Guide to Purchasing Your First Home

The current real estate market favors the buyer. Many real estate companies have lots of homes available for sale, and interest rates are low. Furthermore, many sellers are very motivated and willing to do whatever it takes to make a deal. Even though this is a great time to be a first-time buyer, you may not know what to expect or exactly what is expected from you as you begin the home-buying process. This is an overview of exactly what will happen during each stage of the process.

Home purchases often take between 30 and 45 days. How much time will depend on the contract between you and the seller and how eager each side is to close the deal. It also depends on how long it takes your lender to process your loan application.

Below are the basic requirements in the financing, house-hunting, purchase contract, inspection, and closing phases of purchasing a new home.

Initial Financial Phase
- Get your tax records (past two years), assets, bank statements and credit profile ready for inspection
- Interview potential lenders. Remember that interest rates and mortgage terms vary from lender to lender.
- Get a Loan Status Report (LSR) from your lender (this tells sellers that you can make a serious offer).
- Determine your price range

New Home Search Phase
- Find a Realtor that answers questions and is trustworthy.
- Let the Realtor know exactly what you are looking for a home.
- Work with your Realtor on an MLS search based on your individual needs.
- Look at homes and compare prices and features.
- Make an offer on the property that you would like to become your home.

The Purchase Contract Phase
- Your Realtor will help you make an offer. It will include your LSR, attachments and addendums.
- There may be counter offers until buyer and seller agree on a price.
- Once both buyer and seller accept the contract, it becomes a legally-binding document for both parties.

Timeline of the Purchase Process
Once the contract is accepted:
- Your earnest money is deposited. Usually, this is one percent of the total purchase price.
- Escrow starts.

Five days after contract acceptance:
- You, the buyer, complete the loan application and pay financing fees.
- Seller gives the Seller Property Disclosure State (SPDS), a history of the insurance of the property, and any other disclosure statements.
- You respond to the disclosure statements and apply for insurance on the property.
- You schedule (and pay for, unless your contract says otherwise) a home inspection. Rates vary depending on the size of the home and location.
- You review the title commitment.

Ten Days after contract acceptance:
- You request any repairs that the property needs after you get the report back from the home inspector.
- Seller gives information about Home Owner Association (HOA) regulations and fees.

Fifteen Days after contract acceptance:
- Seller must respond to your repair requests.
- You then have the option of accepting the repair offer or canceling the contract. If you cancel based on the repair offer, your earnest money can be refunded.

Getting Ready for Closing

Most buyers are relieved and excited when their closing date finally arrives. If the buyer and seller have met all of the requirements of the sale, then your lender will schedule an appraisal. You have to pay the appraisal fee, which, once again, is based on the size of the home. The appraisal is required by the lender to make sure their loan is secure so the property must appraise for the price of the home. If the home appraises for less, the buyer or the seller can make up the difference in cash, the seller can lower the purchase price or you can cancel the contract.

Three days before the date of closing, all repairs must be done and all of the documentation must be finished as well. Your Realtor will suggest a final walk-through of the property at this time. The title company serves as the recording agency and will put your name on the title once all of the requirements have been met and documents signed. If you have any questions about what will happen during this transaction process, be sure to ask your Realtor and lender, who will be familiar with this entire process.

Del Mar Real Estate