer and financial position by including any necessary contingencies, which would protect you if a particular requirement or deadline was not met. Once the seller signs and accepts the contract, it will be too late to make any adjustments or changes.
A well written contract should include the following:
- The legal description of the subject property
- The offering price for the purchase
- The amount being used as down payment
- Financing and loan arrangements
- A detailed list of fees and which party will pay them
- Amount of the earnest money
- Inspection rights and resolution guidelines
- The method of conveying and what type of title
- A list of appliances and fixtures that will be included in the purchase
- The date of closing
- Any relevant and necessary contingencies
Please remember that the legalities of this phase of the home buying process are very important. Any questions or concerns you may have must be addressed right away. Think about this, no one has ever said after their closing, "I wish I had asked fewer questions."
6. Negotiate The final purchase price
Once your offer is presented to the seller,negotiations between both parties will start in order to reach a final agreement. A good rule of thumb is that everything is negotiable when you are buying a house. Leverage is the key negotiating factor in the buying process -- that is, if you have appropriate information and you use it in a strategical manner. Urban Synergy Realty will have the market knowledge and aggressive negotiating expertise necessary to ensure that your offer is accepted at the optimal terms and price possible for you.
Some of the things that you may have to negotiate are:
- The final purchase price
- Financing and assistance
- Seller concessions including Closing costs
- Issues and Repairs that need to be fixed
- Appliances and attached fixtures
- Landscaping and painting
- Closing date
- Occupancy time frame
Successful negotiating has an end result that must make both you, the buyer and the seller, happy. Otherwise, negative and awkward feelings will be present throughout the remainder of the transaction and someone may finish the process feeling that they were not respected or treated fairly.
7. Hiring and Finding Vendors
After the contract has been mutually accepted, Urban Synergy Realty will supervise and coordinate of all necessary professionals and vendors while serving as your advocate when working and communicating with each vendor. Urban Synergy Realty will make sure that each vendor has access to the home at the agreed upon times to perform their duties of expertise and oversee the completion and execution of those procedures on your behalf.
For example, the property will need a detailed examination and inspection. Working with your chosen lender, you will have to execute a formal appraisal and possibly a survey completed for the property designated in the executed contract. A thorough home inspection, a foundation inspection, and an environmental inspection will also need to be completed to ensure that the home is up to the standards outlined in your written contract. If there are inspection related issues or inconsistencies found during this time, it could possibly delay or even nullify the contract depending on the contingencies and verbiage written in the agreement.
Homeowner insurance is also a very important item that will need to be taken care of, getting multiple quotes from various agencies is always recommended. Insurance professionals advise that you obtain home owners insurance equal to or exceeding the full replacement value of the property. If you do not find and obtain adequate home owners insurance, the closing will not proceed. Having the insurance policy completed in a timely and professional manner that meets all dates and guidelines per the agreement is a must.
8. Closing day Preparation
As the closing date approaches, Urban Synergy Realty will communicate with the escrow company and your lender to ensure that all the necessary documents are being prepared, they are completed, accurate and precise, and delivered in a timely and professional manner. Your agent will also need to make sure that all necessary documents will be delivered to the correct location so they can be reviewed and approved by both parties and that they will be ready for the agreed upon closing date.
At this point, your lender should communicate what form of payment you will need to bring to the closing for any owed and unpaid fees. Make sure that your payment is in good funds and made out to the appropriate closing company. Did we mention not to forget your legal Identification card such as a drivers license or state issued ID!
Ensuring that the necessary closing documents are ready, accurate, and available will enable you to have a quick, stress free closing.
9. Closing on your new Denver Home
"Closing" refers to the final meeting where ownership and conveyance of title to the property is legally transferred and accepted by the buyer. The closing is a formal meeting that is attended by all of the parties involved including the buyers and sellers in this process. Closing procedures are usually held at an attorney's office or lawyer's or a title company. Your title company officer coordinates and executes the document signing and collection along with the disbursement of funds. Urban Synergy Realty will be present at the closing to help explain the documents, answer any questions you may have, or help to resolve any last minute or unexpected details or issues that may arise.
To ensure the closing goes smoothly, both parties involved should bring the necessary documentation and be prepared to pay any transaction related fees. Usually there can be more than one form of acceptable payment for your closing costs and transaction related fees, so ask the closing officer from the title company which form of payment will be acceptable and to whom it should be made out. As a general rule of thumb expect your closing costs to total an amount equal to 2 to 3 percent of the total loan amount, not including the down payment.
Sellers sometimes agree to pay for some or all of the closing costs, depending on the terms of the purchase contract, and the seller's equity and timing considerations. Any such concessions should be clearly made in writing in the contract. Generally lenders will allow some sort of credit from the seller to the buyer for non-recurring closing costs related to the closing of the transaction. However, they usually won't allow the seller to issue a credit that reduces the amount of the buyer's down payment or any of the buyer's recurring closing costs, examples of this are expenses for home owners insurance policy, PMI, or property taxes.
10. After Closing
Congratulations, you have now closed and own your dream home! Now that you have taken ownership of the property don't forget to have your local services such as cable, electricity, phone, and water set up. Urban Synergy Realty can help you coordinate the set-up of these local services and supply you with contact information for all service companies. Guaranteed your agent already knows who the service providers are for such services as electricity and water, as well as others.
You should already be aware of the typical expenses that are associated with owning your own home. Home Owner Association fees, trash removal, and annual taxes should be budgeted for and kept up to date throughout the year.
