1. GET STARTED
Where do I want to live?
Narrow down your search to the key neighbourhoods where you want to live. If you have children, take into consideration the available schools in that specific area as well.
What type of property do i need?
Deciding what king of property suits your needs can be critical in the home buying process. There are many quality properties on the market, prioritizing accordingly will absolutely ease the buying process.
What can I afford?
Besides the purchase price, buying a home involves some extra expenses: down payment, closing costs, inspections, etc. Making a wise decision in regards to the affordability of the property you want to buy is essential.
2. QUALIFY FOR A MORTGAGE
Getting financing represent the MOST important step in buying a property. Before you even start searching for your dream home, you should talk to a lender and determine what you can afford and learn about what types of loans are available.
How much do I need to put down?
To qualify for a mortgage, you’ll need to meet the lender’s credit qualifications. Start gathering your financial records: pay stubs, W2s, last 2 months of bank statements, last 2 years of tax returns. Present all your financial information to your lender. In order to determine if you qualify for financing, your lender will need to carefully analyze your debt to income ratio and credit report. They will determine if you qualify for a mortgage with a low (3%) or a high down payment (20%), if you need a co-borrower, the terms of your loan, if you need to pay a mortgage insurance, etc.
3. SHOP FOR YOUR HOME AND MAKE AN OFFER
How much do I need to put down?
Start touring homes in your price range. Make sure to check out the little details of each house. For example:
• Test the plumbing by running the shower to see how strong the water pressure is and how long it takes to get hot water
Once you found your dream home, work with your real estate professional to negotiate a fair offer based on the value of comparable homes in the same area. An offer will be submitted to the seller.
You typically will need to pay what’s called “earnest money” which shows the seller you are serious about buying the home. Think of earnest money as a deposit you are providing the seller (usually around $500 - $1,000 or a certain percentage of the offer price) that will be applied to the purchase once the contract is finalized.
4. GET A HOME INSPECTION
After the offer is accepted by the seller, you have 5 days to request a home inspection. This allows you to uncover any potential issues with the home—structural, plumbing, electrical—that may not be visible when you visited the property. If there are important damages/issues with the property discovered by the inspector, you can walk away from the property and the contract will be null. The earnest money should be refunded immediately.
5. FIND AN ATTORNEY
This is an optional step if you want to get a professional legal opinion on your closing documents. A real estate attorney will carefully review your closing documents and make sure that everything is ready to close. They will also search the title of the property you are buying to make sure there are no issues with it.
6. CLOSING PROCESS
You’ve found your dream home, your offer has been accepted, the financing is in place, and the inspection is complete. Now, there’s just one more key step in the process—closing! The closing occurs when all the conditions of the contract have been met (full loan approval, evidence of clear title, mortgage insurance is in place, etc.).
Here are some of closing documents you should receive:
Settlement Statement — HUD-1 Form
Prepared by the closing agent, this form lists all the important details regarding the sale/purchase of your new home: price, amount of financing, loan fees and charges, prorated real estate taxes and amounts paid between you and the seller. It must be signed by both you and the seller. Your lender will keep the original.
Truth in Lending Act (TILA)
Shortly after you applied for your mortgage, you received a truth-in-lending statement from your lender, including your estimated monthly payment and the total cost of all finance charges involved in your mortgage. You’ll get a final TILA statement at the closing if these amounts have changed.
The mortgage note is legal evidence of your mortgage and includes your formal promise to repay the debt. It also spells out the amount and terms of the loan, along with the penalties the lender can impose if you do not make your payments on time as well as any prepayment penalties that may be required.
Deed of trust
This document gives your lender a claim against the house if you don’t live up to the terms of the mortgage. It lists the legal rights and obligations of you and the lender, including the lender’s right to foreclose on the home if you default on the loan.
The bill of sale
This transfers all of the personal property that is being sold along with the house, such as furnaces, air conditioners, appliances, light fixtures, window treatments, security systems, antenna, or cable or dish TV equipment, from the seller to the buyer. The document will typically list the property to be transferred, or refer to the contract that lists the personal property.
Congratulations—the property is yours!