1. Decide to buy.

You might think of this one as a “DUH” statement.  Well, hello Captain Obvious.  But you really do need to consider if it’s the right time for you to buy a house.  There are a lot of good reasons to buy your own home.  Building your personal wealth ranks right up there.  If you rent–you’re giving money to your landlord.  But there are sometimes good reasons not to buy.  If that’s you–stop reading now & go have a latte’.

If that’s not you, here are some good reasons to make the decision to buy your own home.

1. You’re mortgage payments may be less or equal to paying rent.
2. It’s always a good market for real estate.  Find a good deal in the short term and make sure you have the financial ability to hold it for the long run
3. You can still get low-down payment loans.
4. A less-than-stellar credit score won’t necessarily stop you from buying a home.
5. Have a plan to buy your first home now and then move up to your ultimate dream home.

2. Hire a good real estate agent.

You want to find a good deal–right?  But how can you tell if that two-bedroom bungalow is a bargain or whether you should get the three-bedroom ranch?  And what about that “diamond in the rough”?  Is it a steal, or will it be the “money pit”?  You’ll want a realtor who has the kind of experience to advise you about how to find true value in the real estate market.  Your buyer’s agent should do the following:

1. Educate you about the market.
2. Listen to your wants and needs.
3. Guide you to homes that are what you want.
4. Help to coordinate inspections and appraisals.
5. Negotiate on your behalf.
6. Check and double-check paperwork and deadlines.
7. Work to solve any problems that may arise.

3. Get together your financing.

It’s exciting to think about owning a home, but getting a mortgage can be intimidating.  Just as in finding a good realtor is important, so too is finding a mortgage professional.  You want to find someone who will take time to explain the process and listen to your concerns.  As a general rule you will follow this six-step process to securing the financing for your home.

Six steps to Financing a Home

1. Choose a loan officer (or mortgage specialist).
2. Make a loan application and get preapproved.
3. Determine what you want to pay and select a loan option.
4. Submit to the lender an accepted purchase offer contract.
5. Get an appraisal and title commitment.
6. Obtain funding at closing.

4. Matchmaker find me a home.

At this point you might think that you hop the the car and start house hunting.  It’s the ultimate shopping trip.  Probably the most expensive thing you’ll ever buy.  But like e-Harmony says in their ads–the perfect match is based on dimensions of compatibility not on random drive-bys.  There’s not many things worse than buying a house on emotion and then finding out it doesn’t really fit with your values and lifestyle.

You should ask yourself the following:

1. What things do I do that I want my home to be close to?
2. How much space do I need and why?
3. Is question #1 or question #2 more important?
4. Do I have the stamina, talents and/or money to buy a fixer-upper?
5. How long do I think I’ll live here?  Do I need to consider appreciation and/or resale value?
6. Do I think the neighborhood will continue to fit with my lifestyle for the time I plan to live here?
7. What are the “non-negotiable” things I want in a home?

5. Make an offer.

You’ll find a house you fall in love with.  This is it!  You want it.  But now you have to get your emotions under control and think as a businessperson.  Your buyer’s agent can help you balance your emotions with the reality of the market and the true value of your dream home.  You want to make a good offer that will get you the best deal.

There are three basic parts of an offer: price, contengencies, and terms.

Price – the right price to offer should fairly reflect the true market value of the home you want to buy.

Contingencies – these include such things as obtaining favorable financing or selling your existing home.

Terms – the other financial and timing factors that will be included in the offer.
Terms fall under these basic categories in a real estate offer:

1. Schedule – a schedule of events that has to happen before closing.
2. Conveyances – the items that stay with the house when the sellers leave.
3. Closing costs – who pays closing costs is negotiable, but if you want to roll the costs into the loan, you need to write that into the contract.
5. Home warranty – this covers repairs or replacement of appliances and major systems. You may ask the seller to pay for this.
6. Earnest money – this protects the sellers from the possibility of your unexpectedly pulling out of the deal and shows you are serious in your offer.

6. Perform due diligence.

Unlike most major purchases, once you buy a home, you can’t return it if something breaks or doesn’t quite work like it’s supposed to. That’s why home owner’s insurance and property inspections are so important.
A home owner’s insurance policy protects you in two ways:

1. Against loss or damage to the property itself
2. liability in case someone sustains an injury while on your property

The property inspection is to help you discover  issues a home might hide so you know exactly what you’re getting into before you sign your closing papers.

* Your major concern is structural damage.
* Don’t sweat the small stuff. Things that are easily fixed can be overlooked.
* If you have a big problem show up in your inspection report, you should bring in a specialist. If the worst-case scenario turns out to be true, you might want to walk away from the purchase.

7. Close the deal.

Before you close the lender will confirm the home’s value and legal standing, as well as your continued credit-worthiness. This entails a survey, appraisal, title search, and a final check of your credit and finances. Your buyers agent will keep you informed through this process, but your work is pretty much done.
You just have a few things to keep on top of:

1. Stay in control of your finances.  Don’t buy a boat or anything else that will ding your credit.
2. Return all phone calls and paperwork promptly.
3. Stay in touch with your agent.
4. Double-check your documentation several days before closing.
5. Obtain certified funds for closing.
6. Conduct a final walk-through.

On closing day you’ll sign a big pile of papers that will:

1. Finalize your mortgage.
2. Pay the seller.
3. Pay your closing costs.
4. Transfer the title from the seller to you.
5. Make arrangements to legally record the transaction as a public record.

It sounds like a lot to do, but with the help of your agent you’ll have the joy of getting the home you want.

8. Protect your investment.

You shouldn’t expect your real estate agent to abandon you after you move into your home.  A good agent will want to keep in touch with you and can be a good resource to help you find good people to keep your home in good shape.  Good realtors have a network of people in trade and service professions and should be eager to share these referrals with you.  If you ever receive a referral from your realtor in which you don’t receive top-notch service, let your realtor know your disappointment.  He should be an advocate to help you make the problem right.  He’ll also think twice about referring that business again.

Good realtors will also ask you to refer them to people you know who are buying or selling a home.  If you received good service you can be assured that your friends will appreciate your referral.

Protecting your investment also includes making sure routine maintenance and service is done on your home.  Even if you buy a brand new home, things wear out and deteriorate over time.  Your realtor can be a resource to advise you on how to maintain your home so that it keeps the maximum value.