Steps to Buying a Home

It is important as you start your home search you work with someone who has the experience, professional expertise and integrity to make your next real estate transaction pleasurable and stress-free. Whether it is your first home or your tenth, you need an agent who can inform you on the process and work on your behalf.

In this guide I will walk you through the planning process and the Steps to Buying a home step-by-step , to help you determine which home is right for you and how to strategically find your next home. You’ll develop a better understanding on mortgages, viewing homes, the offer, closing details and moving in. Understanding the home buying process and knowing what to expect can make it a pleasant, stress-free experience.

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Making the Decision to Buy

The purchase of a home is one of the largest expenditures that most people make in their lifetime. It should be an informed and cautious decision regardless if is your first home, vacation home, or rental property.

The first two questions you should ask yourself are:

1. Can you afford to buy a home right now? You have to analyze your budget to make sure you can afford the cost associated with home ownership. This goes beyond making the monthly mortgage payment. You must account for repairs, maintenance, and potential income loss in the future.

2. Is it a good time for you to buy a home?

There are several factors that you should consider before making the decision to buy a home.

1. Make sure that you are able to hold or stay in the home for several years after your purchase.
2. Make sure your employment status should be secure.
3. Analyze market conditions and use realistic expectations on where the market is at and where it is going.
4. What financing options are available to you and at what cost.

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Steps to buying a Home

When you plan to purchase a home, there is a series of steps necessary before you move forward. Below you will find all the steps needed when purchasing your next home.

1.  Financing– If you plan on financing your purchase, getting financing lined up is the first and most important thing you need to do. This will help determine not only if you qualify to buy a home, but at what cost. At the very minimum most lenders will need the following information from you. You should start compiling this information to give to your lender as you will need a preliminary approval to submit any offer moving forward.

• • bank account statements (last 2 months)
  • Documentation of any other loans you may have (school, installment, car, etc)
  • Any investment accounts you may have
  • Last two pay stubs
  • Tax returns for the last two years

If more than one buyer is involved, this information should be included for each individual.

2. Credit score- Your lender will pull your credit as it will play a big role on obtaining a loan approval.. The higher your score is, the better your chances are for securing loan and the better the interest rate you should be able to get. A credit score above 620 is generally considered a good score. Ideally you would like to be over a 720.

It could be beneficial to have your credit report and score in your hand when you apply for a home loan to have a better understanding of what is on there and to make sure there are no discrepancies that you have to fix beforehand.

3. Get pre-qualified – Once your lender receives all this information from you they should be able to issue you a pre approval and give you an idea of what you can afford and at what rate. This pre-approval shows how much you can afford to comfortably spend on your home purchase, how much of a down payment you will need to have, and how much money you need for closing costs.

In Arizona, buyers are required to submit a Loan Status Report or LSR (a standardized pre-approval letter from a lender containing relevant information) along with any contract to purchase a property.

4. When Purchasing a Home in Arizona what Documents are used or required

In Arizona, the purchase of a home involves several different types of documents that buyers should understand. All forms that are needed should be provided to you by your real estate agent. Most of these are standard forms issued by the department of real estate which include:

• • Real Estate Agency & Disclosure– a document that clarifies the relationship between the buyer (and seller) with the real estate agency.
  • Loan Status Report (LSR) – a standardized pre-approval letter from a lender containing relevant information.
  • Loan Status Update- a three-section document that provides updates on the buyer’s loan status.
  • Lead Based Paint Disclosure- a document disclosing the presence or lead-based paint provided by the seller and signed by the buyer.
  • Arizona Purchase Contract- several pages that are completed with the intent to purchase the property.
  • HOA Addendum- a required document stating the current amount of HOA fees (including transfer fees) when the Arizona home is situated within a Homeowner’s Association or HOA.
  • Buyer’s Inspection Notice & Seller’s Response (BINSR)- a document detailing the buyer’s request for repairs along with the seller’s response.
  • CLUE Report/Loss History Report- a report detailing insurance history regarding home losses.
  • Cure Period Notice- a three-day notice allowing one party to provide the other with a three-day extension for all dates/times listed within the real estate contract.
  • Final Walk Through- a document dealing with the condition of the property regarding the seller’s representation of it that is completed by the buyer.
  • Other forms can include: HOA addendum, Short Sale addendum, As-is addendum, etc.

Finding which home to purchase

Once you have qualified to purchase a home, it is time to begin your home search. Most buyers have a general idea of what they are looking for and the location.  We will then set up a customized search portal for you that will keep you up to date on any properties that come on the market that fit your criteria. After viewing the properties, you then can take the next step to making an offer.

Making an Offer to Purchase

Once you have found the home you would like to purchase, you need to present the Seller with an Offer to Purchase or an Agreement of Purchase and Sale. As your home is probably your biggest investment, it would be wise to work with your real estate agent and/or a lawyer/notary in preparing your offer. Remember that the Offer to Purchase or Agreement of Purchase and Sale is a legal document and should be carefully prepared.

Any offer or agreement will typically include:

* Your legal name, the name of the vendor and the legal civic address of the property.

* The purchase price offered.

* The chattels that will be included in the purchase price (for example, window coverings, appliances). Whatever items in or around the home that you think are included in the sale should be specifically stated in your offer.

* The amount of deposit.

* The closing day (date you take possession of the home) — usually 30 to 60 days from the date of agreement. It can also be 90 days or longer. Generally, an Offer to Purchase obliges the purchaser to take possession of the house and property on a certain date. As of the closing date, the purchaser is responsible for taxes, utilities, repairs and maintenance.

* Request for a current land survey of the property.

* Date when the offer becomes null and void — that is, it is invalid.

* Any other conditions that go with the offer, including property inspection and approval of mortgage financing.

The process of making an offer, receiving a counter-offer and then revising it again is not uncommon. The whole process can seem like a roller coaster ride — exciting, but stressful. It’s all part of making the deal work best for you and the vendor.

If Accepted, Whats Next….

Once your make the offer on the property and it is accepted, you need to take care of several important issues on a time table set by the contract.

1. Opening escrow- Once your offer to purchase is accepted, you have to open escrow through a title company. The title company is hired to act as an unbiased or neutral third party to the transaction. The title company will handle the transaction from this time to closing. They will conduct research on the property to ensure that the title is free and clear of old encumbrances and liens. Title will also hold all documents and conduct and signing that needs to occur.

The title company charges fees that are paid by either the buyer or the seller depending on the terms of the contract.

2. Setting up a home inspection- During the due diligence period (usually the first 10 days after contract acceptance) is when you should get one or more professional inspectors out to evaluate the entire home including but not limited to  plumbing, electric, and heating. Depending on the terms of the contract, you may be able to go back to the seller and ask for repairs for things found wrong in the inspection. Your realtor will help you through this process.

3. Arranging for your financing- Simultaneously with your inspection, you will need to begin finalizing financing.  This includes ordering an appraisal. You will need to work with your lender diligently and in a timely manner to make sure the process moves along and in the time line needed for closing.

4. Closing- If all goes well with the above items, you should be well on your way to closing. Your title company will arrange with you a time to sign all documents needed as well as provide you with a final closing statement. The title company will walk you through all required forms and ultimately will take  care of having the transaction recorded for you.

Move into Your New Home and make sure to get all utilities transferred into your name!