Home Buying Steps
Steps to Buy Your Next House
Embarking on the journey to homeownership can be exhilarating, yet overwhelming. At Home Buyers Legal Services (HBLS), we understand that navigating the complexities of buying a home can feel like traversing a legal labyrinth. Our mission is to provide you with expert guidance every step of the way, ensuring a seamless experience as you fulfill your dream of homeownership.
Our Home Buying Process
If you are ready to buy a home, you can expect to go through the following steps.
Step 1: Get Pre-qualified
When you go to the grocery store, you look to see how much money you have in your wallet so you know how much you can spend. The same applies to buying a home. When you get pre-approved for a loan, you learn what your budget is for buying a house.
Getting pre-approved for a loan through a mortgage lender is not only important to help you look for homes that are within your budget, but it also lets you show proof to the seller that you are a serious buyer and ready to purchase their home. Getting a pre-approval letter is where a mortgage lender will verify your income, expenses, credit history and amount of cash you have available for a down payment.
With this information, a mortgage lender will issue you a pre-approval letter which will provide details on how much of a loan you can obtain and the interest rate you qualify for to borrow this money. Pre-approval letters are generally valid for 30 days.
Step 2: Find a Home
Before you start looking for your home, you should itemize what “musts” and “wants” apply to the home you are looking for. You can easily do this by taking a sheet of paper and drawing a line down the middle. (include a visual) In the left column, enter the “musts,” such as the maximum price you can afford, number of bedrooms and baths, etc. In the right column, list everything you “want” for, but could live without. For example, being close to a park, or having a two car garage, or being close to public transportation, and so on.
Once you’ve created your “want” list, prioritize each item by placing a value to each item, from the most desirable to the least. For example, if your “want” list has five items on it, and the most important one to you is “solar panels” – give it a value of 5, if the second most desirable item is a pool – give it a 4, and so on until you’ve put a value on each item. Writing out your “musts” and “wants” will helps you identify the best available home for you. For example, if you find a home within your budget that has three bedrooms and two baths (all “musts” on your list), you can compare the point values of the “want” list for each home available to come up with the best home for you. Going through this exercise will make it much easier to find the best match for your “dream” home. At HBLS, we will be glad to help you customize your own dream home list.
Step 3: Make a Successful Offer
After you’ve confirmed that the seller of a home you like is still taking offers, it’s time to prepare and send your offer to the seller’s broker for review. In California, the “offer package” may include more, but will usually consists of:
The Residential Purchase Agreement (RPA)
Disclosure Regarding Real Estate Agency Relationship
Fair Housing & Discrimination Advisory
Wire Fraud and Electronic Funds Transfer Advisory
Buyer’s Investigation Advisory
Fair Appraisal Act Addendum
California Consumer Privacy Act Advisory Disclosure and Notice
Along with preparing all of the paperwork in the offer package, we will explain each document to you and answer your questions as to their legal ramifications. Once your offer is accepted, the escrow process begins
The Escrow Process
Once your offer has been accepted, escrow will be opened to gather all the documents, money, and other things needed to complete your transaction. The Escrow period is negotiable, but normally about 30 days.
During the escrow period, matters like submitting your earnest money deposit (your ‘skin’ in the game), obtaining and reviewing title reports, conducting inspections (general home, termite, roof, electrical, plumbing), finalizing your mortgage financing, obtaining property insurance and clearing any other “conditions” of your purchase take place. Once all of your inspections, document review and financing tasks are successfully completed, you are able to “close” your transaction, and give you the keys to your home.
Step 4: Get Loan Approval
Within the escrow period, you will work with your mortgage lender enable them to lend you the money to buy a home. From verifying income, sources of funds and reviewing income-to-debt ratios, your mortgage lender will work closely with you to make sure your file will pass a final review from an underwriter. Once your underwriter issues a ‘clear to close,’ that means that your loan is ready to be funded and you can get keys to your new home!
Step 5: Inspections and Clearing Conditions
Within the escrow period you will also be conducting various inspections of a home. Unless you are a contractor yourself, most buyers have a general home inspection done of the property. This is where a trained professional will inspect the house for possible issues with the electricity, plumbing, insulation and foundation. Based on the home inspection report, you may also want to have an electrician, plumber or roofer also inspect the property as a follow-up to any health and safety concerns found by the general home inspector.
Step 6: Close Escrow
When escrow is ready to close, you’ll be notified to either go to the escrow office (or they will send someone to you), to review and sign the final documents needed to close your transaction. You can expect to spend between 60 to 90 minutes for this visit.
The escrow officer will have a stack of documents, which they will go over with you and have you sign some of them, to finish your transaction. Like most real estate agents and brokers, escrow officers are not attorneys and will not give you legal advice. This is where HBLS can fill the information “gap” by explaining the effect of the closing documents on you.
Once all documents are reviewed and signed, Congratulations! All inspections and processes to obtain a loan are now complete. This means that a deed (document used to transfer legal title) will be recorded at the county courthouse where your new home is located to give you legal title to the property.
Get Started Today
Buying a home doesn’t have to be daunting. Let HBLS provide the legal expertise and guidance you need to protect your interests. Ready to start your journey? Contact our team in Southern California with us today!