The Home Buying Process
If you have never purchased a home before or if it has been a while since you have, the home buying process may be a little bit of a mystery to you. Buying a home can be a stressful process and having a good Realtor can really help you through the process and possibly relieve some of that stress. If you are thinking of buying in the Bend or Central Oregon area hopefully I can be that Realtor for you. But regardless, to help you to know what to expect, here is how a typical home buying process should go.
Find out how much you can afford
Although you have more then likely already been looking at homes through Zillow or some other home search page, if you are serious about buying a home then your first step should be to find out how much you can afford. The best way to find out exactly what you can afford is by meeting with a mortgage broker. Although there are a lot of online calculators that will give you an estimate of what you monthly payments might be for various home prices, these usually use a generic interest rate and don’t include property taxes or insurance. Plus just because you think you can afford the payment the calculator comes up with doesn’t mean a lender will qualify you for that amount. Mortgage brokers look at all your income and expenses along with your credit scores and will find the best loan programs for you and let you know exactly what amount you would most likely qualify for and what the current interest rates are for your loan program. Talking with a mortgage broker is free and there isn’t any commitment involved after your first meeting.
There are usually a lot of different mortgage brokers to choose from and your Realtor can always recommend a few they have worked with before. I do recommend using a local mortgage broker as opposed to an online lender that are becoming more popular these days. Local mortgage brokers know the local market and are people that have offices in town where you can go and meet them in person. The online companies don’t typically know anything about the local market and you can only communicate to them via phone or e-mail. The online companies also in my experience take a lot longer to get your loan processed then the local brokers. If you are buying in the Bend or Central Oregon area and need a recommendation on a few really good mortgage brokers feel free to contact me
Start the home search process
Once you know the maximum you can afford to spend on a home you can start your home searching process. There are a lot of different home search websites out there if you are interested in looking on your own. Zillow, Trulia and Realtor.com are probably the most popular, and if you are searching in the Central Oregon area I have a search feature on my website here. I previously wrote a post on the best ways to search for a home which can be viewed here, so I won’t go too much in depth on the subject here. Ideally you want to start your search fairly broad and slowly narrow it down. If you need 3 bedrooms and a 2 car garage then be sure to put these in your search perimeters so you don’t waste time looking at homes that won’t work for you. If you are serious about buying a home, and especially if you are not familiar with the area you are buying in, my recommendation for searching for homes is to talk to a Realtor and have them send you listings through e-mail. Not only is this convenient for you since anytime a listing comes on the market that matches your criteria it is automatically sent to your email, but if you have questions about any listing you can simply e-mail your question to your Realtor. If you are looking to buy a home in an area that you are not familiar with your Realtor can be helpful with finding which neighborhoods would fit with your lifestyle and limit your search to those areas. Regardless of how you are searching for homes at some point you have your list narrowed down and be ready to start looking at these homes in person.
Start walking through some homes
At this point you will need to find a Realtor to work with that can show you the homes that you got your list narrowed down to. In case you are totally new to the home buying process, using a Realtor as a home buyer usually doesn’t cost you anything as the home seller pays the commission to both the listing agent and the buying agent. I say usually because there is the occasional situation where you may have to pay part or all of your Realtor’s commission, but these circumstances are not common and your Realtor will warn you of the situation before it happens so you can avoid having to pay any money. Your Realtor will set up appointments to walk through the homes so you can see how they look in person. Sometimes they look a bit different then the pictures may have made them look. Usually you can narrow down your choices significantly by walking through some homes. One thing to keep in mind when walking through homes is to not get to caught up in paint colors or furniture or if the house is messy. When the sellers move out you will be left with an empty house and cosmetic stuff such as paint and curtains are easy to change. Depending on the market conditions and how many houses fit what you are looking for, the home search may go quickly, or it may take a while to find the house you like. But hopefully you will eventually find the right house and then you are ready to make an offer on it.
Make an offer
When you find the house you want to buy, your Realtor will write up the sales contract and the price you are offering to pay for the home. Home prices are usually negotiable, and depending on market conditions and the price that the house is listed at, your offer may be higher or lower then what they are asking. The price you are going to offer to the seller is a discussion you will need to have with your Realtor and they will go over what they think is best for the situation. After the negotiation process if you and the seller can come together on a price for the house the contract will be accepted and you will move into the home buying process.
Start the loan process
As soon as the offer is accepted you need to start the loan process with your Mortgage Broker. This is unless you are paying in all cash in which you will be skipping down to the home inspection process. The loan process and all the paperwork involved is the reason it takes 30 to 45 days to purchase a home. So you will want to get it stated as soon as possible. You will fill out some paperwork and come up with pay stubs and other document to provide to your broker.
Get a home inspection
Once you have your loan process going, you need to get your home inspection done. In your contract for the home purchase there is a home inspection clause that gives you a certain amount of time to inspect the home to make sure there is nothing wrong with the home that isn’t obvious during your initial walk through. You will hire a professional home inspector who will go to the house and spend about 2 to 3 hours inspecting everything about the house. After the inspection they will write a report that they will send to you that covers any issues they found with the house. For new home buyers this report will usually look pretty scary because there will usually be a lot of stuff listed in the report that the inspector found wrong. Keep in mind that it is the inspector’s job to find everything wrong with the home and to point it out to you. Most of the issues will be minor stuff that is normal wear and tear items, maintenance items or stuff that might not currently be up to code anymore but was at the time the home was built. For the most part you are looking for major issues that might lead to expensive repairs down the road. Your Realtor will go over the report with you and discuss any of the issues that came up. After going over the report you will need to decide if you are willing to accept the house in the condition it is, decide not to purchase it anymore, or ask the seller to repair some of the issues that came up.
After you complete the inspection process, your lender will order a home appraisal to make sure the home is worth what you agreed to pay for it. If you are paying in all cash you will skip this part and go straight to closing. If you are getting a loan on the house, your lender will only give you a loan for the current market value of the house. A licensed appraiser will go out to inspect the house and do their calculations to come up with what the home is currently worth and send this report to your lender. As long as the home is worth at least what you are paying for it, then your loan will go to final underwriting and you will be close to closing on your new home. If the appraisal comes in lower the the sale price then you will need to either renegotiate the sales price of the home to match the appraised value, or you will need to come up with the difference in cash to continue with the home purchase. This doesn’t usually happen too often, but your Realtor will help you through this part if it happens.
Once your loan is approved, you will be given an appointment to go to the escrow office and sign a seeming endless supply of documents. Most of the documents are for your loan and the rest are to transfer ownership of the property to you. This is also where you will need to bring your down payment money to escrow.
Closing and moving in
After signing all the documents it usually takes a day or so to get the lender to fund the loan and deliver the money to the seller at which time the house becomes yours. The escrow company or your Realtor will let you know when it becomes official and will deliver the keys to you so you can check out your new home.
This is very simplified version on how the home buying process usually works. Obviously, there are other events that can occur and all transactions are a little different but this should give you a good idea of what to expect. If you are using a Realtor they will be walking you through this process and helping you with anything that comes up during the process.
If you have any questions about buying a home, feel free to contact me. Also if you are looking to buy a home in the Bend, I would love to meet with you and see if I can be the one to help buy your new home.