Most people consider buying a home to be one of the most important financial decisions that they make in their life. However, if you are a homebuyer just entering the market for the first time, the entire process can prove exhausting and overwhelming. You want to make sure that you find the right house for your lifestyle and budget, and after that, you must navigate all the legal aspects involved with completing the purchase.
If you do your research and talk to other people around you who have successfully completed a home purchase, you will gain some personal insight into the things you will need to consider along your own journey. It is important to remember that everyone’s path to homeownership looks different. However, you should have a good knowledge of certain things as you plan to begin shopping for your new house. Keep reading to learn more about the key steps you must take when purchasing a home.
Hire a Realtor
Many people think that they can navigate the home buying process without the help of a realtor. After all, there are so many home listing sites that you can search for your perfect house from the comfort of your couch. However, even if you find your dream home while you are searching the Internet at midnight, you will need to hire a professional to ensure the process of viewing and negotiating the purchase of the house runs smoothly. Seek out a realtor that is a member of the National Association of Realtors, as these individuals adhere to specific rules and codes of ethics. Take a look at the benefits of realtors, and how they can help your home buying experience go off without a hitch.
Find the Right House
Once you have found a realtor that you click with, you are ready to start viewing houses and find the one that works best for you. This process can be both exciting and overwhelming. It is exciting because, with every door you open, you get to imagine living your life there. It is overwhelming because you want to make sure that you find the right house to meet your needs and budget. Nobody wants buyer's remorse when purchasing a house. When looking at houses, remember that you will never find a perfect house and there will always be compromises that you need to make. Your realtor can help you assess these situations to guide you toward making the best decision. Where your decisions will be based on emotion, the realtor can help you to see the bigger picture and provide input on potential resale value and insight about the area. Once you have finally found the right house for you, it is time to move on with the purchase.
Getting an Escrow
Often the first time that a person hears the word “escrow” is when they have made an offer on a house. It sounds like a complicated thing and can scare off some new homebuyers, but it is really just a standard part of purchasing a house and nothing to be worried about. You can expect to be asked for an escrow shortly after you make an offer on a home and it has been accepted.
What Is an Escrow?
An escrow is a contractual or legal agreement that you make during the period between when a seller accepts your offer and when you close on your new house. It is a good thing because it protects both you and the seller during the process that takes you to the closing table.
After the seller accepts your offer, they will ask you to provide a “good faith deposit” (also known as earnest money) towards the home. It lets the seller know that you are serious about completing the purchase. A third-party agent holds onto the money and distributes it at the house closing according to the terms of the agreement.
Benefits of Escrow
Although many new homebuyers may feel uncertain about the idea of escrow, it actually provides many benefits to both parties during the transaction. If you did not have an escrow account, there would be no liability if either the buyer or the seller did not uphold their part of the agreement. It assures the seller that you do not intend to back out of the agreement and provides them financial protection if you do. It assures you as the buyer that the seller will not offer the contract to another buyer, even if a better offer comes along after they have accepted yours.
Cost of Escrow Service
When you finally close on your home, you can expect escrow fees to be part of the closing costs. The fees go to the agent or escrow company that set up and managed your escrow account. They pay for the required paperwork (such as recording of the deed). Other fees that they cover include the fund distribution and other miscellaneous fees such as loan fees, third-party payments, and the seller’s profit.
On average, you can expect to pay between 1% to 2% of the actual purchase price of the home in these escrow fees. You may also have an additional flat fee charged by the escrow agent or company. Most often the buyers and sellers split these fees, but no rules exist, and the payment is negotiated during the home buying process. You can get an idea of how much your escrow fees will cost by using an online fee calculator.
When you have finally made it to your closing date, you can expect a few standard things to happen before you receive the keys to your new home. You need to bring all your required paperwork and your agreed-upon down payment. The closing typically takes place in a law or real estate office. Once you are there, you review a lot of paperwork and sign your name on many legal documents related to the purchase of the home. The average time it takes to close on a home is approximately 30-40 days after you have negotiated a contract. Here is exactly what you can expect during the home closing process.