Purchasing a home is probably the biggest financial decision you will ever make. Whether this is your first purchase or you are moving on to a different home that better meets your needs, this decision must be made carefully.
Why Do You Want To Buy? Are you tired of paying rent? Have you outgrown your current home? Would you like a larger yard? Would you rather live in a different area? Do you want to shorten your commute? Having a clear sense of your reasons for buying will help you choose the right home.
Has Your Income Grown? Home ownership can be a very good investment. As you pay down the principal part of your loan, you are building equity over time in addition to any market appreciation on your property.
Can You Afford To Buy? Experts recommend spending between 33-40% of your income on housing. The tax benefits of home ownership can provide a considerable advantage over renting.
Before you start shopping for your dream home, it’s a good idea to make some preparations
Build your ‘Home File’ – A file contains all your important financial documents. You’ll need it to secure financing for your home. The typical file should contain:
- Financial statements
- Bank accounts
- Credit card
- Auto loans
- Recent pay stubs
- Tax returns for two years
Check your credit rating – Your credit score will have a huge impact on what type of home you can buy, and at what price. Anything above 620 is considered good. A premium interest rate may mean a lower interest rate on your mortgage. Check your credit rating with a credit reporting agency such as Equifax , Experian or Trans Union.
Be Careful With Your Finances – Now is not a good time to make sudden career changes or large purchases. You want to approach home buying from a position of financial stability.
Getting Pre-Qualified – Next is getting a mortgage company to look at your ‘Home File’ and see if they are willing to lend you the money. This is a simple process and will determine if you are ready to look for a home, or you may have to wait until a few things are taken care first. This process does not cos any money, but is critical to the home buying process.
Choosing an agent – Here are some factors to consider when choosing a real estate agent:
- Look for a full-time agent who has experience completing transactions similar to yours.
- Interview a few agents: Are they familiar with the area you are interested in?
- Ask how much time the agent will have for you, and if they have a licensed assistant.
- Ask about their credentials and education: A good agent willcontinually strive to improve and gain knowledge of the latest real estate trends.
- Does the agent return your calls promptly? Time is money when attempting to buy a home.
- Ask for a list of homes they’ve sold or a list of references.
- Choose an agent who listens attentively to your needs and concerns. Pick an agent with whom you feel comfortable.
Select an agent that will represent you during the home buying process… a Buyer’s Agent. Seeking the assistance of an agent that has a home for sale may not be what you want since that agent represents the seller of the home.
Once you’ve got those preparations out of the way, it’s time to find the home of your dreams.
Take a Drive – Get to know the neighborhoods you are interested in. Drive around and get a feel for what it would be like to live in the area. Start getting a sense of the homes available in those neighborhoods.
Narrow your search – Select a few homes that interest you the most and have your real estate agent make appointments to visit them. Ask your real estate agent about the potential long term re-sale value of the homes you are considering.
Time to make and negotiate an offer – Once you’ve picked out the house you want to buy, your real estate agent can help you make an offer that the seller will accept. A good agent will investigate the potential costs of maintenance and repairs on the house. Your agent will then negotiate your offer with your best interest in mind.
Title Company and Closing Attorney – In Mississippi we use a closing attorney to complete the sale of a property, and not an Escrow company. The job of the attorney is to complete all the necessary closing documents and complete a lien and title search of the property. The attorney acts as a neutral third party holding all instruments necessary to the sale, including funds and deed. The attorney (Title Company) will research the complete recorded history of the property, to insure that the title is free and clear of encumbrances by the date of closing and that all new encumbrances are properly added to the title. Some properties are subject to restrictions which limit various activities from building to parking restrictions. There may be recorded easements and encroachments, where others have limited rights to use your property.
How to Hold Title – You may wish to consult with an attorney or tax advisor on the best way to hold title. Different methods of holding title have different legal, estate and tax implications, especially when selling or upon death of the title holder.
Inspections – Once your offer is accepted by the seller, you’ll need to have professional inspectors evaluate your home’s major systems. Your agent may recommend other inspections, such as roof, chimney/fireplace, property boundary survey, well, septic, pool/spa, arborist or mold. In addition Mississippi requires a Clear Certificate of Termite from a pest control company asserting there are no visible signs or termites or damage affecting the structural integrity of the home.
Appraisal and Lending – Keep in close communication with your lender, who will let you know when additional documents are needed to approve your loan application and fund your loan. The lender will often send an appraiser out to the property and you may pay a fee for this service. Appraisers are specialists in determining the value of properties, based on a combination of square footage measurements, building costs, and recent sales of comparable properties. When you are within two weeks of closing, double check with your lender to be sure the loan will go through smoothly and on time.
The hard part is behind you, but there are a few more steps before you can move in to your new dream home.
Final Inspection – A few days before you take over the property, we’ll do one last inspection to make sure everything is in order.
Utilities and Services – You will have to change the utilities and services of the house over to your name. Your real estate agent will assist in this process.
At the closing table – When your transaction is nearly completed, the closing attorney will provide you with a “closing statement or HUD-1” detailing all of the financial details of your home purchase. We will go over this with you to ensure its accuracy. At the last step in the buying process, the attorney will have you sign the final documents, including loan documents (“deeds of trust”). When everything is complete, the attorney will record the transaction for you at the County Assessor’s Office, and you will become the official new owner.
Follow-Up– After your closing we will follow up with you to make certain all is well, you received your recorded Deed of Trust and you are settled in.
Remember, we will walk with you every step of the way to ensure you understand the process and help you resolve any issues that may come up. We will be your ‘Personal Shopper’.