In this guide for first time home buyers, we try to explain the process of a home purchase. Being a first time home buyer can feel overwhelming. There are so many questions that come up.
The first step for any buyer is to find a knowledgeable Realtor to guide you through the process and find the perfect home for your needs and get preapproved for your financing with a qualified lender if not purchasing with cash.
Our team at Palisade is dedicated to our clients needs. We have many years of experience behind us.
A great lender is more than just getting a good interest rate. They need to be someone experienced that you can trust and know that they will be part of your team working together to accomplish your main goal: to own a new home. Your lender will first take your information in the form of a loan application, much like the one you probably filled out when you bought your last car or got a credit card. They will need you to prepare some documentation for them. Once they have compiled the information they need, they will issue a pre-approval letter. The pre-approval letter is key to having the seller of a property know that you are a qualified and serious buyer. This will help your offer to compete with other offers that they may receive. Tom Parashos and the team at Palisade Realty have recommended lenders that we have worked with in the past and have had great experiences with for our clients.
Deciding What You Want
Are you looking for a home in the country? Do you want to be downtown in close proximity to nightlife? Do you have children and your top priority is a family neighborhood with fantastic schools? Do you commute to work and need to consider public transportation access or driving time? All of these things are important in deciding what part of the city/county you want to live.
The home itself can be anything from a small condo to a large home on acreage. Consider the time needed to keep up your home and what you are able to handle. Do you like to garden? Do you want to have someone else take care of it all and you’ll just upkeep your own part? Do you need a lot of space for your family or future family? Do you want a one story home or a two story home? How many bedrooms and bathrooms do you want in your home? Do you need special rooms dedicated for a home office, play room, exercise room, entertaining area, or dining room? Do you want outdoor space like a large backyard, pool, garden areas? Do you like community living with a pool, recreation room, workout center? Think carefully about what you truly want in a home and make a list of your top priorities to share with your Realtor so that he/she will know exactly what you are looking for. This will help shorten your search time and get you the best home for the money that meets as many of your desires as possible.
Touring Homes And Open Houses
Your realtor is your greatest asset in finding you home. They will send you listings to look at to narrow down your likes and dislikes. However, nothing beats going with them to see the homes in person. Sometimes the pictures just don’t do a home justice. A realtor will also evaluate the value of the home, they type of purchase and if it will fit in your time frames. A short sale is typically the longest time to get to closing so if you are wanting to close at a certain amount of time it may not be the best choice for you. A realtor can shorten your search time by ruling out homes that won’t fit your needs. This is what they do everyday. They know the inventory and the value of homes in certain neighborhoods. They do their research and save you valuable time hunting around the internet. Visiting open houses yourself is a great way to see what other homes are out there. We recommend that you take a stack of your realtors cards with you and hand them to the agent when they ask you to sign in. This will discourage you being solicited by the agent there. It will allow you to look more freely at the house.
You’ve Found Your Dream Home And Are Ready To Write An Offer! What Happens Next?
You will sit down with your realtor and talk about the options in the contract. Your realtor will be important in helping you determine how much you want to offer on a home. They will provide you with the information needed to make the best offer. You will need to know how much you are willing to put down as a deposit. This is called your earnest money deposit. It is money that shows the seller that you are making the offer in good faith. This is different from your down payment on your loan. The earnest money deposit is normally between 1-5% of the purchase price. You will be expected to write a check that day to submit with your offer. Every Palisade Realtor will go through the contracts with you and explain every step of the way before you sign anything. Feel free to ask questions. There is a lot of information in there and you need to be comfortable with what you are signing. Once the offer is complete, the agent will submit the offer to the sellers agent. They are typically given up to 3 days to respond. Sometimes there are counter offers and your agent will go over those with you. Your realtor will negotiate on your behalf to get you the best price and value possible for the home you choose. Negotiating skills are one of the most important thing that a realtor has in addition to experience and knowledge of the contracts and process.
Once your offer is accepted the clock starts ticking. The initial inspection period (usually the first 17 days) are the most important. The first thing that happens is that escrow is opened. Escrow is a company that is a neutral third party that handles the transfer of funds and property in a transaction. The Escrow officer is the person who is assigned to oversee the entire process.
During the first 17 days it is referred to as your inspection period or discovery period. In the state of California, it is the buyer’s responsibility to get any and all information pertinent to the property they are purchasing to their satisfaction. It is the seller’s responsibility to relay any information to the buyers of the property that they know about the property. It is important to hire a licensed inspector. They will meet you at the home and look over all accessible areas of the home and provide you with a report. They are general inspectors and if they find a problem specific to plumbing let’s say, they will recommend you have a licensed plumber check it out. The same with any other findings they will have. The inspection is the most important way to find out what you are getting yourself into with a home. Palisade can assist in locating a qualified inspector.
During the inspection you may find that there are issues that you would like the seller to fix before you complete your purchase. Your agent will facilitate a repair request to submit to the seller’s agent. The seller is not required to make any repairs but may consider your request and take care of some or all of the items. Please note that in some cases, such as short sales and REO properties, the lenders who make the decisions will not likely agree to repairs. We at Palisade work hard in those circumstances and do our best to get as much as possible for our clients.
Also during the first 17 days you will be reviewing a lot of paperwork. Included in this paperwork will be disclosures from the seller telling you what they know about the property. It will also be reports such as termite reports, Natural Hazard Reports, Local Area Disclosure reports, just to name a few. All of this information is for your knowledge so you are very clear on the property you are purchasing. Your agent will be happy to go over these disclosures and answer any questions about them.
Palisade Realty highly recommends our clients ask for a home warranty. This is a warranty that protects you in the case of something going wrong at your new home in the first year. It covers things such as plumbing leaks, water heater, air conditioning, heating, etc… Some of these items are additional to the basic warranty and you can choose which specific coverage you want. We can refer you to the best warranty’s available.
Waiting Game, Sort Of…
Now you wait. During the time after you have finished all of your discovery about the property it seems as if nothing is happening. Just the opposite is true! Your lender is hard at work processing the items they need for your loan. They are working with the bank, underwriters, appraisers and a host of others to make it happen for you. During this time they may ask you for updated financial information. It is your job to get items to them in a timely fashion so as not to hold up the process. Escrow is creating the instructions for the transaction, they are getting the information to both sides. They will also be asking you to sign paperwork and get information to them in a timely manner. Be sure to be available and responsive to them. Your agent is busy making sure that everything has been received and is moving along. We followup with escrow and your lender and see how we can assist. If situations arise during this time period that need to dealt with, we are on top of it. The agent also keeps you up to date on the status as we move forward closer to closing.
Your job during this time besides providing the information that everyone needs is to get prepared for your move. You will need to decide on an insurance company as well. All lenders require homeowners insurance to be in place before you close escrow. You will also want to set up the transfer of utilities. It is easier to transfer your gas/electric, cable, satellite, etc… than it is to start new. At the same time, you will want to plan the rest of your move. Decide on movers, or if you are doing it yourself, rental truck companies and who will be helping you. Packing and unpacking is easier if you don’t do it in a rush. Be organized before you move your present home and it will make unpacking later so much easier.
The Finish Line!
Now it is time for closing. The escrow officer will contact you and let you know exactly how much money will need to be brought into escrow. You can either wire your funds or bring a cashiers check to them. There will be final escrow paperwork and documents to sign from your realtor. Be available as much as possible to get these things handled quickly. Your loan will fund at the end of escrow meaning that your lender has provided the funds to escrow for the purchase of your new home. The last thing we wait for is for the property to be recorded with the county in your name. Once this is done you are the proud new owner of your own home and can move in!
Don’t worry, after the sale you aren’t on your own. Palisade agents don’t disappear once the keys are in your hands. We are always here for any questions or needs that may arise.