Today’s market is full of opportunities. With a high buyer demand matched with record-low housing inventory it has resulted in the ultimate seller’s market. And although it is a
The Homebuyer's Journey, From Start to Finish
Dated: June 7 2021
Step 1: The Pre-Approval Process
When making an offer on a home that involves you getting a mortgage a pre-approval letter is required 100% of the time. There are a lot of buyers who make the mistake of skipping this step which is a huge mistake because it is a vital part of the process! Without the pre-approval a buyer risks the chance of losing out on the perfect home to a different buyer who was prepared with all the paperwork.
During the pre-approval process, you will meet with your bank or your loan officer who will analyze your income, assets and credit report to determine the maximum amount of financing you qualify for. During this process it will also give you an estimate of how much you will be paying each month. Many buyers who skip this step end up backing out of purchasing at the last minute because the monthly payments are too high and are not financially prepared. You must be financially prepared when making the decision to Purchase a home.
Step 2: Meet with your Agent
When meeting with your agent they are going to ask you what are the most important things you want from the home you Purchase? Do you need lots of space? Do you need a driveway or a large garage? Do you need to be near public transportation or near stores? Or maybe you really have no idea what you want. During this meeting with your agent it is important to express your wants, needs, and desires for your future home because this will give your agent a better idea of what to show you that is available, that meets your criteria and the market value for the type of home you are looking for. In the event that the type of home you want is out of your budget, your agent can also discuss all available options. During these meetings with your agent they will also discuss with you the home buying process.
Step 3: Make an Offer!
The search is over and you have found the home you like! With your pre-approval letter in hand, it’s time to make an offer!
When it is time to negotiate, your agent will be by your side. Swiftness is key to getting your offer accepted. In a fast paced seller’s market like today’s market, many properties are selling FAST. Until the seller signs a formal contract of sale, they can still show their home and accept other offers even after they have accepted yours. If a property is in a hot market, you must be competitive to get your offer accepted. If a property has been sitting on the market for a long time, the seller may be more negotiable on the price.
Step 4: Home Inspection Time!
Your offer has been accepted and now the next step is to make an appointment with a home inspector. The purpose of hiring an inspector is to identify latent defects and issues that are not visible to the naked eye. They can also inform you of upcoming items that must be repaired or required maintenance in the near future. Once completed you will receive an inspection report that details the overall condition of the house and issues that must be addressed. If a major issue is found such as a structural issue; a credit or a repair is usually negotiated by your agent. Keep in mind that the inspection report should not be used to negotiate cosmetic or minor repairs that are often expected in a home Purchase. During this step it is important to be decisive as other buyers still have the opportunity to make offers on the home.
Step 5: Time to sign the contract!
You’ve decided this is the home for you, you want to move forward and sign the contract. In New York state it is required that both buyer and seller are represented by an attorney in a real estate transaction. The seller’s attorney will send the buyer’s attorney the contract of sale then meet with them to review the terms and sign the contract. At the time of signing, you will leave an earnest money Deposit. This Deposit will be held in escrow until the closing where it will be applied to your down payment. Typically the earnest money Deposit will be 10% of the total sales price or the amount of your down payment if you are leaving less than 10% down. If there are any appliances included in the sale or if there are any agreed upon repairs this is the time to make sure that it is in the contract or there will be no legal obligation for the other party to comply.
Step 6: Mortgage Application, Revisit your Lender!
Once you receive the fully executed contract of sale, meet with your lender to sign the mortgage application and provide them with all necessary documentation. Within 48 hours of the application, your lender will order the appraisal. The appraiser will value the property based on recent sales, market and the overall condition. If the property appraises for below the sale price, the seller must either reduce the selling price to match the appraisal or refund your Deposit. In certain cases, the appraisal can be disputed by your agent if found to be incorrect. If the appraisal comes in at or above the Purchase price, the appraisal report will be sent to underwriting. The underwriting department will do a final review of the appraisal report and your financial documents. When approved, you will receive a mortgage commitment letter which will be sent to your attorney. Your attorney will then submit the title report to the bank attorney for review.
*During the mortgage application, it is important that you DON’T make any cash Deposits, make any large credit card Purchases, co-sign any loans, change bank accounts, apply for new credit cards, change jobs, buy a car or miss any payments on your debts or credit cards.
Step 7: The Closing!
The time has finally arrived - you have your mortgage commitment letter and a clear title. Just like purchasing a car, you must get your homeowners insurance policy ready and submit this to the bank as well. Once all bank conditions are met they’ll issue a “clear to close”. You and your attorney will be notified of the “clear to close” and a date will be scheduled by the attorneys and the bank. Before the closing, the buyers will do a final walk-through of the property with their agent to approve the condition of the house prior to signing the closing documents. At the closing, all parties will sign closing documents.
The house is yours and it is finally time to start moving in and enjoy your new home!
Ruke is our administrator here at EXIT Realty Private Client Bronx office. She works in close coordination with all of our agents ensuring that our office is supported and running efficiently. With he....