The Home Buying Process – A Complete Guide

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Hi, I’m Sean Reynolds, the owner of Summit Properties Northwest and Reynolds & Kline Appraisal and this is a short video on the basic steps that takes you through the process of buying a home. So step number one would be to start doing your research, so do a google search for the areas that you want to live in. Start paying attention to how long homes are staying on the market, how quickly they’re going off the market, um, what areas are stronger than other areas. Just kind of get a general knowledge of what real estate is doing in the areas that you’re considering and also start paying attention to the price levels. Ok, a three bedroom home is here, four bedroom home is here, and kinda have those in your mind as you’re doing your research. So the second thing you’re going to do is you’re going to figure out how much house you can afford.

And so lenders typically allow you to have a certain amount of debt relative to your income. And oftentimes that goes up to a ratio of like maybe 50 percent at the very top, but what you’re going to want to do to figure out how much you can afford is to get pre-qualified with a mortgage broker. And so what you want to do as far as getting pre-qualified for a mortgage is to ask for a referral from either friends or family or co-worker. Somebody that you trust that they have worked with a loan officer or mortgage broker. Somebody in the lending industry. Get a referral for a couple of different names and call that person up and say, “hey, I want to buy a house. This is kind of the beginning of my process. I want you to qualify me and I want to figure out how much that I can afford as far as spending on a home”.

And so the pre qualification process is a pretty simple one. Uh, the loan officer can ask you a series of questions over the phone, get an idea of your financial situation, and then they can kind of tell you within broad strokes of what payments you can afford and that reflects the amount of house that you can pay for. And after the pre-qualification process, which is just kind of a real quick idea of where you sit so you can get a pre qual letter comes the pre-approval process and that’s when you actually go in for credit, you’re going to be handing in all of your W2’s, your tax statements, bank accounts statements, everything like that so that your loan officer, your mortgage banker, whatever, can take that to the bank and ask for basically credit on your behalf. Once you’ve figured out what price range you’re going to be looking in, you’ll want to pick a real estate agent.

Now you can try and do this process on your own, but um, the home buying process is just a massive process and there’s a lot of moving parts. So unless you’re really familiar with it, it’s probably not in your best interest as a buyer to try and do this on your own. Because on the buyer side, you don’t pay a commission anyway, the seller pays all the commissions. So you don’t have to worry about that within this process. And as far as choosing a broker to work with, I would go again with talk to your friends, talk to your family, talk to your co-worker, get a name or a or a couple of names to contact that somebody that you know has already done business with and they’re comfortable and it hopefully it would be a good fit for you. So after you’ve chosen your real estate broker, the next step you’re going to do is that broker is going to start showing you homes, so they’re probably gonna set you up on an email drip campaign where you get shown anything that comes up on the market as available within your price range or with your criteria.

Start looking at those homes and then you’re gonna want to physically go out and take a look at those homes as well. And within that process, hopefully you’ll find a home to make an offer on. So you’ve found the perfect home and you’re making an offer. And just for the sake of this video, I’m going to say your offer gets accepted and oftentimes this portion right here is a massive sticking point in a lot of markets because you may make two, three, four, a dozen offers before you get one accepted, and the reason that is, is there’s such little inventory and a lot of major markets right now and there’s a ton of buyers competing for the same homes. So it takes buyers awhile to figure out, ok, I’m really willing to spend up to this price point to kind of get the transaction under contract.

So then once you’ve got the contract put together, then you’re going to do a series of events and the first one that I’m going to talk about is getting the home building inspection. The building inspection is a building inspector that you hire. Typically, it is a professional that’s recommended to you by your real estate broker. That person is going to go through the home, both inside and out. They’re going to go on the roof, kind of take a look at all the major systems and give you an overall view of the condition of the home. And so at this point you are having the home building inspection done and what this entails is the inspector goes through everything. He writes up a report, typically the same day or maybe a day after, gives you that report and then you have a decision to make. You can either accept the home in as is condition or you can ask for the seller to fix things or give you a credit towards fixing those things.

And so this is kind of another one of those sticking points within the process that you may want to back out depending on the condition of the home, but at least you have that option. And I typically recommend having a building inspection done. And I know in a lot of markets right now, people are waving building inspections just because they want to have their offer be competitive. And a lot of times what that means is you get rid of basically every contingency possible in order to make your offer look the best. But the building inspection I think is a really important one, especially with first time home buyers. You want to know the overall condition of your home before you step up to the biggest investment of your life. So you’ve gotten past the home inspection process, you figured out the things that need to be worked on, you’ve got those squared away.

Your real estate broker has figured out a solution for those items. The next step in the process would be to have the bank’s appraiser come out. An appraiser is an independent third party and they are typically contracted by yet another party called an appraisal management company. So you have no control over the appraiser that comes out. It’s, it’s based on a random system. So the appraiser comes out and he is working for the bank. He is there to tell the bank that the asset that they’re going to lend on for you on your behalf is worth what you’re paying for it. So it’s basically a third party independence report on is your home worth what you’re paying or not? And a lot of people think that the building inspector and the appraiser are kind of interchangeable. They’re not, the building inspector looks at the condition of the home, the appraiser also looks at the condition of the home, but more from the standpoint of how does it affect value and how does it affect marketability?

So, things that actually impact the ability of the home to be sold. And so the appraiser is going to be more concerned with square footage, bedroom count, bath count, um, site size, views, those kinds of things than he is with, you know, are certain things working or are they not working. He’s going to do kind of a general look, but the inspector is going to do more of a micro look at the condition of the home. Whereas the appraiser is looking at it from the overall value standpoint. And there are some specific things that appraisers look for and they will call, call out for as conditions. Um, lenders don’t want to lend on a home that has, that has issues that prevent it from basically being sold again, and so appraisers will call out for certain things and we’re going to do another video on that in the immediate future here, kind of just what are the major things that appraisers look for. And an example of that would be a bad roof or broken windows or settling foundation kind of major ticket items.

So let’s say at this point in the home buying process, your appraisals come back, there’s no issues. So now your mortgage lender is going to be basically full tilt while working on your loan. There are no other kind of obstacles in their way of, of getting you the, the home loan that you’re looking at using to purchase the home. And so now you’re basically in the escrow process. And so it’s just a lot of paperwork and you may get a ton of requests for additional information at this point. Um, that seemed really ridiculous, but it’s kind of just part of the process now. Since lending guidelines have changed since the great recession or however you want to call it, since the real estate crash of 2007, 2008 lending requirements are such that there’s just a ton more paperwork. There’s going to be more questions and there’s just a lot of stuff to go through before a lender is going to give you a loan.

And a lot of the questions and a lot of the guidelines that are in place now are to protect you as the consumer from buying a home that basically you can’t afford. So now all the paperwork is at escrow and escrow is the third party that takes the money in from the buyer, gives it to the seller, gives the seller’s title to the buyer. They basically facilitate the exchange and so, the somebody will contact you and set up a time. You will go in and you will physically sign all the documents for your purchase. And then typically like a day later, the loan funds, closes, you get your keys, your broker gives the other broker the keys or however that’s going to work, the exchange kind of happens and then you’ve got your new house. So this is a super oversimplification of the home buying process and in any one given of these little segments, there’s just a ton of information that until you get within the process, things can go a million different ways, but I’d kind of within this video I just wanted to give you some broad strokes of what the home buying process looks like.

Again, I’m Sean Reynolds, the owner of Summit Properties Northwest and Reynolds & Kline Appraisal, so that’s a real estate brokerage and a real estate appraisal company. So if you have any questions on anything I’ve gone over in this video, I’d love to have him posted down below. I’m more than happy to answer anything on the home buying process and also love to have you like, subscribe, make comments on anything here and get also give us ideas for future videos that we can create. We’re creating content all the time and love to have your ideas as well.

Sean Reynolds

Sean Reynolds

The Owner and Designated Managing Broker of Summit Properties NW and Reynolds & Kline Appraisal.

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