Step 1. Get Finances in Order
One of the most important aspects of buying a house is your financial record. Your credit reports are the witness to your financial management and before you even think about purchasing a home, you should get copies of your credit report. In order to apply for a mortgage you must have the appropriate credit rating in order to show you are worth lending to. There are different types of interest rates available depending on your credit score. For more on credit reports and how to access your personal reports, check out http://www.myfico.com or get a free credit report at http://www.freecreditreport.com. It’s also a good idea to check out your report before applying for a loan to check for errors, which are all too common. Knowing what your credit report says beforehand will go a long way in preparing you to buy a house.
Step 2. Get Familiar with the Mortgage Industry
Get informed about the Nashville home loans and mortgages process, including familiarizing yourself with the terms used and the process that lenders go through to approve loans. Find out the difference between an FHA loan, HUD conforming or non-conforming loan or a VA loan. Find out which ones you are eligible for and also shop around for lenders. We recommend Countrywide. It’s always a good idea to get at least two competing mortgage offers so that you can make the most informed decision. Finding the right loan from the right lender will make your home buying endeavor a success.
Step 3. Get Pre-Approved for a Mortgage
After working with lenders on a mortgage plan, it pays to get pre-approved. This will allow you to really see how much you can afford in monthly installments and will also help determine the type of property you can afford. Getting pre-approved is important when it comes time to making an offer on a home. A seller is much more likely to approve an offer that has already been backed up by a lender rather than take a chance on an offer that has yet to be funded. It gives you, as the buyer, some control over your home buying experience and also provides some financial muscle to sellers to show you are serious about the offer.
Use this handy mortgage calculator to help you come up with an estimate of all that. Remember it is an estimate only and the actual mortgage loan may differ.
Step 4. Determine Wants and Needs
There’s no doubt that buying a home is an intimidating process, but it isn’t as hard as it seems, especially with guidance from one of the top Realtor teams in Nashville. As you are looking at available properties, determine what it is you actually must have and that you need—a certain number of bedrooms, proximity to work or school or at least 2 bathrooms. Then you can list your wants, or the things that you’d find in your dream house. There are plenty of homebuyer mistakes that you should avoid as well, so get up to speed on this advice before you even start physically visiting homes. The perfect home rarely exists, and most home buyers subscribe to the 80/10/10 rule. This means that the home is 80 percent perfect to you, but has 10 percent that you can change and 10 percent that you can live with. This formula generally adds up to 100 percent satisfaction.
Step 5. Find a Good Real Estate Agent or Realtor
It’s invaluable to have an experienced guide to help you navigate the murky waters of real estate. Using a Realtor is the best way to gain instant experience and professional advice every step of the way, from locating property to closing on your dream house. Don’t be fooled by claims that you can do it all yourself and save money. The agents of both the seller and the buyer are paid out of the marketing price of the home, so if you don’t use your real estate agent to their maximum capability, it would be like paying for their service and never using it.
So how do you find a good Realtor? It’s important to choose a Realtor with experience in the area. They should be familiar with real estate trends, market rates and provide networking connections for you immediately. When you are relocating to a new city, a real estate agent can give you all the information about the community, including the latest numbers on such important aspects as crime, school performances and even taxes.
The Cindy Jasper HummerHomes Team is just such an agency, dedicated to providing clients with the most information and the best advice for purchasing residential real estate in the entire Nashville and Middle Tennessee area. Our connection to the area is enormous and we can help with relocating because we have years of experience working specifically with those coming in from out of town. Take a moment to see why we are the top Realtors in Nashville.
Step 6. Search for a Home
Now for the fun part—searching the available properties on the market. The Internet is an amazing tool that saves time and energy. By searching the entire Nashville and Middle Tennessee MLS, you can get the most up to date information on the very latest homes on the real estate market. Most of the time, you can even experience a virtual tour to determine if it’s the kind of place you want to see in person. Also, there are several home sales magazines available for no cost at grocery stores, and the newspaper also has classified ads for home sales.
Make a list of properties you want to see and get out there. Take some time to drive through the neighborhood around the property as well. You’re well on your way to getting into your dream home. Remember to frequently consult your list of features that you must have and features that you’d like to have. Keep in constant communication with your agent and discuss what you do and don’t like about each property. Evaluate what you can live with, what you could change, and what you love about each home. There is such a variety of Nashville area homes and properties that you’re sure to find the one best suited for you. With us as your agent, we can keep you up to date on the latest listings via email and phone calls. We’re happy to accompany you on home visits and will give you our expert opinions when you ask.
Keep in mind that almost every home will have some cosmetic work in store for you. Don’t be turned off by something that isn’t move-in perfect—instead, decide what can be improved, thereby adding value to the home. Kitchen and bathroom remodels, for example, often add a large amount to the overall value of a property. We can even put you in touch with trustworthy and experienced contractors so you can get accurate information on what it would take to improve a property that’s nearly perfect already.
Step 7. Pre-Offer Issues
Structure, features, amenities and more—it’s all come together in that one house that you adore. But before you submit an offer, take some time to examine every single aspect of the house you are considering. Think about the possible resale value, the age of key appliances such as water heater and air/heat unit, and evaluate the electrical system. Find out about any land easements, zoning for surrounding property, any deed restrictions and even neighborhood plans. A good real estate agent will be able to help you get this information so that you can submit an offer on a house that will not likely have any surprises in store for you down the road. We can access this information quickly and would love to advise you based on our experience in the Middle Tennessee area.
Step 8. Make an Offer
You’ve found the home, checked it out thoroughly and still love it. Now, its time to make an offer. That’s when you detail how much you are willing to pay for the property, the schedule for closing and when you want to occupy the property. Based on a professional inspection, your offer spells out that you are willing to proceed as outlined. If the inspection results in some previously unknown information, an offer can be resubmitted. The offer should be tailored to your needs and the specific property in question.
Step 9. Earnest Money
Generally when an offer is made, earnest money is included. This is essentially a good faith deposit that reveals to the seller that you are serious enough to submit some money for the deal. Generally in this state, it’s customary to provide $500 in earnest money, depending on the total property price. However, there is no limit on the amount that can be offered.
So who gets the earnest money once it’s offered? The check is put into an escrow account by the attorney or broker and is held there pending the outcome of the offer. If the offer is accepted, the check will be put towards the closing costs. If the offer is denied or otherwise falls through, it is returned to the buyer. If negotiations are stalled for any reason, and both the buyer and seller agree that there can be no further negotiations, the check is returned to the buyer.
Remember to give the earnest money check to the Realtor, never to the seller. Only attorneys or Realtors should handle earnest money, for your protection.
Step 10. Negotiation and Counter Offers
It’s generally understood that the first offer won’t be accepted, especially since the first offer was probably low, in hopes of securing a real bargain and evaluating the seller’s eagerness to sell. Once the seller receives an initial offer, they will usually respond with a counter offer. This offer/counter offer could go several rounds before all the parties are satisfied, and there are specific timeframes that each side must adhere to. However, usually this process doesn’t take very long and agents are adept at getting to the point of each offer and counter offer.
Step 11. Home Inspections and Other Tests
Keeping on schedule when buying and selling a home is important, but more important is taking time out to have a professional home inspection done. Home inspections in Tennessee are generally done after an offer is accepted but before any final purchase contracts are signed. Other states sometimes conduct inspections after an offer is finalized. Regardless of the timeline, a full home inspection is critical to the home buying process. A home inspection should always include a radon test, a mold review and a termite inspection. Other areas that are checked during a home inspection is the septic system, a lead-based paint check (if the home was built before 1978) and inspection of any private wells.
Hopefully, the inspection will reveal that the home is fine, but there can be some surprises as a result of a full inspection. Any issues that are discovered must be addressed by the seller and they must either pay for repairs or have the cost of the repairs taken out of the contract proceeds at closing. Repairs must be made and re-inspected before continuing.
Step 12. Final Contract
Once a final offer has been accepted and a home inspection completed, it’s time for the final contract. When the seller agrees to the final contract, the buyer should then follow through on the loan. At this point, you should take the final contract to your lender and begin the official loan process. This is where it’s helpful to be pre-approved as much of the financial paperwork has already been done and this step should move quickly. Otherwise, the loan process begins in earnest and your lender will notify you when they need an appraisal.
Step 13. Home Appraisal
As part of the loan approval process, the lender will arrange for an appraisal. Depending on what the appraiser decides, the loan may or may not be approved. It isn’t very common for the appraiser to determine that the home is worth more than the lender is willing to lend, and real estate agents are very much on top of which homes are overpriced and which ones are prime candidates for loan approval. Know that lenders usually have a maximum price per square foot that they will lend, and an overpriced property will be obvious in a hurry. In that case, the buyer may want to renegotiate with the seller, as the seller is unlikely to be able to sell the home at that price to anyone.
Step 14. Closing on the Property
This is the point in the transaction where a Realtor can really help reduce stress and panic. All parties involved in the real estate transaction are working hard to bring it to a close, but invariably there are issues that pop up that must be dealt with. It’s important to stay on top of things at this stage so that any issue can be immediately dealt with to keep things on course. At this point, it’s important for the buyer to know of several things they should not do during the closing phase. Among these no-no’s are:
Don’t change jobs unless absolutely necessary
Don’t make any other major purchases, such as a car or boat
Don’t panic if an appraisal is lower than you expected
This is the time to rely on your Realtor, because they’ve been through these scenarios and more and their expertise and experience will help guide you through all the little bumps that are to be expected. Use them as teachers, guides and coaches, and the dreaded closing phase of home ownership will be a piece of cake.
Step 15. Settlement and Possession
You’re nearly there, and possession is closer than you think. When settlement, also called closing, is complete, it’s time to transfer the property to you. A closing attorney is usually who will be handling Tennessee closings, and they’ll deal with escrow settlements and title services.
At this point, anything unusual can still happen, including glitches, issues and roadblocks. Among the many things that might happen are:
Closing costs are higher than anticipated due to extra service fees
Errors or mistakes in your credit report are discovered
The seller hasn’t completed agreed-upon repairs in time
Home warranty process has been delayed
Appraisal has to be rescheduled
No matter what issue arises, your Realtor can help you decide how to best proceed and how to handle these last-minute issues. Experience really becomes important in these instances. After all the issues are resolved and the papers are signed—you’ve are now a home owner. Congratulations! The home is yours!