The Home Buying Process, a Tutorial
The Home Buying Process, a Tutorial
The Home Buying Process
Many People make this honest error when they start looking for a Simi Valley home. They go to open houses and start kicking the tires without taking the most important step in the buying process and that is they need to see a lender.
You have to see a lender first to determine what your house buying budget is. Imagine walking into a home and falling in love with it only to find later on that it is priced 100K more that they can afford.
If you have no money for a down payment on a home, you can’t unless you are a veteran so if you want to buy a home, you need money.
Now if you have been a responsible individual who has managed to put away enough money to buy a home outright, step 2.
Who are the lenders
1: Big banks like B of A, Chase, Wells Fargo
2: Credit Unions
3: Mortgage Brokers
They want specific information from you
- Income Tax Returns: 2 Most Current
- W2’s for the most Current Years-All Jobs
- Most recent paystub (covering 1 month)-All Jobs
- 2 most recent bank statements- All Pages (All Accounts: Checking, Savings, CD’s Retirement Accounts Etc.)
- If you already own a property-current mortgage statement, hazard insurance declaration page.
They will want your name, Social Security # and Date of Birth as well as your current address. If you are married, they want your spouse’s information.
Find an Agent
1) Open houses
2. Friend or Family member (be sure the agent does real estate full time rather than part time) and make sure they know the area well.
4. Use Barry and Debra Kessler for homes in Simi Valley, Moorpark, Thousand Oaks, Calabasas, the San Fernando Valley, Burbank and Hollywood.
You and your new agent should get together either in person or over the phone, and talk about what you want your new home to be like. How many rooms, baths, a fixer or move in ready. What neighborhood and so forth. From that discussion, your agent will set up a customized internet search with your specific wants and needs plugged in and as the properties come on the market on the MLS, that meet your custom criteria, you will start receiving them in your email inbox.
You should arrange with your agent, a time when you can go on a house tour, looking at a few homes that meet your criteria.
Now once again, this is a brief overview of the buying process. I am oversimplifying here and we will cover each of these steps in much greater detail in other buyer tips so look for those and download them too.
Make an offer
Let’s say to simplify things you find the home of your dreams, what next? It’s time to write an offer. You will sit down with your agent and go over the Residential Purchase Contract. They should go over it page by page and explain what it all means. By this time your agent should have your pre-approval letter from your lender, and also a copy of bank statements showing funds sufficient to cover you down payment. My wife Debra and I do a few other little things that help our buyers get noticed.
So again to make this simple let’s say that your offer is accepted by the seller what next?
So what is escrow and what do they do? Escrow is a third party that works on behalf of the seller and buyer. The escrow company will issue escrow instructions where they basically break down the purchase contract into simple to follow directions, assigning what is expected from each party by breaking it down into plain English. Each party gets a copy of the instructions and it is wise to read them and understand them. If you see something that doesn’t look right, let your agent know and put it in their lap. They are going to review the contract to see if a mistake was made by the Escrow Company, or if it is a contract issue that can be amended.
Now what else does Escrow do?
1. Look for and deposit your check or wire for the deposit you put on the house, and keep it in safe keeping.
2. Order a preliminary title report.
3. Order a Natural Hazard Report
4. and contact the home warranty company
Inspections are next
You have, according to the California Real Estate Purchase agreement a default period of 17 days to perform your physical inspections on the home. This inspection, along with the appraisal performed by your lender are out of pocket expenses incurred by you. The physical inspection can run from $250-$600, and a typical appraiser will charge $400-$500.
What other inspections should you do?
Now it’s time to do your due diligence. This is your responsibility, not your agents, not the seller, it’s you. So what can you do on your own?
- Check the schools if you have kids
- Maybe you want to see the Megans List to see if someone special may be living next door.
- Go to the city building department and pull a permit history on the home. It is available to the public for a small fee.
- Have a specialist look at key parts of the inspection where there may be expensive problems like the HVAC system or the roof.
- Maybe you want to check out the street during different times of the day or night to see what is going on in your neighborhood to be.
- You are also entitled to a final walkthrough, no later than 5 days before the close of escrow.
The Closing Process
We have almost come to the end of the road here in the home buying process. This is the closing process and it goes a little like this….
- You have been jumping through all kinds of hoops and finally your loan is approved by the underwriters at the bank and the loan papers or Documents, referred to as Docs, are drawn up.
You will be meeting with an escrow officer , a Notary Public, and signing the documents. Next, the documents are sent back to be reviewed, to see if any mistakes were made like signatures missed and so on, then depending on the lender, you will wait for 1-3 days for review, then, the loan will fund. That’s not the end of the road, you will have to wait one more day for the keys to your home because the Purchase will need to be documented at the County Recorders office. That could happen anytime between 9 and 5, but you will get the keys to your castle. Finally.
And that is it for this first lesson from me, the realestateanswerman. You made it through the first episode. Thank you for reading the whole way through. Remember, if you are looking to buy or sell a home in Southern California, especially in the San Fernando Valley, Simi Valley Moorpark, Thousand Oaks and Agoura, The Kessler Team is here to serve you with fantastic service, and all of the finest tools in the industry.