Home Buying Process - 12 Steps to Home Buying in Utah
1. Figure out what you want, based on what you can afford.
Surprisingly, what you want and what you can afford are usually different. I recommend you start by getting an idea of what's on the market and how much it costs for so how much home. The easiest way to do this is to search online. Many Utahn's greatly underestimate the cost of housing in Utah. In most areas, it is impossible to find a brand new house with 4 bedrooms and 2 baths for less than $150,000.
It's also a good idea to anticipate future family needs (buying a home is a great investment, but there are costs of both buying and selling, if you're going to need a bigger house in a year, you might be better off to get that house now.) If you know you'll be moving in less than 2 years, you might be better off renting.
What you can afford is not only determined by the cost of the house you get, but also the type of loans you'll qualify for. There are many different loan products, FHA, Utah Housing, Conventional Loans, Option Arms, Baloon Loans, that will largely change how much home you can afford. In addition, your credit score will make a huge difference on the interest rate you can get, or if you can even get a loan at all.
If you think the housing cost in your area is affordable for the kind of house you'd like to live in, then you can move on to step two of the home purchase process and get pre-qualified for a loan.
2. Interview Lenders and get pre-approved for a loan.
Before committing to a lender you should get several mortgage quotes to make sure you are really getting the best loan. Different lenders have different products they can do, and they will recommend the loan products that best fit your needs. When lenders know you're shopping around they will usually lower their fees to win your business. The link below will help you get free mortgage no obligation mortgage quotes.
After finding the lender you're most comfortable with, get Pre-Approved for the loan. They examine credit, employment, debt, and income to make sure they can give you the loan they recommended and at the rate they quoted. Also ask them to give you a preapproval letter saying that you have been "pre approved". Being pre-approved can strenghten your offer ability, as It shows sellers that you are quality buyer. In some cases, sellers require that buyers are pre-approved in order to even make an offer.
3. Find a Local, Dependable, Honest Realtor
Find a local Realtor you can trust, and who will be available when you need them. A good Realtor knows the local market you are looking at and has experience working with buyers. A buyers agent is there to protect your interests and will save you thousands when it comes time to negotiate an offer. It doesn't cost anything to hire a buyers agent. That's right it is FREE to work with a Realtor as a buyer, so hire a good realtor as your buyers agent.
4. Tour Homes and narrow down those you like.
Contact your Realtor and they will arrange to see the homes you're interested in from your online search. A good real estate agent probably also knows of other houses that might be closer to what you're really looking for. Realize that you should be able to narrow down many of the homes on your list by just after seeing the neighborhood or walking in the front door. Homes don't always appear as good in real life as they do in their online home tours.
Once you find a house that you think you want to make an offer on, go back and see it again. This time you look at it from a more pesimistic perspective, and do our own sort of "home inspection" looking for all the negatives. Examine every inch of the home. Open and close the doors and windows. Pay attention to the craftmanship, care, and quality.
5. Make an Offer - How much earnest money should I put down.
Once a house is found that you want to make your home, you make an offer. To be legal in Utah, an offer must be in writing. Your real estate agent has standard forms that are written to protect you as the buyer. In the offer, you'll need to negotiate not only the price, but also possible concessions, possesion date, and contingencies that must be met to make it a binding deal. Sellers will almost always go down on price a little if your other terms are favorible and flexible. However, be careful not to offend the seller by offering too low. A good buyers agent should be able to quickly determine a reasonable asking price.
When you make the offer, you also must make an earnest money deposit. The earnest money shows the seller you are serious about your offer. The earnest money is non refundable if you back out for a non acceptable upon reason.
Your Realtor submits the offer to listing agent, and they present the offer to the home seller.
6. Wait for Offer to be Accepted, Rejected, or Counter-Offered
The offeree is usually given about 24 hours to respond to the offer. Each offer has a unique situation and more or less time may be appropriate. If your offer is accepted, you are closer to a new house. Otherwise, it will likely be counter offered and then the seller becomes the offerer and you get to decide if you want to accept the counter-offer. When accepted, you work to meet all contingencies.
The negotiation of offers can take several offers if you have a lot of differences with the sellers. These negoitations must be in writing. Although, they can be faxed documents you can save a lot of time by using faxes. If you don't have a fax machine it might be well worth the to get set up with a fax by email account until your house closes. They offer free trial periods, and by the time the trial period is over you probably won't need it any more. Try RapidFax Today for FREE for 30 Days!
7. Complete Necessary Inspections
Unless you are paying Cash, you will need an appraisal. Usually your Lender will arrange the appraisal. The purpose of the appraisal is to verify that your home is really worth what you have offered. The lender doesn't want to back their loan with a home that's not worth what they are paying. Nearly all appraisals on home purchases end up being within a few thousand dollars of the agreed purchase price.
It is also recommended to have a professional home inspection. Professional home inspectors can examine structure, safety, mold, meth, and radon tests. In most Utah Real Estate Purchase Contracts the seller is not required to warrant the property. They state that they are selling the house in good working order fit for its intended purpose. They warrant that the heating, cooling, electrical, and plumbing are in good working order and that the roof and foundation are free of any leaks. It is your duty as a buyer to perform "Due Diligence" and verify accuracy of anything you are concerned with.
As long as the deadlines are met, the seller will likely fix (or give a credit to the buyer) certain problems found during the inspections.
8. Finalize The Loan
Getting your loan to go through is sometimes the most painful part of the real estate purchase process. Even when you are pre-approved, underwriters often throw you through loops and require you provide all kinds of ridiculous information at the last moment. Employment verification, bank statements, divorce decree's, payoff notices, business cards, whatever. A good idea is to prepare for this is to plan for it to take a lot longer than it should, and press your lender to get things done long before settlement is to take place.
Sometimes buyers get really excited when they go under contract for a home. Make sure you don't try to buy anything big until the property records. Until the underwriter approves everything, the loan isn't official. An auto purchase at the last minute could ruin your purchase of real estate. Before the funding process, the underwriter can pull an updated credit report, if the buyers have purchased something like a new vehicle the buyer may not qualify.
9. Arrange for Home Owners Insurance
Because your home is probably the most expensive asset you'll probably want to insure it. In addition, insurance is required if you are getting a home loan. Different home owners insurance policies can be drastically different. If you cannot obtain affordable home owners insurance, you can usually cancel the real estate purchase contract and get your earnest money back. Its best to shop around to several home owners insurance providers to insure you are getting the best deal Here's a link that will help you get several non commital home owners insurance quotes.
10. Set up your Utilities, Phone, Internet, TV
With our modern conveniences it is hard to live without electricity, heat, water, Internet, and even Television. Somtimes these services can take weeks to get set up. If you can't live without them, make sure you arrange to have them hooked up in advance. The below link will give you the best promotions to sign up for services online. Utah Telecommunication and Service Providers.
11. Settlement
At settlement you, your Realtor, your lender, and a title officer meet at a Title Company (A neutral third party that gatheres all the documents and disperses funds). You go over all the paperwork, loan forms, and make sure the dollar figures, prorations, and arrangements are correct. The title companies also provide drinks and treats. The title company then proceeds to collect and distribute funds.
The title companies also issue a policy of "Title Insurance" which guarantees the real property is rightfully yours, and that no one else has claim to it.
Settlement is often referred to as closing, but most likely the home will not be yours until the money goes through and the trust deed is actually recorded in your name. This often takes place several days after settlement. Many buyers assume that the sellers will also be present at closing. In Utah this is not the case. The sellers will have their own settlement, and often times this will even occur at a completely different title company.
12. Recording
After you and the sellers have signed your settlement papers and the funds have transfered, the title company records you as the new owner of the property at the county office. This usually takes place the day following settlement, but depending on your lender, and the time you settle it could take longer. Once the transaction is recorded at the County Office, the property is officially, and legally yours and unless stipulated in your real estate purchase contract, you can now move in.
