Steps to buying your Madison MS Real Esate Home

Categories: Buyers posted on June 30th, 2008

STEPS TO BUYING YOUR MADISON MS REAL ESTATE HOME

Madison MS Real Esate - Sold Photo

Purchasing
real estate is one of the biggest investments you will ever make. It is a
decision that will have lifelong implications, therefore it is very important
to understand the key factors to consider before purchasing real estate. Here
are 10-steps to give you some insight about the home buying process.

Step
#1 – What Can You Afford?

To
find out how much you can afford, it is best to speak with a Mortgage
Professional. To find a good mortgage broker consider consulting with you
friends and/or family members who currently own a home. After talking to a
Mortgage Professional you will know weather or not you need a down payment, how
much of a down payment you will need, your potential interest rate and all of
the necessary criteria required to qualify for a loan. Once you choose your
lender and provide them with the necessary documentation, you will be given a
Pre-Approval Letter that states how much you can afford, your interest rate and
the terms of the loan. Key Points: 1. Not all Lenders are
created equal so it is a good idea to shop around. 2. Make sure you are given a
Pre-Approval letter not a Pre-Qualification letter. 3. Beware of the bait and
switch technique. This is when lenders get your attention by advertising an
attractive interest rate only to increase it after you are locked in.

Step#2
- Choosing the Right Property For You

The
decision of what type of real estate you purchase will consist primarily of,
how much you can afford and your reasons for buying. After consulting with
a lender, you will know what you can afford in terms of a
Condo, Single Family Home, or a Multi-Family
property. The questions you should ask yourself is “What
are my goals for my real estate purchase?” This will help
you better define what type of property suits your needs. The financial
commitment is significant, and not every property fits the needs of its
potential suitor, so it is important that you consider the goals for your
real estate purchase, both short term and long term. For example if it is going
to be your primary residence, you want to make sure it can
comfortably accommodate your current and future family i.e. children
or in-laws. If the market takes an unfavorable turn and it become difficult
to sell then you can still live comfortably in your home until the market
recovers. Key Points: Always consider the short term and long
term goals of your real estate purchase. It all starts with your reasons for
purchasing real estate.

Step#3
- Finding a Home

Now
that you understand the lending process and have narrowed down the type of
property you are looking for, its time to start looking. So where do you
start? I would recommend finding a local real estate professional. You
will have professional representation at no cost to you, and it will surely
make the process a lot smoother. Buyers Agents are paid at closing
by the seller. The total commission is split between the buyer’s agent and the
listing agent

Step#4
- Attorney or No Attorney?

Real
estate brokers and agents are professionals at finding an ideal home and
negotiating the terms, but attorneys are experts at reviewing and explaining
contracts. As a result, it is best to have an attorney review all contracts
before entering into any agreements with the seller. The best way to find a
good attorney is to ask your real estate agent. Real estate agents regularly
work with a number of attorneys in many different capacities and know
which attorneys will be best based on your specific needs. It is in the
agent’s best interest to recommend an attorney that they know is competent,
trust worthy and focused on protecting their client’s interest.

Step#5
- Making an Offer

Before
placing an offer on a home you should know how much it is worth to ensure the
listing price is in line with the actual value. Ask your agent to provide you
with a CMA (Comparative Market Analysis). A CMA compares homes based on size,
location, condition and several other factors to estimate the value real estate
in a given area. As a result you will see what similar homes have recently sold
for. This will give you a better understanding of the market and help you to
better gauge your offer. It is also important to understand that everything is
negotiable. For example if you see any furniture, appliances, a chandelier or
anything that you like, include it in the offer. This strategy can sometimes
give buyers more leverage when negotiating. Even if the seller does not want to
sell their personal property, it gives you the buyer an additional negotiating
point. It also is important to include contingencies in the offer as well. The
most common types of contingencies are a mortgage contingency and an inspection
contingency.

Step#6
- Home Inspection

A
home inspection is an essential part of the home buying process. Every buyer
has a right to have a home inspection and it is extremely wise to take
advantage of that right, even if it is new construction. It is best to ask your
agent to provide you with a recommendation for an inspector. They work with
multiple inspectors and will likely refer you to an inspector that is right for
your needs. Purchasing real estate is the most significant investment many
people will make during the course of their lives. A home inspection will
validate that you are investing in a good home or uncover significant defects
that you would otherwise not have known about until moving into the home.
It is far more valuable to know what you are buying before you buy, than to
invest hundreds of thousands of dollars into a property that is not worth it.
So what happens when the inspector discovers defects? In most instances the
buyer and seller come to a mutual agreement on how to deal with the issues.
Sometimes the seller may agree to take care of the issues. In other instances
the buyer may assume the responsibility for a discount in the price. It really
just depends on the specifics of the defects. As a buyer, it is best to know as
much about your home before you purchase it as possible.

Step#7
- Mortgage Application

Once
of all the terms are finalized following the home inspection, it is now time to
complete your mortgage application. The first step would be to inform your
lender or bank that you have signed a P&S (Purchase and Sale
Agreement). They will ask for a signed copy of the P&S along with
other financial documents needed to complete your loan application. It is
important to get this application in as soon as possible so the bank has as
ample time to process your application. In accordance with the P&S, the
bank must provide the buyer with a commitment letter or a declination letter by
a specific date. The commitment letter states that the bank is going to give
you the loan. The declination letter states that you have been declined for the
loan and cannot purchase the property. If the lender does not supply this, they
buyer runs the risk of forfeiting their deposit if they are not approved or
declined for the loan within the given time. If you need more clarification on
this, ask your real estate agent. Key Points: Make sure the your
lender supplies you with a commitment or declination letter before the
commitment date. If not you could end up losing thousands of dollars.

Step#8
Insurance Binder

After
the bank provides a commitment letter, the only additional requirement is the
insurance binder. Before the bank can complete the loan the buyer must purchase
homeowners insurance. It is best to get three quotes when shopping around for
homeowners insurance. The first quote should come from the provider of your car
insurance. In many instances the insurance company will give you a discount for
insuring your home and automobile with the same provider. You should also
gets recommendation from friends & family and your Realtor. These are all
sources that you can trust and it will insure you get the best. The insurance
binder is then sent to the lender prior to closing. Now the funds are all set
to be released on the specified closing date.

Step#9
- Reviewing The Settlement Statement

1-2
Days before you close, the closing attorney, who represents the bank lending
you the funds, will provide you and the seller with a settlement statement
(also called a HUD) for your review. It is important that you, your attorney
and your Realtor review the charges, fees and adjustments to ensure everything
is correct. The HUD will have all of the information such as the closing costs,
tax adjustments, utility adjustments your real estate rebate and several other
fees. It will also state the amount you need to bring to closing. Any funds
brought to the closing should be done in the form of a certified or bank check.
Note: The seller will have to make sure the home meets the
local fire code and provide final utility bills prior closing.

Step#10
- Closing

So
what do you need to bring to the closing? you will need at least 2 forms of
identification, a certified or bank check for any additional funds and a good
pen for all of the documents that you will be signing. The closing is typically
attended by the buyer(s), seller(s), closing attorney, your attorney and the Realtors
involved in the transaction. Your attorney will explain all of the
documents to you prior to signing any of the disclosures at the closing. Once
you are finished signing, you will receive your keys.

The Herrington Realty Company realizes
that buying a home is big responsibility and we are committed to providing
others in our communities with information concerning homeownership.

If we can assist you with your current property or help
you select your next
home, please contact us and we will be glad to answer any questions you may
have.

Our team of
experts specializes in making dreams come true in the Brandon
MS and Madison MS area.

This entry was posted on Monday, June 30th, 2008 at 5:58 pm and is filed under Buyers. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.