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A Few Simple Steps to Owning a Home

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Purchasing property can be an excellent experience if you follow a few simple steps. For most of us, real estate purchases are our largest investments, so we tend to be a bit nervous and emotional about the process. Always remember that no question is a bad question and that you shouldn’t settle for an ambiguous answer, but should be referred to the professional that can answer that question if the person you’re asking does not know. A competent real estate attorney of your choice can also be instrumental in the transaction. The following is a brief guideline that should help to make your purchase a smooth one.

     The first step is to determine what amount you can afford to spend on property, whether it is your primary residence, a vacation home or investment property. The rule of thumb for a primary residence is that you should not spend more than 28% of gross monthly income on housing. Most lenders also require a steady two-year work history, although this can be flexible. Most lenders will help you with the pre-qualification process on all types of properties, including providing you a letter stating that you are qualified. This letter, which can be submitted with an offer, typically increases your appeal to a seller.

     The second step is to choose a real estate professional. Typically they have access to a Multiple Listing Service and/or should be very familiar with all properties available in your market area. They will guide you through the buying process and usually are very familiar with all the services you will be using to get the job done as well, such as surveyors, inspectors and/or lenders. Be sure that you understand whom the agent is representing during the process, and that they disclose the level of service that they can provide you. You do have the option of shopping for a real estate agent that you trust and feel knows the market thoroughly to represent you.

     Thirdly, the search for your dream property begins. You should devise a wish list, for the property that you seek, keeping in mind the practicalities involved in living in the great northwest. How much road will you be expected to plow in the winter, are all utilities on site, how is the well, etc. Covenants are something to consider. Would you wish to have a commercial site next to you, or a hog farm? Covenants are only effective if enforced, but can keep a neighborhood full of like properties, which can protect your value. While looking at properties, keep detailed notes with all of your considerations listed.

     Making the offer is the next step. Arriving at a value can be accomplished through a current market analysis prepared by your agent or a licensed appraiser. Once you have settled on a price you are comfortable with, the offer must be reduced to writing, typically a purchase agreement. Earnest money usually must be put down to show your seriousness and all of your questions must be addressed in the offer.

     In the Northwest, there are few building permits, thus a qualified and experienced home inspector is almost a necessity.There are many other aspects to consider, such as a septic system pumping and/or testing, and perhaps a survey to determine the boundaries. Your real estate professional should be instrumental in helping you get all questions answered.

     Unless you are paying cash in this transaction, the next step in the process is to select a mortgage lender, if you did not already do so during step one above. In exchange for the funds you will receive to purchase the home or land, the lender will place a lien on the property to give all constructive notice that they have an interest in the property and will allow the lender to foreclose if payments cease.

     The down payment can be as little as nothing down to as much as 50% down for bare land, depending on the loan, the property and your situation. There are many types of loans such as fixed-rate or adjustable-rate mortgages as well as variable time periods from 5 to 30 years. The most important considerations are all of the following: interest rate, closing costs and terms of the loan.

     The last step in the process is the closing. Once you’ve completed all inspections, provided all the proper documentation for the loan, received the appraisal and approved the preliminary title commitment and all documents referenced in it, you should be ready to close. This is the step that transfers ownership of the property to you, the buyer. The loan will also close at this meeting, thus there are two closings in one, typically. The seller may or may not be present, but the closing agent, your agent and your attorney, if he/she hasn’t already reviewed all documents, should be present. The closing usually takes place at the Title Company’s office, an attorney’s office or the lender’s office. You will need to bring sufficient funds for the closing costs and down payment to the closing. After closing the escrow agent will file the mortgage and deed at the courthouse. Once the recording information is received, your final title policy will be written and forwarded to you. Now you can relax and enjoy your new purchase. Congratulations!

    Tina Morkert the Broker/Owner of Realty Northwest, and is a licensed real estate agent.

 

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