Things you should know before buying a house

Buying a house for the first time can be overwhelming, but hopefully, with these tips, your experience will be a little bit easier.

What does pre-approval mean?

You made the decision to buy your first house. It is time to think about if you can afford it. Before you start looking for a house get pre-approved. A good loan officer will check your credit and let you know the price you can afford and will give you a closing cost estimate and down payment amount needed. Additionally, the loan officer will let you know if you qualify for any first-time home buyers' special programs. When home buyers are in the market without knowing if they can afford it or without knowing if their credit is good, they are really wasting their time.
Sometimes, home buyers set a price range and start looking in the market for that price. They find it and fall in love with that home. When they apply for a loan to the mortgage company, the loan officer requests all the paperwork the mortgage company finds that according to the buyers' income, they cannot afford that house and provide the buyers the pre-approved letter with the amount of the loan they are pre-approved for. This can cause a lot of frustration because even though the buyer fell in love with the house, they are not able to purchase it. Also, when a house staged very well on the market and has a great price for the neighborhood, it is at, there are many other people that are also looking for a property to buy, that is why they must act fast and have all the paperwork done to start the process. At this time, you must have a pre-approved letter to send to the seller with your writing offer. This process can take time and requires your income tax, your personal documents copies and employment verification.

Find a Trusted Realtor it is Highly Recommended!

Sellers wants to sell the house as soon as possible with the highest amount of money they can possibly get so that they get a profit out of the investment and years they have put into the property. Having a realtor on your side to handle all the paperwork and provide you with the correct information in order to successfully close the deal is more than recommended. This is the best decision that you could make. Realtors are knowledgeable, and they will help you in many ways to investigate the property you are interested in and the locations you prefer. They help you look for the house of your dreams in a budget you are looking for. They are experts on negotiating, and this could save you thousands of dollars. Your Realtor can run a market analysis to make sure the price is right and negotiate with the seller. And addition to that your Realtor follows step by step the rules of the contract. Furthermore, if there is anything you don’t understand your Realtor will explain and guide you.

Finding the Right Home

The first step to finding the right house is to have a list of all the characteristics that fit you and your family. The first characteristic you want to have in mind and look at is, Location, decide what kind of neighborhood you want to live in, what schools do you want your kids to go to? What highway do you have to take every morning to go to work? Did the area suffer from floods during a hurricane? Is there a supermarket near? These are some of the questions you need to have in mind when deciding and finding the right location for your new home to be at.

You want to think about how big or small do you want the house to be like. Do you want or need a 4 bedroom with 3 and a half bathrooms? Or do you need or want a 3 bedroom with only 2 bathrooms because you have a small family?

When first-time buyers start looking at a house the question of whether to buy a new house or a resale is also, something that can do the search even harder.

They both have advantages and disadvantages when purchasing. The pros of buying a whole new house that you get to pick, what floor plan to use, what color is everything going to have, if you want to add something to the floor plan, and just pick everything to your taste wants and needs.

When buying a new house, you also get the builder guarantee and insurance on the appliances they use on the house. Some of the cons of a new house are that it is going to be more expensive and harder on your pocket, especially if you have expensive tastes.

On the other side, there is the option of buying a resale. The pro to that is the price of the house is going to be lower because it is going to be used. The cons are that you cannot choose how everything is going to look like, and if you want to change something it is going to cost you more money.

This is a brief summary of what you should start thinking about if you are a first-time homebuyer, that way you'll have the answers and can narrow down the possibilities of the kind of house you go look at.

The Earnest Money

You found your dream home in the price range you are pre-approved for. The Realtor will write the offer. The buyer must sign the offer and then send it to the seller; the Realtor will also send a copy of the earnest money check, which is a security deposit presented to the seller that will be issued to the order of the Title Company; the name of Title Company must have been approved by both parties beforehand; the name of the title company is mentioned in the purchase & sales agreement and a copy of the pre-approved letter in order to be considered as a legitimate potential buyer. The Realtor will hold this check until the seller has accepted the offer. Once this happens, earnest money is deposited in an escrow account, once the contract is signed by all parties and they all accept the terms.

The earnest check will be delivered to the title company immediately after the offer has been accepted by the seller. The Title Company will cash out the check, and it will initiate all the procedures necessary to set up a working file for this Real Estate transaction, which is often referred to as “opening a title” and is the first step in the title company’s work to close the sale and issue a policy.

The earnest money is part of the “purchase price cost” to the buyer and it should not be considered as additional money or wasted money. If the purchase contract is canceled and the buyer is not in default, in that case, the money will be returned to the buyer.

Furthermore, have in mind that the earnest money must be a bank cashier’s check or bank money order when it is for a very High amount, personal check it is accepted only if it is approved by the title company, normally when it is for a low amount of money to avoid the bank holding the check.

Title Insurance Commitment

As soon the title company receives the check opens title to conduct a title search and will issue a title insurance commitment that is sent to both buyer and seller. It is very important for the buyer to carefully review the title commitment because it will disclose any defects in the title like if there are any deed restrictions or liens on the property and whether there are other people who have an interest in the property. If the buyer has objections, it must declare the objections within a certain period. It is crucial that the buyer review the commitment and raise any objection, during that time if any.

The Option Period

An Option agreement gives a potential buyer the right to purchase a property. The option to purchase is for a specific time period - number of days for the specific price negotiated between the buyer and seller. The option period is used to hold a property out of the market while potential buyers are having inspections performed. The option period gives the buyer the right to terminate the contract for any reason before the option period ends. In Texas a period expires at 5 pm on the ending day. Your Realtor will send a Termination notice to the seller before 5 pm with a form requesting for earnest money refund. Option Period is highly recommended to buyers.

Home Inspections

Anyone could say to you that a house that you are trying to purchase is beautiful and in perfect condition because of how they appear. This happens on some occasions, but there are homeowners who are selling their houses and don’t even know the possible things that could be wrong with it because they are not obvious. There could be many major problems with the house. They might be a foundation or electrical problems that are not obvious to see. Someone who will help you save money and we highly recommend having is a licensed inspector, not only they are honest about the actual situation on a home, but they could help you get an idea of what you are getting into and how much this would cost. Having an inspector by your side to prevent you from making a horrible mistake that could cause you headaches and thousands of dollars is more than recommended. They also help you to check if there are any termites in the house.

We hope these tips help you and if you have any questions, do not hesitate to identify them in the comments and we will answer your questions as soon as possible.

Happy Home Searching!