Elite Orlando Homes - Article: 10 Steps To Buying an Orlando Home
Buying a home is probably the largest single expense you will make during your life. Like a marriage, there will be endless planning, compromises and ultimately, satisfaction. In many cases, there is also unnecessary stress involved in the process. Hopefully, you are reading this before you start your search.
I believe that this stress is not a prerequisite for this experience and if you are aware of some of the bumps in the road that may happen, you will be able to take them in stride, enjoy the experience, and not have this be the most stressful experience of your life.
This list comes from being personally involved as 3 of the 4 parties that are involved in buying a home.
As a Century 21 Oorlando Realtor professional, as a homebuyer and in the experience of being a homebuilder I have managed to experience one or another of the pitfalls I have described and perhaps I can save some of you from having to experience the same.
The 10 Steps
There are basically about 10 steps to buying a home. There are articles throughout DailyInterest.com that go into more depth on thes subjects and I have provided links to each of them to assist you in your quest for a new home.
Pay particular attention to the order of these steps because taking these one by one, and in order, will help you be prepared for what is to come. Much of the stress caused by the homebuying process comes from performing these steps in the wrong order. I have also covered some of the pitfalls you may encounter along the way.
Step 1 : Get Pre-Qualified or a Pre-Approval for a Mortgage
Step 2 : Use the Homebuyers Checklist to set your Priorities
Step 3 : Get a Real Estate Agent
Step 4 : Talk to your Mortgage Professional again Before making an offer
Step 5 : Make the Offer on the Home / The Offer is Accepted
Step 6 : The Mortgage Process
Step 7 : Appraisal, Inspections and Possible Renegotiations
Step 8 : Setting Up The Closing
Step 9 : The Closing
Step 1: Get Pre-Qualified or get a Pre-Approval, learn what you can afford
Visiting your mortgage professional before any of the other steps will remove as much as 50% of the stress that may be involved later on. The first step should be to get pre-qualified.This is where a pre-qualify makes sense. Please read Pre-Approve vs Pre-Qualify to understand the difference.
As you get closer to finding a home, and are choosing an real estate agent, then it is time to pre-approved.
There are many mortgage professionals who will be more than happy to help you through this step. You don't have to wait until you get a house, do this now! In fact, getting pre-qualified before you start looking will lead to the answer of many other questions, such as
the size and price of the home,
the size of your downpayment,
the type of loan you will need
and most important what you can afford, NOT what you can qualify for!
You may want that dream home, but you may want to consider other ways to accomplish getting to that goal.
Getting pre-qualified doesn't cost anything more than a little time and the cost of a credit report. There is no obligation, but it would be the right thing to go back to the mortgage professional who took the time to pre-qualify you!
Finding the home first and then going to the mortgage company to ask if you can afford the home, just doesn't make sense, does it? Still, thousands of homebuyers per year go in just that order. Finde the house, make an offer, get a loan.
The results of doing this step later on can result in higher interest rates, dissapointment or more time to get the loan closed as a lender is found who will accept the terms of the deal that you already negotiated. Isn't it better to negotiate a deal that fits your terms?
This is also a great time to be able to interview the mortgage professionals to find someone you communicate well with and the pre-qualification process can give you an idea of their competence and will give you a good indicator of how the rest of the mortgage process will go.
Now that you have an idea of what you can afford, take an evening to sit down and answer these questions and fill in the order of importance column.
It is almost guaranteed that you are going to have to make a choice or two where it comes down to one or the other and by filling this checklist out in advance, you can see what you thought before you started looking versus what you think in the heat of the moment.
Nothing is written in stone. This list may change.......or I should say probably will change! That is why there is a printable copy, so you can do it again!
Step 3: As Your Orlando Realtor we can give you an idea of how much house you will get for that amount you and your mortgage professional have decided you can afford, but getting an agent to work with will definitely save you time.
Also, since you are buying a home, employ us as your Buyer's Agent. If you just go to a Realtor and they hook you up with an agent that has listed the home, they are a Seller's Agent. No matter how nice they are, you must remember that a seller's agent has a first priority and obligation to get the seller the most for the house that they can.
As your Buyer's Agent we will negotiate on your behalf and will ensure that the documents you eventually sign will have your best interest's included in the final agreement.
Some of you are likely also thinking about the FSBO (for sale by owner) homes. Just a thought to throw out there is that the owner is most likely selling by themselves in order to keep the money they would have given to an agent, not so that they can offer the home cheaper to you!
In addition, many homes are sold through referrals from other agents as they will call their netowrk of agents when they get a new listing. Having a good buyer's agent with a good network can get you a home before it ever hits the market.
If you haven't already done so, now would be a good time to take the extra step to get a true pre-approval instead of just a pre-qualify.
Step 4: Talk to your Mortgage Professional again Before you make an Offer
You found that house, it's time to make an offer. You're excited and the agent's are telling you that more offers will come in today, you need to make an offer now if you really want to get this house.
Gather your thoughts, call your mortgage professional and structure an offer that you can afford.
Maybe that home is a little more expensive than you promised to hold the price down to. Maybe you know you stretched it a little.
Well, your mortgage professional might just have an idea or two to make it all work out and still be affordable.
Perhaps this involves a seller's concession. This is where you pay a little more for the house in return for the buyer paying some of all of your costs.
Perhaps you can make it affordable with a different program, such as a piggyback mortgage or a 5 or 7 year ARM instead of that 30 year fixed.
Perhaps a simple phone call will let you know that the differnce is only $28 a month and you really can afford that home you fell in love with!
Step 5: Make the Offer on the Home / The Offer is Accepted
An offer on a home is what is the exciting stage, and if you have been following all the above steps you should be covered.
Your agent will help you draw up an offer that will protect you make sure that the home really is what it appears to be. Not only is the price of the house included in an offer, but also the things that are included and are not included, when you want to close and when you will actually take posession of the house.
When you want to close should be in accordance with what your mortgage professional has told you it should be! More stress comes over the timing of the closing or someone trying to get a house closed fater than is possible than perhaps any other item in the process.
If you haven't seen that movie where the buyer's show up to take posession of the home and there is a big hole in the backyard where the pool used to be and all the light fixtures are gone, then you might want to give this a thought! Of course there is no need to be quite so specific, but the movie made a point. There are more than a few arguments between buyer and seller over things that one party thought was included and the other did not that it is worth taking the time to include things you expect to see left at the home when you take posession.
In addition, make sure that this offer is contingent upon passing inspections, an appraisal verifying the value of the home and upon a mortgage approval.
Step 6: The Mortgage Process
The offer has been accepted and it's time to get down to the real business. The Mortgage.
Show me the money!
I won't go into detail here, too fully understand the steps in the mortgage process, you can read my article "The Six Stages of a Mortgage"
Basically, though, having gotten that pre-approval will cut out quite a bit of time in this process. With pre-approvals, I have actually seen some houses ready to set up a closing in a week or less. Wow!
However, if you do not have the pre-approval and maybe even if you already have it, a good time period for the mortgage process is about 30-45 days out depending on the complexity of the situation.
Step 7: Appraisal, Inspections and Possible Renegotiations
The Appraisal and Inspections are really part of the mortgage process, but more than a few contracts have been changed or even cancelled depending upon the results of these two items.
When an inspection reveals a defect or needed repairs (as happens many times!) this is an opportunity for you. Often these are repairs that are fixable and the contract is just adjusted. Other times, something nasty appears. The roof is rotting, the foundation has a crack behind that pretty toolbench in the basement. Inspectors find the things that are not easily seen by the naked eye. Always get an inspection.
Either renegotiate a fair price for the repairs to be held back or decrease the price of the home to cover the repairs or head on out the door and find yourself another home and be thankful that you got an inspection.
When an Appraisal reveals that the home is not worth what has been offered, this is a much more serious issue. Remember that an appraisal compares this home to the prices of those that around it that have sold recently.
If the value comes in low, there is a reason for it! That reason is that other buyers refused to pay that much for a similar home and this should mean the exact same thing to you. Never, ever ask an appraisor to increase the value of a home! "Oh, just have them stretch the numbers so I can close!" "Find another appraisor who will get a higher value!"
Can you see how silly that sounds reading it? Why do you want to pay thousands more for a home that it is really worth? Pressure from all parties sometimes makes people do silly things and this is certainly one of them. Don't fall in this trap. Make the price of the home meet the price of the appraisal or find yourself another home. Do not pay too much because it can take years to catch up on that mistake.
As a note from the mortgage end of things. Mortgage amounts can be reduced in the underwriting department in 24-48 hours, this is a very simple process. Increasing the mortgage amount involves a whole new approval.
Step 8: Setting Up The Closing
The hard part should be done. The contract is fully negotiated, the mortgage is approved and you are ready to set up the closing.
Do you note the order that I just placed that in? Contract - Mortgage - Set up Closing
In the mortgage industry, the final approval is called a "Clear to Close" and once the clear to close has been issued a closing can take place in 48-72 hours.
Many, if not most, closings that go smoothly have received this clear to close about a week in advance of the closing.
The Pitfall of a Delayed Closing
A word of advice as a way to avoid a delayed closing, which is the number one stress creator in Buying a Home, is that if a clear to close has not been issued a week in advance, delay your closing.
It is so easy to move the date 7 days before, there is plenty ot time. Unfortunately, those that are new or those that are just plain "living for the stress" try to promise things that just don't happen and everyone ends up hating each other and giving evil stares at the closing.
If your mortgage professional says "delay the closing" please, please take that to heart. Do not demand a closing on the date you picked because you are setting yourself up for a mess. A good mortgage professional who has been through this process many, many times, knows whether this is going to close on time at least 10 days before the closing.
Another way to avoid the pitfall of a delayed closing is during the contract process. If you have been following these steps in order, your mortgage professional knows if your situation may have some bumps in the road and will suggest the time to closing that they may need to secure the mortgage and have a smooth pleasant experience.
Step 9: The Closing
Expect a closing on a home to take an hour or two. If you have been following all the other steps until now, this really is a pleasant experience. Smiles around the room, papers are signed and checks are passed out and you walk away with the keys to your new home.
There are horror stories about botched closings and needing more money and of course the dreaded delayed closing, but if the steps above have been followed this is a very pleasant experience. The closing does not have to be an electric situation where closing fees have changed, the amount of money you brought doesn't match the paperwork or the seller really did leave you a hole in the ground instead of a pool.
Part of the whole reason for this article is to save others from going through one of those and if this saves just one person from having an awful experience it has done it's job.
I truly hope that you have learned a little from these Steps to Buying a Home and perhaps are able to avoid a problem or pitfall from sharing the order to do things in.
When you deal with a mortgage professional who understands the mortgage process, any changes in dollar amounts are known days if not longer in advance, because the steps in the process were followed, any glitches were communicated and the closing was set up properly.
May you have a pleasant experience, a wonderful homebuying and enjoy your home!