In a previous article, I wrote about the 6 things to know before you buy your first home. Now let’s discuss the 7 things to know when buying your first home. I first discussed what you will need to know before you start your buying process. This article will discuss things you will need to know after you’ve picked your house and are going through the buying process.
Pick House, Provide Offer
Picking up from where we left off in my last article you’ve picked a house you liked and are ready to buy. Once you get to this point it’s time to put that pre-approval to good use. There are two ways this can go. If you provide an offer to the seller and there are no other offers, then you’re in a good spot. The respective real estate agents just have to do some negotiating and you sign for the house. The second way this can go is if there are other offers on the house.
Write up the Offer
Now let’s say you were the only offer or the winning bid on the house you’ve picked, this leads you to the writing up of the offer! You’re now one step closer to getting your first home, congrats! But you’re not quite there yet. Now let’s move to inspecting the property!
Inspect the Property
This is the most important part of the entire process. When inspecting the property understand there are a few variables that you have to consider. The first is obviously the quality of the house. You want to do a general inspection of the house to make sure that it is in good working order. These inspections typically take between 2-4 hours. I won’t get into everything that you will need to look out for here in this article, but here is a good article regarding what you should look out for.
During the inspect the property phase you will have to look out for a few other items as well. You will have to look over the title policy and make sure that it is a clean title and there are no complications and disputes. You will also have to put down your earnest money deposit on the house. If you are not sure what an earnest money deposit is; it is a sum of money you put down to demonstrate your seriousness about buying a home. The deposit is usually around 1% of the buying price of the home.
Next is the option fee. An option fee is an amount of money paid by a Buyer to a Seller for the option to terminate a real estate contract. This portion usually takes around 5-7 days. After all of that is done you can start negotiating on the repairs you found during your property inspection. If you cannot negotiate a deal on the survey you get your money back and can cancel the transaction. You will not be on the hook to buy the home if the negotiations are not able to happen.
This part is pretty clear and simple. In the Lender Writing process, you are pretty much just making sure the title is clear and transferrable. That’s pretty much it for this stage of the buying process.
During the appraisal process this is when, you guessed it, an appraiser comes in to establish the value of the house you are about to purchase. In this phase, there are two things to consider here. The first is if the appraiser values the property below the agreed-upon price of the house.
This one is pretty tricky. Let’s break it down let’s say you agreed to purchase a house for $400K but it appraises for $300k you will have to come into purchasing day with $100K (the difference between the purchase value and the appraised value) in cash. Now, if you don’t have the cash or are unwilling to do that you can cancel the deal.
Then there is if the house is appraised over the agreed upon price. In this case, you are good to go. Nothing changes for the status quo of the amount agreed upon for you.
Lender Sends the closing disclosure
This is where things start to get real. It’s the part where the lender sends you the closing disclosure. For those that don’t know what a closing disclosure is, let me explain. The Closing Disclosure is a five-page form that describes, in detail, the critical aspects of your mortgage loan.
That includes the purchase price, loan fees, interest rate, estimated real estate taxes and insurance, closing costs, and other expenses. One thing to know regarding the closing disclosure is that you need to have it 3 days prior to closing. There are times that Saturdays will count but that is dependent on the situation and the lender.
Final Walkthrough and CLOSE
Once you’ve received the closing disclosure you now get to the part you’ve been waiting for in this long crazy journey, the final walkthrough, and CLOSE! This is so exciting! But you’re not quite done you will still need to bring a few things with you. When you come to your final walkthrough be sure to bring your government-issued ID (driver’s license) and bank account information. These are obviously important to verify your identity and pay for the house! Once you’ve gotten that out of the way and done your final walkthrough you are now ready to close on your first home! Congrats!
There are 7 things to know when buying your first home. This is an exhaustive list but these are the main things to look out for when buying your house. There are a few things here that most people miss when they buy their first home. This article is meant to help you eliminate as much uncertainty as possible. I did not go into too much detail on each individual item. That was intentional because I wanted to introduce the items and build you a road map. That way you are able to do the research that is specific to you.
If you thought this article was interesting check out my previous article 6 Things to Know Before Buying Your First Home. It’s a bit of a prerequisite and is a good resource for any first-time homebuyer. I hope that these 7 things to know when buying your first home, was helpful to you all. If you have any suggestions or if I missed anything let me know in the comments!