June 22nd, 2016
1. I'm ready to buy a home. What is the first step in the process?
So you are ready to buy a home. The first step in the process would be to contact a local Real Estate Agent. A good Real Estate Agent will meet with you in person to discuss your needs and explain the overall process of buying a home. A good agent will not only help you find and purchase a home, but become a helpful resource throughout the entire buying process. It's best to link up with an agent who is familiar with the neighborhood. You will need the help with referrals throughout the home buying process which includes working with a mortgage loan officer, home inspector, attorney, and possibly contractors. The process always goes smother if you have a group of professionals who can communicate effectively with each other.
2. I found an agent and I'm ready to look at homes now. Can I skip the pre-approval process until I find after I find a home to purchase?
It's best to get pre-approval process out of the way before you begin looking at property. There are a few reasons why you should do this. You will need a pre-approval letter in order to submit an Offer to Purchase. It may take a few days before a bank will give you a pre-approval letter. The process includes both the bank and buyer submitting and reviewing financial information and documents which takes time. Without the pre-approval letter, you could potentially lose out on a property to another buyer who is prepared with this document. Also, you need to know how much you are qualified for so you are not out wasting time looking at houses over your budget. It's best to work with a mortgage professional who knows the neighborhood. Your Real Estate Agent can provide you with a list of Mortgage Loan officers so you can shop around for the best service.
3. How much do I need for a down payment?
It depends on the loan type. Some types of loans, such as conventional home loans, VA and FHA, require low or no down payment at all. FHA and VA loans are the best type of loan product for single-family homes. VA loans are for military Veterans only, and they require no down payment. FHA loans are federally backed loans, and require around 3.5% down payment as of right today. If you are purchasing a condo or co-op in NYC, you will likely have to go with a conventional loan. There are lending restrictions with the VA and FHA which are products better suited for more rural and suburban areas. A typical down payments for a condo in NYC is around 10%. For a co-op apartment, 20% if often the minimum required. If you are purchasing and multi-family property you will most likely be required to go with a conventional loan.
4. I'm pre-approved for a loan, now what?
Technology has changed the home buying process for everyone. A buyer today can access thousands of properties online with the click of a mouse or from the tap on a smart phone from anywhere. In addition to being a proactive buyer, ask your Real Estate Agent to send you new listings as they hit the market. Keep in mind that many properties advertised online may be in-contract or sold already. Contact your agent about any property that you come across that interest you. Ask your agent to inquire about the status of the property and help you schedule appointments.
5. We found the home of our dreams. What's the next step?
So you found the home of your dreams. Before it can be yours, you will need to negotiate an offer to purchase the house with the assistance of your Real Estate Agent. Depending on the market, you may or may not be competing with other buyers to purchase the property. Generally speaking, you will have less leverage if a listing is brand new and priced right, compared to listing that's been sitting on the market for weeks or months. If its a new listing and it's priced right, you may need to come in with a strong offer at the asking price or above. If it's been on the market for a while, you will generally have more leverage with the seller. Consult with your agent about creating a personalized negotiation strategy. Once you have an accepted offer with the seller, the next step is to have your attorney prepare and help you execute a contract to purchase. After the contracts are signed by both the buyer and the seller, its just a matter of time until you move into your new home :-)