Buying a home is a big step and so it is always best to be prepared. Daphne, Al. is a great area, but there are many types of homes from Rural to Waterfront, so it is best to have an idea of what you are looking for before actually looking at homes. There are a few steps to buying a home that we will cover here, but this is not a complete list of everything that could happen, just the basics.
1. Pre-Approval. We have reached a time in the market where very few sellers will consider an offer viable if it is not accompanied by a Pre-qualification/Pre-approval letter. This step is necessary for you to also know how much house you can afford to buy in the lender’s opinion. Shop around, you can use Credit Unions, Banks, or Mortgage companies. I will provide you a list of possible lenders to use, or you may contact your own Bank. It is YOUR choice, not your agents. This is also the time your lender will suggest the best type of loan based on interest rates and ability. Conventional, VA, FHA, and USDA are the most common. Discuss these with your lender.
2. Finding your Home. Now that you know what you can afford it is time to find the house that fits your budget but still works for you. Make a list of the things your home MUST have. This will go a long way in making sure your Realtor® does not waste your time showing you houses that don’t meet your needs. Personally, I feel it is not good to see more than 5 potential homes in a day, because it is easy to forget what options were in which house. I will provide you with a printout to allow you to take good notes. This phase will take as long as needed to find your home. I have seen this be done in a weekend, and I have seen it take 9-12 months. Only your timeline matters, not how quickly your agent wants to finish.
3. Making the offer. There are many moving parts to an offer when trying to get the seller to pick yours. How much help, if any, are we going to ask the seller to assist with closing. Do you want a survey of the property, home warranty, inspections, and the like. There is no limit to what you can ask for in an offer. Then we sit down and look at the market as well as going over each item in the offer to make sure you fully understand what you are asking the seller to do for you, and what you are willing to do for the seller. Once all of that has been completed then we decide the price we are going to offer based on all those things. Your Realtor® can assist you, but he or she can not make the final decision, that is up to you. You will also receive an estimated net sheet based on your offer. This is only an estimate, but it will let you know approximately how much money you will need to bring to the table based on your offer. I use a fairly consistent and proven formula to calculate that number.
4. Inspections. After your contract is accepted, it will always be my suggestion to have a home inspected, but there are cases in which you may want to skip it. The inspector goes over everything in the house to let you know if there is any danger to you or your family. The Major components of concern are roof, electrical, plumbing. foundation, and HVAC. This process usually takes less than 2 -5 hours depending on house size. Usually, we ask for anywhere from 5-10 days after an accepted contract to complete this. Costs vary depending on the inspector and difficulty of the house to be inspected. This fee is paid up front about 90% of the time. Expect to spend between 450-700 dollars on average.
5. Appraisal. Your lender is going to order an appraisal to ensure the home is worth at least as much as you are borrowing. Most lenders want this money up front and once received, will order the appraisal. As soon as the appraiser is done, then then he sends the report to your lender. This process can take anywhere from 1-3 weeks depending on how quickly the appraiser picks it up. Neither you, the lender, nor I are allowed to select an appraiser. They are on a rotation, so you never know who is going to do it until they call to set a time. ($500-600)
6. Closing. After all these parts are done your file goes into final underwriting by your lender. Once complete they will send you and the closing attorney the expected closing costs and what you need to bring to closing in order to secure the home. This is called a Closing Disclosure (CD) or a HUD. You will have 3 business days to review that with your agent and make sure everything in the contract has been covered. After you sign the CD we will be given a closing date and we will sign all the documents for the house. Usually 45 minutes to an hour.