This home buyer guide has a lot
of information. It is recommended
to open on a desktop or tablet.
To help you understand the
home buying process, We created
this detailed guide. Please reach out if you have questions.
Some of the information is Massachusetts specific.
Is buying right
Your total housing payment (including taxes and
insurance) should not exceed 35% of your gross (pre-tax) income, but it’s recommended to stay
closer to 25%.
The most important step is determining your budget and deciding if homeownership is right for you.
You should determine how much you can afford before you start searching for a home. To do that Realtor.com has a handy tool to make this estimate easy. Once you determine and get an idea of the amount you can afford come back as there is a lot more to go over! Click here
Now that you have an idea of your budget, we can discuss your down payment. A large part of your mortgage will be determined based on how much you pay upfront in the form of a down payment, which is typically 5-20% of the home’s final sale price, but some loan programs you can put down as little as 3%.
If your down payment is less than 20% you will most likely need to pay Private Mortgage Insurance (PMI). PMI protects the mortgage lender against loss if a borrower defaults on a loan. You'll want to discuss this with your lender and your Realtor. We will get to that further in the steps!
Tax benefits. U.S. Tax Code lets you deduct the interest you pay on your mortgage, and your property taxes.
Equity. Money paid for rent is money that you’ll never see again, but mortgage payments let you build equity.
Predictability. Unlike rent, your fixed-rate mortgage payments don’t rise over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will likely increase. Loan payments are often less than rent payments.
Freedom. The home is yours. You can decorate any way you want and choose the types of upgrades and new amenities that appeal to your lifestyle.
Stability. Remaining in one neighborhood for several years allows you and your family time to build long-lasting relationships within the community. It also offers children the benefit of educational and social continuity.
Maintenance. No worries about yard work. If you rent, your yard and the landscaping might be maintained.
Break downs. You won't have to fix something if it breaks! Being able to call the landlord when something needs fixing has to be one of the biggest perks of renting.
Short-TermHousing. Renting is best for short-term housing needs, such as those who are attending college or individuals who are in or plan on going in the military. Renting allows you to move easily when you plan on relocating.
Relocation. If you recently moved to a new city or town, you may want to rent to get to know the area before buying.
Lease. You may be stuck in a 12 month lease with high fees if you decide to break the lease.
Get pre-approved for a mortgage
Once you are pre-approved, don't make any big purchases or life changes, such as quitting your job, applying for credit or buying a car, that could negatively affect your credit score. This could jeopardize your loan.
A mortgage pre-approval is an evaluation by a lender that determines if you would qualify for a loan. It also shows how much the lender would be willing to lend you. Getting pre-approved is the first step towards getting a mortgage, but it does not guarantee a loan. It’s important to have a pre-approval before you start your home search. Your pre-approval letter is to be submitted along with your offer to show sellers that you are a serious and qualified buyer.
I always recommend getting quotes from multiple lenders as all lenders have different programs and rates. Read online reviews for lenders and consider their responsiveness and transparency. I have included lenders I have worked with before. Please do your due-diligence no matter which lender you decide to work with.
If you are interested in any of these lenders -
I'm happy to send an introduction to make the process smoother.
Whatever is easier for you.
Find a Realtor.
The seller will pay all real estate commissions in a home sale, so working with an amazing Realtor won’t cost you a thing!
Real estate agents are licensed professionals who have access to information that isn’t open to the public. A Realtor is an agent that have additional code of ethics training and have access to additional real estate market data and transaction management services, among other benefits. An ideal Realtor will be an expert on the home buying process, know other local agents and be a skilled negotiator.
Things you should look for in a Realtor-
Honesty, integrity, problem solver, ethical, engaging personality
If you're thinking of representing yourself without an agent you may be at a disadvantage, especially in a competitive market like Massachusetts. You really want a knowledgeable ally in your corner when negotiating.
The home buying process can become a stressful and complicated experience if you don't have a knowledgable Realtor at your side. You really need someone looking out for you and your best interests. I created this guide to help with some of the unknowns in the home buying process.
When it comes to choosing a Realtor that has your back, you don't have to look any further. When you work with me, you have a team of Realtors all working together at one goal - your success. I frequently connect with my teammates to discuss ideas and strategies for my clients.
I can't wait to help you.
Search for your home!
With guidance around Covid-19 your Realtor can show you homes in person or virtually. If you meet in person you may need to wear a mask and gloves.
This is the best part of the home buying process. It all starts with narrowing down your search and viewing the homes you like!
Connect with your Realtor about your must-haves, your wants and what towns or neighborhoods you like. Your Realtor will set up a customized search for you that instantly sends you homes the moment they hit the market!
Feel free to explore other websites to see what's on the market, but be sure to reach out to your agent if you see something you like. They will be able to weed out any fake/spam listings (There are a lot of them.) and save you from telemarketers harassing you. Any home you find online - If it is a real listing, your Realtor can find information and set up a showing.
If you venture to an open house and you are working with an agent, be sure to let the listing agent know. Avoid sharing any information, or any thoughts on the home. This could affect negotiations later on.
CREATE A SEARCH
Your Realtor will work with you to create a customized search specific to you and your families needs.
View homes matching your criteria at your own leisure from anywhere you have internet access.
SHOWINGS AND OPEN HOUSES
Go and see your matches in person during an open house or a showing scheduled by your Realtor!
Submit an offer.
When making an offer- You will need to submit a small deposit to "bind" the offer. This is typically a bank or personal check and is around $500-1000. This deposit check is only delivered to the sellers broker if your offer is accepted, and is deducted from the total sale price of the home.
You found a home that you love and you want to submit an offer! Congrats! If you haven't already, you should connect with your Realtor and discuss the home. Your Realtorwill help you determine what to offer, if any contingencies are needed and when you want to close on the home.
Sometimes in a competitive market a listing may have an offer due date. Your Realtor will let you know of this.
Once your offer is submitted the listing agent will review the offer with the seller, typically within 24 hours. The seller can either accept, reject or counter your offer.
If your offer is rejected, talk to your Realtor to determine what went wrong, and what can be learned for the next time.
If your offer is countered, it's time to negotiate. Your Realtor will help you achieve the best deal possible. You may need to raise your offer price, move your closing date or lesson some of your contingencies.
Once you and the seller have agreed and have signed an offer, you are in the closing process which can take anywhere from 30 to 60 days. During this time it is important to stay in close contact with your Realtor, lender and your attorney. Your lender or Realtor can recommend a real estate attorney if needed.
Anyone on the loan is on financial lock down until closing! Do not open or close credit cards. Do not quit a job. Do not purchase anything out of the ordinary. Stay out of the furniture stores! This is very important as you could potentially lose your mortgage if your debt to income ratio changes or if your liquid assets change.
What happens after your offer is accepted?
Your lender is notified to start the process on your loan.
A Home Inspection is typically completed within 10 days. A home inspection is a non-invasive examination of the condition of a home, conducted by a home inspector that has been training and certified. The inspector will generally walk the property with the buyer and provide a written report of findings. The buyer uses the knowledge gained to make an informed decisions about their pending real estate purchase. This is paid by you at time of service. The cost will vary anywhere from $300-700
depending on the size of the home. You can decline to have a home inspection,
although that's typically not recommended.
In Massachusetts a Purchase & Sale (P&S) is roughly twelve business days after an offer is accepted. This is a document received after mutual acceptance on an offer, which states the final sale price and all terms of the purchase. This is also when a buyer will make their next deposit. The remaining balance of your down payment will be due at closing. Deposits are typically liquid funds (bank checks or money orders).
An Appraisal is typically ordered around the same date as your P&S. The appraisal is an unbiased estimate of the true (or fair market) value of what a home is worth. Lenders order an appraisal during the mortgage loan process so there is an objective way to assess the home’s market value and ensure that the amount of money requested by the borrower is appropriate. This is paid by you, and the cost can vary.
Closing & Move in!
You are still on financial lockdown until you sign your closing documents!
If you are shopping online, add items you want to your shopping cart for after you close!
We are at closing day! A couple things happen on this day. First, you will typically perform a final walk though of the property before you go to the closing. Your agent will tell you when and where the closing will take place. During the final walk through you should check agreed upon repairs and check that no new issues have popped up since the home inspection. It is smart to make sure all appliances, light switches, faucets and toilets are operational.
Before closing you will receive your closing disclosure. Go over it carefully. On the actual closing day, you will have a large amount of documents to sign. Your
attorney will go over them as you sign each document. Make sure you ask questions if you don't understand something.
You’ll want to think about hiring movers and setting up your utilities. I would recommend doing this before closing so you can have things set up to move in shortly after you close.
Once all the paperwork is signed and the deed is recorded, you will receive the keys! This could take a couple hours after signing. Your Realtor will typically be the one that gives you your keys.
It is a good idea to have a locksmith change your locks or buy a new lock set from your local hardware store.
You are now able to do the shopping that you couldn't do earlier! Just be careful to not over commit yourself! This is a great time to make sure your monthly budget is updated.