If you are thinking of buying a home for the first time, CONGRATULATIONS! It's exciting and terrifying all at the same time. I'll share a few basics with you, so you know some of the things that are most important in buying a home. This is in no way all-inclusive since every single transaction is different.
#1. Find ONE good realtor to work with. Optimally, someone you know and trust and who will represent YOU and your interests. It's ok to go with the listing agent on a property, but even better yet to have your own realtor. It is NOT a good idea to call several different realtors off the signs of properties you are interested in. But you might call a few from one or more offices and actually interview them for the job. Or you can call me. 928-292-0016. I've lived in the Gila Valley for 21 years and have been a real estate professional for over 8 years in Graham and Greenlee Counties. Your home is the heart of my business.
#2. Get pre-qualified for a loan. Buying a home is not like buying furniture or a car. It's best not just to "show up" one day hoping today you will just buy a house. There is a fairly long process of 30-60 days when you find the home you're in love with. Go to my lenders page and choose either listed. You can call them and compare what they have to offer. They each have different loan products, prices, and personalities. Some of them have been in the business for decades and know just how to work with the financial problems you might present. When you talk to a loan officer, they will want to know your income, how long you have been employed, and they will ask permission to check your credit. When they do that, they will be able to tell you what price range you qualify for. You are a MUCH STRONGER BUYER if you have been pre-qualified and some realtors don't even want to show you properties if you have not been through this process. You cannot make an offer on a property without being prequalified. After you have been pre-qualified, they will start asking you for proof of income, bank statements, pay stubs, and other financial information.
#3. How much is this going to cost you? The amounts vary according to the home price. But you will be required to have "earnest money." Earnest money is a small amount that you give when a contract is accepted, that shows you are a sincere buyer and are willing to put up some money to show that. Typically in small purchases of less than $100,000, you can expect to put $500-$1000 in escrow and that money will go toward the price of the home or closing costs. You can lose your earnest money if you violate the terms of the real estate contract, so make sure your realtor has explained all of the terms with you.
You will also need a down payment and closing costs. Sometimes there are programs for first time home buyers to receive down payment assistance. Ask the lender you choose about that. But a down payment can range from 3.5% of the purchase price all the way up to 20% or as much as you would like to put down. The down payment is usually paid at closing along with closing costs.
Closing costs. There are 2 kind of closing costs. The loan costs and the escrow fees. In Arizona, when you have made an offer to a seller and it is accepted, the contract then goes into escrow at a title company. This is just a temporary place for the earnest money and documents to be held until you are ready to sign the papers and "close." The loan costs vary depending on the loan. There may also be loan assistance for first time home buyers. Ask your lender. Otherwise, expect closing costs to be thousands of dollars. Your lender will give you a form once you have chosen your house, that tells you what they expect those costs to be. Escrow fees are fees charged by the title company for you to come in and sign papers and then record the documents at the county recorder's office so you have legal possession and ownership of your home. Escrow fees also vary according to the price of the house. But they are typically lower than loan costs.
#4. Finding the right home for you. With the ease of the internet, you can now do a lot of the legwork that only a realtor could do even 20 years ago. If you've chosen a realtor, go to their website and search for properties. You can also go to sites like www.homes.com. Or you can call me, tell me your price range, size, your particular needs, and I can search and then email you the results. Then you can either preview the outside of the homes yourself, further reducing the ones you are interested in, or I can take you to the homes you like, and discuss the features of each one. It's up to you.
#5. You've found a home, now what? It's a very exciting thing to know what you qualify for, spend time looking for the perfect house, and then find it. This is the funnest part for me. Writing up the paperwork and making an offer to the seller and negotiating in your best interest. You will come to my office, and we will sit down and I will explain all the different parts of the real estate contract. You will direct me in how to present an offer that you like. If I do not represent the seller, I will send the offer to the realtor who does, and we begin a process of communicating back and forth. The contract can be accepted, rejected, or countered. If the seller counters, he is basically saying, "I like your offer, but there are a few things I would like to change." We continue that process until the buyer and the seller are happy with the contract.
#6. Accepted contract. Now we have an agreement. I'm only going to mention the steps now taken because I can explain them in greater detail as we go along. Your contract and your earnest money are given to the title company and we "open escrow." The lender starts working actively with you to make sure you are completely qualified if they haven't already. An appraisal is ordered by the bank. This is another cost for you that you need to be aware of. The lender will ask you for around $500 for the appraisal. If you choose a home inspection, and I highly recommend you do, it is another approximately $400. The whole process starts moving forward and at each point, you get another chance to evaluate continuing the process, stopping the process, or starting over with a new property. For example, if the home does not appraise for the right amount, or if there is something you don't like about the home inspection, then you may want to change your offer, or even look at other homes.
#7. Closing. The big day has finally arrived and you may be very nervous. I will go to the closing with you if you want, and you will sit at a desk with a title agent, and they will walk you through all the papers that need to be signed so that you can move into your new home. Closing actually occurs when the documents are recorded with the county. So, if you sign late in the day, you might not be able to move in until the next day. So, if move in day is important make sure you share that when you set up your closing appointment. You will need to bring any funds (down payment and closing costs) in an exact amount in a cashier's check or money order. I will make sure you know that amount before you come to closing.
#8. You are a home owner! It's a wonderful thing. I hope I have an opportunity to help you through the process. Your home is the heart of my business. :-)
Don't let the process scare you. I am there to lead you through the process and we simply take it one day at a time. I hope this information helps you to better understand what you need to begin looking for the home that is just right for you. Feel free to ask me questions. And I'd love to help you find that perfect home.
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