Successful Steps to Home Ownership

Home Buying can be a daunting process. However, the process can be navigated more effectively with a roadmap. The roadmap, when followed, can provide a rewarding experience for the new homeowner.

Step 1:  The Decision

Make a decision that you want to purchase a home. This sounds simple, but once you make a commitment, you are now engaged in the process.

Step 2:  Hire a Professional Realtor

This is one of the most important steps in the process. Buying a home is one of the most involved and expensive investments you will make. Your agent will be your anchor in navigating you through the process.

Step 3:  Determine your Credit Score and Purchasing Power   **Skip this step if you are paying cash.

A reputable mortgage company, bank or credit union is a good place to start to obtain a prequalification, preapproval and eventually a conditional approval for a mortgage. It is important to know the difference between the 3 types of approvals:

Prequalification = High Risk & High Stress

This is not an approval at all; it is merely an opinion. The loan officer asks you basic questions and forms an opinion that you "may" qualify, but not that you "are" qualified. The information provided is not verified and can be likened to fool's gold.

Preapproval = Some Risk/Some Stress

A preapproval gives some credibility, but it is not the top shelf approval. A credit report will be run, you will complete a loan application and your income and assets will be verified. Your application will likely be run through automated desktop underwriting. Unfortunately, your can run into problems down the line because the actual underwriter hasn't touched your file. There may be disputed accounts on your credit report, for example, that may not have been apparent at the time of the automated process.

Conditional Approval = Low Risk/Low Stress

This is an actual approval from the Underwriter. It is the highest form of approval letter you can have. If you are in a multiple offer situation or competing for a foreclosed home at a discount, you will want to have an approval letter in hand or your offer may not be accepted. The conditional approval gives you credibility and true purchase power.

Your loan originator will also assist you in determining the best mortgage product (CONV, FHA, VA, etc), terms and interest rates, as well as provide approximate payment amounts and expenses.

Step 4: Determine Your Wants and Needs

Identify the items on your list that are "MUST HAVES" (i.e. bedrooms, baths, garage, etc) and those that are optional. Keep in mind that some of the optional items can be addressed once you own the home, particularly those that are cosmetic in nature (i.e. beige carpet or stainless appliances).

Step 5:  View Homes With Your Realtor

View homes that are priced within your budget and within the parameters of your Approval Letter.

Step 6: Select a Home & Write an Offer

Your agent will review recent area home sales and help you to arrive at a fair offer price for the house you want to purchase. When there are multiple offers, however, you will be asked to put forth your highest and best offer. It is a good idea to have a Conditional Approval Letter as well in this situation.

Step 7:  Negotiation & Offer Acceptance

The price, closing date, earnest money, home warranty, survey and other items will be negotiated and finalized.

Step 8:  The Option Period

During this period, your home inspection will be completed. Once the inspection is completed, repair negotiations are conducted. The lender will now have the consummated purchase contract in hand and will have started processing your file. 

Step 9:  Appraisal, Conditions & Coordination of Closing Activities

Once the option period has ended and the repairs are completed, the lender will order an appraisal on the property. During this time, any final conditions of the loan will have to be met. For example, you will need to purchase home owner insurance prior to closing.

Step 10:  The Closing

You will sign loan and closing documents. The Seller will terminate rights to the property and transfers this bundle of rights to you, the new homeowner. The transaction is finalized and closed.

HAPPY HOMEOWNERSHIP!

Kelly Jackson has been a professional Realtor for the past 15 years. She is currently Team Leader of the Jackson Realty Group at RE/MAX Southwest. She services the Houston Area, including Harris, Fort Bend and Brazoria Counties. She may be reached at 281.652.6873 or KELBJ25@gmail.com.