13 Steps to Buying Your First Home
1) Take a homebuyer education course
Harborlight Community Partners & NSAR offer a first-time homebuyer course, but if our upcoming classes don’t work with your schedule, you are looking for a course in another language, or you need the landlord training, please check the list of MassHousing approved homebuying counseling providers.
2) Get financing pre-qualification
Getting pre-qualified for a loan can help you concentrate on a specific price range, and save you time so you won’t be looking at properties well over what you can afford to purchase. Pre-qualification is essentially an estimate of how much you can afford to spend on a house. You typically take the step of getting pre-qualified sometime before you begin your search, and before your actual loan application meeting.
An additional step you may take is to get pre-approval for a mortgage loan. That means that your loan application has actually been processed by a lender, and a specific mortgage amount has been approved for you. Some buyers feel they have more negotiating power when they can provide this pre-approval proof to the seller. As with pre-qualification, lenders will use established guidelines to determine the size of your loan approval.
For more information visit: http://www.mymassmortgage.org/
3) Meet with your REALTOR® and start building your team -
Consider enlisting a “buyer’s agent” – a REALTOR® who will represent your interests in the transaction and help you search for a home. Once you have selected your agent, they should present you with a Real Estate Licensee-Consumer Relationship Disclosure form. Other professionals you may have already or may want to select are – a mortgage broker/loan officer, a home inspector, an insurance agent, etc.
Not all real estate agents are REALTORS®. The term REALTOR® is a registered trademark of the National Association of REALTORS®. When you see the REALTOR® , you know you’re working with a professional who adheres to a code of ethics, is highly trained, and is committed to helping you realize the dream of homeownership.
Please note that HCP/NSAR First-Time Homebuyer class participants are under no obligation to use the homebuyer counselors or any guest speakers for their services.
4) Search for your new home!
- Discuss your search criteria with your REALTOR® – what are your wants and needs?
- Familiarize yourself with the neighborhoods and drive by the homes that look attractive in your online housing search to make sure that the area meets your requirements.
- Schedule showings of homes you’re interested in. Compare and contrast the properties with each other and your initial wants and needs.
5) Make an initial offer and first deposit
Once you find a home you would like to purchase, with your input, the REALTOR® will prepare an Offer/Contract to Purchase Form. Once you approve of the terms, you will sign and deliver your first deposit check to bind the offer. Your REALTOR® will then present that agreement to the seller or the seller’s agent. Presuming the seller accepts your offer, move to step 6.
6) Engage an attorney
Your real estate attorney will represent you along with your buyer’s agent and help you negotiate the Purchase and Sale Agreement (P&S).
7) Contact lender to start your mortgage application
A mortgage professional should be knowledgeable on various types of mortgage financing, including FHA and VA loans, Renovation/Rehabilitation and construction loans, Fannie Mae and Freddie Mac guidelines, and MassHousing requirements.
8) Get a home inspection
Hire a licensed inspector to inspect your home once there is an accepted offer and a signed contract. The state has a home inspectors fact sheet for consumers.
One way to find a professional home inspector who has the experience and knowledge to properly inspect the home you are interested in purchasing is to ask your real estate professional. Your real estate professional can usually point you to a list of home inspectors or provide resources where you can choose a home inspector. It’s wise to always ask for credentials and references.
9) Execute P&S and second deposit
Once the inspection is complete the P&S can be finalized. Any repairs or credits as a result of the inspection should be included. Note that the P&S agreement supersedes the offer so all agreements in the offer must be inserted into the P&S. Your second deposit will be due.
10) Obtain financing commitment
Obtain a mortgage loan commitment from your lender. Also, your lender should provide you with a Loan Estimate (LE), itemizing the estimated closing costs that you will have to bring to the closing.
11) Obtain insurance binder
Purchase hazard insurance prior to the closing if you are purchasing a single family or multifamily home.
- Some properties may require flood insurance. Your insurance agent or REALTOR® will know if it is required.
- If you are purchasing a condominium, the condominium association will have a master insurance policy (which covers the building and common areas from fire and liability), but you should still purchase a condominium unit policy covering your personal property for theft and for any liabilities that occur in your unit or areas of exclusive use.
- Your lender will require you to purchase lender’s title insurance, which insures the marketability of title to the property you are purchasing. At some point, you will be asked if you wish to purchase owner’s title insurance, which is optional. You should discuss this with your attorney prior to the closing.
12) Acknowledge and review Closing Disclosure
At least three business days prior to closing (or five days if delivered by mail) your lender will need to issue you the initial Closing Disclosure (CD). This document will provide you with the preliminary final figures for closing.
Note that there still may be a few updates to this document made by the bank prior to closing. Some updates will require redisclosure while many updates (for example: taxes and condo fee adjustment) can be made after the initial CD is submitted by the lender without the need to redisclose.
Bottom-line: Check with your bank/buyer attorney prior to closing for your final cash to close figure. These funds can be delived via certified bank check OR wire transfer. Be vigilant! The real estate industry is under siege by hackers. Be very careful wiring to accounts – even if they seem legitimate. Always follow up an email containing wire instructions with a phone call.
13) Perform pre-closing walk-through and attend closing
Perform a walk-through of the property before the closing to make sure the property is in the condition as contracted. You should contact the utility companies and change the name of the accounts. It is usually financially beneficial for you to do this before the utilities get shut off.
- At the closing, in addition to the note, mortgage (assuming you are financing the transaction and are not a cash buyer), and other miscellaneous documents, you will receive and sign the Closing Disclosure. This should mirror the Loan Estimate received earlier in the loan application process. This document will illustrate every financial aspect of the purchase and sale.
- Your attorney and/or the bank’s settlement agent (the closing attorney) will be able to break it down and explain this in detail.
- Bottom-line: You are going to need a bank check for any amounts owed at the closing, a driver’s license or passport, and most attorneys are going to advise to bring a check book just in case.