Basic Steps on Buying a home
So many people, especially first time home buyers, ask  what the exact process is when buying a home. We hear false information, speedy synopsis, and brief truths about what really happens when buying a house. We would like to share with in you layman's terms the step by step process of home buying in the hopes of alleviating any fears or confusion.
1. Getting Pre-qualified
This is different than pre-approval. Pre-qualification is a simple process that can be done over the phone, online, or even just on paper, if you know how to do it.  It simply takes your income and estimates how much home you can afford solely based on that. It does not take into account debt, credit scores, or any money that may be needed elsewhere. This is just a starting point to let you know approximately what you might be looking into.
2. Getting Pre-approved
This procedure is much more in-depth and needs to be handled by a professional loan officer or mortgage broker. They will take detailed information about your finances and realistically come up with an amount that will be more comfortable on your budget. They take into account debt, payments, credit score, income and history. This also can be done over the phone, in person or online. You are free to and encouraged to check with as many loan providers as you would like to get the best deal. Mortgage brokers cost more in closing costs, but are able to search thousands more loans and more often then not, come up with a more suited loan for your situation. Ask me about different options and I would be happy to give you some references. The reason this step is a priority first before even looking at homes is so that you will be as prepared as possible when the right home pops up.
Buying a home with Zero Down
When talking about money needed to buy a house, you really can buy a house with no money. It is possible to purchase a home without earnest money but much harder. You must convince the seller that you are capable of obtaining the money necessary to pay him for the property. Closing costs can be built into the purchase price of the home and you can complete your own inspection.
Although it can be done, to get the best opportunity on any house in your price range and to get the best loan rate, having a substantial down payment and money in the bank says a lot for the type of buyer you want to be and the type of borrower you are going to be.
I recommend to my clients to have at least .5% to 1% of the purchase price in earnest money. This proves to the seller that you are serious. With every purchase and sale offer I send through I like to include the pre-approval letter from your loan officer again reminding the seller of what a good buyer you are. If you really find a home you love, you should want to do everything to make the deal as easy and hassle free as possible.
3. Look for homes
Now is the fun part. You can get with your agent, hopefully me, or get online, or look through the paper, and start to find homes in your price range. Sometimes the price you can afford is not always the price you want to pay. You may not want that much in mortgage going out every month. That's ok. We will find a home that meets anything under your pre-approved price. You will want to tell your agent specifics on your search criteria.
Such as:
- Area
- How many bedrooms
- How many bathrooms
- Square footage
- Lot or property size
- Special amenities (Home Style, School Districts ect. )
- Any other features you are interested in.(Gas Heat, Attached Garage, Fenced Yard, ect)
Any home you or your agent finds, your agent can help you buy. Even if it is a "for sale by owner" home, a lot of times the agent can make arrangements for payment with that seller. In almost every case, the buyer never pays the buyers agent. That means you don't have to pay me anything for helping you find a home. The seller of the home is always the one paying for the sale of their home. They usually spilt the commission between the listing agent and the "buyers" or "selling" agent.
4. You found a home... Now what?
Once you have found a home you love you make an offer. Your agent will write up a "purchase and sale" agreement detailing the conditions of the offer. This contract is about 20 pages long and includes such forms as inspection contingences, financing contingencies, title contingencies, receipts and disclosures. This is the basic contract used by all Washington state real estate agents and is uphold able in law. Each page must be initialed and signed. It states how much you are putting down, how much you want to pay for the house and when you are closing on the property. At this point an earnest money deposit is required but not cashed until the contract is mutually agreed upon.
Once the offer is sent in to the listing agent, two things may happen:
1.) The sellers will accept the offer and sign it or
2.) They will counter-offer with something else that they didn't like on the original offer. The countering might go back and forth for a while or one party may just give up. In this negotiating time, nothing is set in stone until a mutual agreement can be made. Once made, the house goes off the market and the earnest money is deposited either with Escrow or the selling broker.
5. Inspections
On 9 out of 10 purchase and sales, there is an inspection addendum (form). This states that the buyer must conduct an inspection before agreeing to buy the property. Buyers have a standard of 10 days to complete this inspection after mutual acceptance unless otherwise agreed upon. This can be done by a licensed inspector or a friend, or yourself. We always recommend an inspection just to increase your knowledge about the home. This can range anywhere from $200 - $1000 depending on the inspector. Again, ask us, we have many references. The inspector will need to come out and complete the report on the home and the buyer will need to respond to the seller within that time frame. Once completed, the buyer will send back a form stating one of four things:
1.) Inspection is approved and we can proceed to closing
2.) Inspection is disapproved and agreement is terminated
3.) Buyer gives notice of an additional inspection
4.) Buyer requests the following corrections or repairs.
This can be in the form of money, physical repairs or lower sales price. Then the seller may respond similarly and then back to buyer who also responds the same way.
One way or another there is either a mutual agreement or the contract is terminated and the earnest money is returned to the buyer.
6. Financing and Appraisal
Once inspection has been satisfied the listing moves from "Active-STI" (subject to inspection) to "Pending" meaning now it is up to the bank to finalize paperwork and complete the loan process. This can take 5 days to a month. Most agreements state that financing needs to have final approval within 20-30 days. This is usually reasonable and doable. The appraisal costs are built into the closing costs and the bank will want to verify the home is actually worth what you are paying for it. On occasion it is not and then the seller has to either drop the price or the buyer has to come up with more money to make up the difference on their own. During this time, the buyer will want to complete any loan paperwork or home owners insurance applications and be willing to finalize documents for a smooth transaction.
7. Escrow Signing and Closing
A couple days before the closing data, escrow will call you to make arrangements for you to sign the final documents on the loan and house.  Depending on what escrow company you use, they could come to you or you could go to them. Your agent will usually make the decision. All documents will be completed and then funds will be dispersed to the various groups such as commissions, pay offs and seller's payment. Once all monies have been dispersed, your agent will call you and tell you the house is yours. I cannot hand over keys until I hear from the escrow company that the warranty deed has been recorded with the state and everyone has their money. Then the house is yours!
Feel free to email or call us with any other questions or concerns.
Cathy & Brandi Shelly
(206) 714-8984
cathy_shelly@msn.com
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