Local Real Estate
YOUR GUIDE TO REAL ESTATE
10 Steps to Home Ownership
Knowledge and experience are the keys to successful real estate transactions. One of the keys to making the home-buying process easier and more understandalbe is planning....it will help you discover valuable shortcuts in the home-buying process!
Step 1: Are You Ready?
Whether you are a first-time home buyer or entering the market as a repeat buyer, you need to ask WHY you want to buy. Whatever your answers, the more you know about the real estate market, the more likely you are to define your goals effectively. Do you have the money? Homes and financing are closely intertwined. If you don't have a down payment, don't panic...a number of programs now allow buyers to purchase real estate with little or nothing down..and will underwrite closing costs. Just remember, less money down means higher monthly mortgage payments, so some cash up front is ideal. Also make sure your credit is in good shape. For AT LEAST one year prior to buying a home, assure that every credit card bill, rent check, car payment and other debt is paid in full and on time!
Step 2: Get a REALTOR
More than 2 million people in the United States have earned real estate licenses. Remember though...real estate is a tough business with a steep dropout rate. Buying and selling real estate is a complex matter. At first it might seem that by checking local picture books or online sites you could quickly find the right home at the right price...but that is not quite how it works. A basic rule is that all properties are unique. Even two identical models on the same street are not exactly alike. Homes differ and so do contract terms, financing options, inspection requirements and closing costs. It makes sense to work with realtors who know the community and so much more! Once you hire a realtor, they will provide you with information detailing current market conditions, financing options and negotiating issues in each step of the transaction process.
Step 3: Get Loan Pre-approval
Nearly 9 out of 10 buyers finance their purchase, which means that virtually all buyers require a loan (espeically first-time purchasers). The real issue isn't not getting a loan...it's finding the loan that's right for you - the mortgage with the lowest cost and best terms. Start the mortgage process well before bidding on a home. By meeting with lenders (either online or face to face) and looking at loan options, you will find which programs best meet your needs and how much you can afford. "Pre-approval" means you have met with a loan officer, your credit files have been reviewed and they believe you can readily qualify for a given loan amount with one or more specific mortgage programs. Based on this information, the lender will provide a pre-approval letter, which shows your borrowing power. The loan officer will carefully review your financial situation, including your credit report and other information. They will then suggest programs which most-closely meet your needs. Typically, first-time buyers opt for the traditional 30-year loan, with either a floating interest rate or a fixed rate of interest over the life of the loan.
Step 4: Look at Homes
Millions of new and existing homes are sold each year. There's no shortage of housing options, but with so many choices the challenge becomes finding the property which best meets your needs. The housing market is complicated because the stock of homes for sale is always in flux. It's important to know as much as possible about the choices in preferred markets. A home is more than just a collection of bedrooms and bathrooms. List the features and benefits you want in a home. Consider such things as pricing, location, size, amenities, and design. Next, consider your priorities. For instance, would you trade fewer bedrooms for a larger ktichen? A longer commute for a bigger lot and lower cost? Lastly, consider your needs in several years. if you'll need a larger home, maybe now is the time to buy a bigger house rather than moving or expanding in the future. Some buyers like to look on their own at listings online, and others prefer to have local realtors suggest properties...many prefer both! Regardless of your choice, it's important to target your search. By using basic measures such as general location and affordability, you can refine your search and focus on homes that are the most desirable to YOU!
Step 5: Choose a Home
Choosing a home is a big decision and you want to do it right. Here's what happens: A home has been placed on the market for which the seller has established an asking price as well as other terms. In effect, this is an offer. At this point, you have three choices: accept the seller's offer, reject it, or suggest different terms and make a counter-offer in which the seller may accept, reject, or make a counter-offer. No aspect of the home buying process is more complex, personal or variable than bargaining between buyers and sellers. So how do you know if the house is THE one? The best thing to do is to look at as many homes as possible! Can you really afford it? Well, you're already pre-approved right? While pre-approval is not a loan commitment, it's still necessary for lenders to check such items as appraisals and the latest credit reports. Pre-approval provides a reasoned, careful analysis of what you cn afford.
Step 6: Get Funding
Often the cost of financing is greater than the orginal purchase price of a home (after including interest and closing costs). Because financing is so important, buyers should have as much information as possible regarding mortgage options and costs. There are a variety of different loan calculators online...and your realtor can provide mortgage information, discuss financing options and recommend loan sources. Some realtors even originate loans. there are thousands of loans available out there from a variety of lenders, but in general, the mortgage you choose will be based on the following key factors: how much money you have down, your credit, and whether or not you are a first-time buyer. When it's time you actually GET your loan you will complete a written loan application and provide documents including pay stubs, rental checks and tax returns for the past two or three years. Where do you get a loan? Mortgage financing can be obtained from mortgage bankers, mortgage brokers, savings and loan associations, mutal savings banks, commercial banks, credit unions, and insurance companies.
Step 7: Make an Offer
While much attention is spent on offering prices, a proposal to buy includes both the price AND terms. In some cases, terms can represent and should be carefully reviewed. In a typical situation, you will complete an offer that your realtor will present to the owner and the owner's representative. The owner can accept the offer, reject it or make a counter-offer. Counter-offers are very common! That's why it's so important for buyers to remain in close contact with their realtor during the negotiation process. A number of inspections are also common in residential transactions. They include checks for termites, surveys to determine boundaries, appraisals to determine value for lenders, title reviews and structural inspections.
Step 8: Get Insurance
No homeowner should be without insurance. The idea behind real estate insurance is to protect owners in the event of a catastrophe. If something goes wrong, insurance can be the bargain of a lifetime! there are various forms of insurance associated with home ownership, including the following four major types. Title insurance: Purchased with a one-time fee at closing, title insurance protects owners in the event that title to the property is found to be invalid. Homeowners' insurance: Homeowner's insurance provides fire, theft and liability coverage. Flood insurance: Generally required in high-risk flood-prone areas, this insurance is issued by the federal government and provides as much as $250,000 in coverage for a single-family home plus $100,000 for contents. Home warranties: With new homes, buyers want assurance that if something goes wrong after completion the builder will be there to make repairs. The time to obtain insurance and warranty coverage is at closing, so speak with your realtor or insurance broker prior to closing. Be sure to ask about limitations, costs, deductibles and "endorsements" (additional forms of coverage that may be available).
Step 9: Closing
Every local courthouse has property records detailing real estate ownership that date back hundreds of years. These are important because they provide today's owners with proof that they have good, marketable and insurable title to the property they are selling. The closing process is also known as the "settlement" or "escrow", and it is increasingly computerized and automated. Closings bring together a variety of parties who are part of the "transaction" process. For example, while the history of property ownership has been checked, it's possible that the records contain errors, unrecorded claims or flaws in the review itself, thus title insurance is necesary. At closing, transfer taxes must be paid and other clains must also be settled (including closing costs, legal fees and adjustments). In most transactions, the closing agent also completes the paperwork needed to record the loan. Settlement is a brief process where all of the necessary paperwork needed to complete the transaction is signed. The buyer receives the keys and the seller receives payment for the home. Deeds, loan papers, and other documents are prepared, signed and filed with local property record offices. What do you need to do? One of the best parts of settlement is that buyers and sellers need to do very little. You will do one final walk through the property and then sign all the paperwork that has already been prepared for you.
Step 10: What's Next?
You've done it! You've looked at properties, made an offer, obtained financing and gone to closing. The home is yours. Is there any more to the home buying process? There sure is! There are several more steps you'll want to take. Keep your paperwork! It can help establish tax deductions for the year in which the property was purchased. In the future, such apapers will be important for tax purposes when the property is sold, and in some cases, for calculating estate taxes. Also at closing, determine the status of the utilities required by the home, items such as water, sewage, gas, electric and oil service. You want utility bills to be paid in full by owners as of closing and you also want services transferred to your name for billing. Usually such transfers can be done without turning off utilities. About two weeks after closing, contact your local property records office and confirm that your deed has been officially recorded. Such records are public notices that show your interest in the property. For most owners a home is the largest single asset they hold, so it makes sense to protect it. Many owners make a photo or video record of the home and their possessions for insurance purposes and then keep the records in a safety deposit box. Your insurance provider can recommend what to photograph and how to secure it. Maintain fire, theft and liability insurance. As the value of your property increases such coverage should also rise. Lastly....enjoy your home!
Looking for something new in the populated Real Estate market?
Summa Real Estate Group has the answers and a new adventure in Real Estate. Two years after opening it's doors, Summa now has 7 locations and 140 Realtors in two states!
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Hillsboro, OR 97124
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