The Complete Home Buying Process
Every state requires slightly different steps to buying a home, although they are basically very similar. Here is the path to home ownership in Maryland, broken down into simple steps:
1) Hire a Buyer's Agent
- A buyer's agent will represent only you and have a fiduciary responsibility to look out for your best interests.
- Buyer's agents may ask you to sign a buyer's broker agreement, but it is the seller who pays the commission.
- Interview agents until you find an agent you trust and with whom you feel comfortable.
2) Get Pre-Qualified / Pre-approved
3) Look at Homes for Sale
- Order a free credit report online and fix mistakes, if any.
- Ask your agent for a referral to a mortgage broker, but also compare rates offered by your own bank and / or credit union.
- Ask the lender to give you a loan pre-approval letter, which means it will verify your income and pull a credit report.
- Determine your maximum loan amount, but choose only a mortgage type that you understand and a payment level with which you feel comfortable, which may very well be less than the maximum for which you are approved.
4) Write a Purchase Offer
- Ask your agent search homes for you before showing them to you.
- Narrow your search to those homes that fit your exact parameters to find that perfect home.
- Observe open house etiquette.
- Tell your agent which online home listings you are interested and ask for a showing
5) Negotiate and Write Counter Offers
- Read and question items you do not understand on all seller disclosures
- Consider writing seller's market offers in sellers markets and buyer's market offers in buyer's markets.
- Select a home offer price based on the amount you feel a seller will accept or counter.
- If you are considering a lowball offer, ask your agent to substantiate this price for you.
- Prepare for multiple offers if the home is considered desirable in a hot location.
- If your offer is rejected, ask your agent to explain why and don't repeat that mistake with your next offer.
6) Make an Earnest Money Deposit
- Expect the seller to issue a counter offer.
- If the seller counters at full price, continue to negotiate.
- During offer negotiation, share personal information about your family to give the seller a reason to care about you.
7) Conduct Home Inspection and termite inspection
- When your offer is accepted, deposit your earnest money check with the appropriate party.
- Do not ever make your check payable to the seller.
- Your offer should contain contingencies that will return your earnest money deposit to you if you cancel the contract.
8) Issue Request for Repair
- Hire a reputable home inspector
- Attend the home inspection.
9) Work with loan officer to start loan application
- If the home inspection turns up health and safety issues, issue a request for repair by asking the seller to address those issues or give you a credit for them.
- Realize no home is perfect, and the inspector will find faults.
- Be reasonable.
- Support all of documents requested by loan officer
- Choice the loan type
- Do not open any credit card account or purchase big items by using credit card
10) Order Appraisal
- Your lender will require an advance payment for the appraisal.
- If you receive a low appraisal, discuss options with your agent.
- Ask for a copy of the appraisal from loan officer
11) Comply With Lender Requirements
12) Order Homeowner's Insurance Policy
- Lenders may ask for additional information.
- Do not make home buying mistakes such as altering your financial situation while in escrow.
- When the file is complete, the lender will submit it for final underwriter approval.
13) Remove Contingencies
- Order your homeowner's insurance early.
- Sometimes previous claims by a home owner can make it difficult to get insurance.
- Get replacement coverage.
14) Do Final Walk-Through
- Home inspection contingency date wrote in contract
- Make sure your loan is firm and the appraisal is acceptable before removing your loan contingency.
- If you do not remove contingencies, the seller can issue a request to perform and then cancel the contract, on top of demanding your deposit.
16) Sign Loan / Settlement Documents
- Do not pass up doing a final walk-through. Your agent will schedule for you
- Inspect the property to make sure it's in the same condition as when you agreed to buy it.
- If you find a serious issue, address it now before you close.
17) Settlement (Closing)
- You will receive settlement document HUD-1 before settlement. Review it with your agent
- Go to bank to buy cashier check in amount of showed in HUD-1
- Bring a valid picture ID.
- You will sign all of documents at settlement table
- You give the cashier check to the settlement officer, the seller give you the keys
- After settlement, change the locks immediately.
- Your property deed will record in the public records.
- Title Company will mail you the deed when it records.
- You also will receive title insurance document by mail
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