1. Calculate Your Buying Power
2. Apply for a Home Loan
3. Find a Home
4. Make an Offer and Negotiate
5. Close the Deal
6. Move Into Your New Home

Calculate Your Buying Power
The easiest way to eliminate the stress of buying a new home is to have a clear understanding of your buying power — or how much home you can comfortably afford. When you know what you can afford, you can focus on looking for homes that are right for you — and within your budget. Lenders will usually loan more than you can practically afford, which is why there is such a high bankruptcy rate. In general, your TOTAL Home expense, which includes utilities also should include everything that you need to use and consume in your home, from flowers in the garden, weed killer, deck wash - anything that you would spend money on for the home that you wouldn't normally spend if you remained in an apartment. Those weekly trips to the Home Center can easily end up adding hundreds of dollars to your already strained home budget. You have an obligation to your neighborhood to maintain the exterior of your home to meet or exceed current conditions.

Apply for a Home Loan
Once you have an idea of what you can afford, you’re ready to apply for a home loan. Remember, you don’t have to wait until you find the house you want to apply for a loan. In fact, we recommend that you apply before you start looking. If you’re pre-qualified for a home loan before you start looking, you’ll have a better idea of where to look, and sellers will know you’re serious about buying.

After You Apply
After processing the information from your application, a loan officer will explain the various loan programs for which you qualify. After you’ve discussed and determined your loan program, your loan professional will provide you with several disclosure documents, including: · Good Faith Estimate: this document details your closing costs and your monthly payment (principal and interest). · Truth in Lending statement: this document details the cost of finance charges and the total amount you’ll pay for credit. You will also receive additional disclosures, including any required by your state and/or loan program.

Locking Your Interest Rate
Depending on market conditions, you may prefer to “lock in” your interest rate immediately while you shop for a home, or wait until you’re almost ready to close on your loan.

Be sure to ask how far in advance you can lock a guaranteed rate — a longer lock period may affect your costs.

As always, if you have any questions, contact your loan professional, who should be happy to help you with this and all other stages of the home buying process.

NOTE: Have your financing pre-qualified PRIOR to shopping for your home!

Find a Home
Even if you’re not a shop-a-holic, finding a home can be a fun, exciting shopping experience. Maybe you’ll want to start looking at home listings on the Internet. Perhaps you prefer to drive around your favorite neighborhood and look for houses that are for sale. You might want to work with a real estate professional. Or you could be very industrious and do all of the above! (Use the following information as a general guide, as many states have different requirements and laws pertaining to home sales.)

Using the Internet
The Internet has definitely helped prospective homeowners quickly and efficiently find homes that are right for them. With just a few simple searches, you can easily find hundreds of houses in your area or across the country that are ready for you to buy. Most Web sites that list houses provide maps, tax information for specific areas, school locations, crime statistics, and some even let you tour the homes’ interiors from the convenience of your desk.

Driving Around
If you prefer to look for homes the old-fashioned way, you can hop in your car and start looking for available homes in your area. You’ll be surprised at what you drive by every day, and at what new areas you’ll discover when you slow down and start looking.

Contacting a Real Estate Professional
If you haven’t contacted a real estate professional in your area, you might consider looking for one. Real estate professionals are licensed professionals who can help you save both time and money, and can provide a short list of homes with the features you can’t live without — like a fireplace, double garage, or pool.

Some may ask you to sign contracts stating that they exclusively represent you for a certain number of days or months. Remember, you’re trying to make a business transaction, potentially the largest one you’ve ever made, so you want to be comfortable with the real estate professional you’re working with.

Make an Offer and Negotiate
So you’ve applied for your loan, obtained a pre-qualification, and found your dream home. Now it’s time to make an offer.

Submitting a Contract
When you’re ready to make an offer, you’ll submit a contract, which will be reviewed by the seller. The contract will include your offer price, as well as your contingencies, which will help protect your interests. Contingencies are requirements that must be met in order for the sale to go through. You might want to consider including the following contingencies:

Home must pass inspection: if the home inspection reveals faults in the home, you’d have the right to back out if the owner won’t make repairs, if the repairs exceed a specified limit, or if the repairs can’t be made.

Repairs must be made to your satisfaction: if the seller agrees to make repairs, which turn out to be unacceptable, then you would be able to get out of the contract.

Financing must be approved: if something were to happen to your credit or you were unable to get approval for the home loan, you would be able to get out of the contract.

In addition to the contract, you’ll also need to present an earnest-money check, which will only be cashed when the sales contract is signed. Earnest money is like a deposit; it lets the seller know that he or she is entering negotiations with a serious buyer. The earnest money is held by a third party in an account often called an escrow account, and the money is applied to your closing costs. If negotiations break down before the contract is signed, you will get your original earnest-money check back. Likewise, if the contract falls through because the seller does not meet your requirements, you will get your original check back; however, if you back out of the contract or fail to meet the seller’s requirements, you will lose your earnest money.

If your contract contains an offer that is too low for the seller or that has contingencies that the seller wants to change, then you and the seller will begin negotiations. Basically, your offer contract will be changed to meet both yours and the seller’s requirements. Maybe the seller will want to lower the price of the house, but not as much as you originally asked. Depending on the market, the seller might be very willing to negotiate with you. If and when you do reach an agreement, you’ll be ready to close the deal.

More on Negotiating
Most homes are sold for less than their asking price. If you’re working with a real estate professional, he or she will be the person who helps you decide what to offer, and deliver your offer to the seller. If you’re buying directly from the owner, you’ll be negotiating on your own.

Your ability to negotiate with the seller will depend on several factors:

· Condition of the home: if the home requires repairs, then you can use the estimated cost of those repairs to lower the price or ask that the seller make the repairs before you buy. (Repairs may be mandatory, depending on your loan’s features.)

· Current market: depending on the current market, buyers or sellers may benefit. For example, in a buyer’s market, more homes are available than people who are looking to buy, so you are more likely to succeed in making a lower offer and negotiating aggressively. On the other hand, a seller’s market has more people looking for homes than there are homes for sale. In this situation, you’ll likely have to make an offer that is close to the seller’s asking price.

· Seller’s motivation: if the seller needs to relocate quickly or buy a larger house for a growing family, he or she may be willing to accept a lower offer.

· Seller’s equity in the home: sellers who have little equity in their homes may be less willing to accept low offers because they would lose money in selling at lower prices.

NOTE: Earnest money is usually less than 2% of the home’s sales price, although a higher amount may impress a seller whose house is in high demand.

Close the Deal
After you’ve negotiated the price of your house and any contingencies, you and the seller will sign the offer contract. Also, if you worked with a real estate professional, he/she will review and sign the contract. Once everyone has signed the contract, your earnest money check will be cashed. Then, you’ll contact your loan professional to arrange for the check that you’ll use to pay for your home. On closing day, you’ll exchange the papers necessary for the house to be legally transferred.

On average, closing costs are about 3 - 6% of the house’s sale price. Closing costs may include:

Origination fee
Points
Prepaid homeowner’s insurance premiums
Appraisal fee
Underwriting fee
Processing fee
Tax service fee
Recording fee
Title search and insurance
Flood certificate fee
Credit report fee
Recording fee
Tax adjustments
Agent commissions
Private mortgage insurance premiums (required if your down payment is less than 20% of the home’s price)