According to many successful real estate investors now is the time to buy a home as the prices are lower even with the higher interest rates because one can always refinance when the rates drop. In the United States of America, the numbers of people from various racial groups who own a home are as follows, 44% of Black people, 72% of whites, 62% of Asians, and 50% of Hispanics. In 1866, the Civil Rights act and the 14th Amendment gave Blacks the right to own a home following slavery’s end and now we are in 2023 and these are the numbers, and this is a problem considering how many years have gone by since then. A few years ago, I bought a condo on my own after a few years of saving and going into the process I just knew of the bank loan option and looking for the actual property but I did not know the other steps until I started the process because once you find the right home you have to jump right on it with an offer.
When it comes to buying a home there are questions you should ask yourself and things you should do before starting your search:
- Speak to a loan officer from multiple banks because each will give different incentives such as some money towards closing based on being a first-time home buyer and your income. Make sure you are prepared to do this all around the same time because they will run a hard inquiry on your credit which displays on your credit report, so if done within a short time frame this will only present as one inquiry. Also, they will break down and let you know what needs to be done in order to be approved for a loan such as your debt to income ratio that would be accepted for approval and the amount they are willing to loan you based upon this information.
- Contact a real estate agency to find an agent to help you get started looking for properties. Not all agents are created equal so speak to them, see if they have experience working in the area you desire and ask if they work full-time or part-time because this allows you to know how they prioritize their time in helping you.
- Contact a lawyer who specializes in real estate from multiple firms to get a quote for the price of services. Most lawyers do free consultations, so see who you feel comfortable with. Once you find one you like, keep their information handy as they will not be needed until you find a home and your offer is accepted.
Now once you find the home and the offer has been accepted:
- Contact home inspection services and read their reviews, but make sure they do a thorough check inside (condos and private homes) and outside (private homes) because you want to be prepared there are no problem areas that would break down soon as you close on the home. If there are things the inspector finds all of this is involved in the contract of what needs to be fixed before closing such as functioning outlets and the presence of smoke/carbon dioxide detectors.
- Reach out to your lawyer so they can obtain any financial and other legal information on the property especially if there is an HOA and any assessment values that can increase before closing. Also, your lawyer if involved in the contract process and making sure what you want agreed to is represented when the seller’s lawyer draws up the contract. So, make sure everything is in this contract including closing date, when the property needs to be vacated by sellers if time is needed past the closing date, and fixtures in place such as lighting (as my sellers had a chandelier and I wanted to make sure they left it in place or if they took it down, they were to replace it). Once the contract is mutually agreed on then the process truly begins.
- For those buying condos or co-ops there is an added step of board approval where you have to present all of your financials and have an interview if required. This process with co-ops is usually more strict and requires these steps and in many cases they can deny you obtaining the property for any reason. (Note: When you want to have construction done in your unit you will also have to get these approved by the board)
After the contract is signed…
- A portion of the down payment is often required to be paid to the seller’s team as an initial agreement of contract and property interest.
- The bank does another inquiry of your credit report to make sure nothing changed from the time before and does an appraisal to make sure the property is worth their investment because if the house is worth less than the selling value the bank will not give you the loan for more than it’s worth.
- Start getting quotes for Homeowner’s Insurance to find the best price for you.
- Get the full breakdown of your monthly mortgage price with the interest and down payment considered. If escrow created, it can include real estate taxes and the homeowner’s insurance cost. Also, closing fees that are required as each state has different fees.
- Make sure a walk through is done before closing date to make sure all the things needed to be fixed according to the inspection are completed and the seller’s items are cleared or almost cleared.
At closing…
- The final documents are signed by both parties in the present of the team and the final down payment is to be given to the seller.
- The keys are exchanged, and the home is now yours.
So, I hope I didn’t miss anything, but always do your own research and look up first time home buyer programs as well because some of them help to waive closing fees and/or require no to low down payments. Happy Home Shopping!