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Steps for Buying a Home
Life as a Homeowner






 
Module 4
Steps for Buying a Home
Key Points Summary
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The following key points were discussed in Steps for Buying a Home:

  1. There is an order of steps to follow in the home-buying process. The first step is to get pre-qualified and then pre-approved before looking for homes for sale.

  2. The most important thing to consider in selecting your real estate professional(s) is to find someone that you can trust to act in your best interests at all times.

  3. You can make your offer dependent on many different provisions, called contingencies. For example, your offer can be dependent upon obtaining financing, securing a clear title, comparing the appraisal to the asking price, having a satisfactory home inspection and any other issue(s) that you feel are important before you are willing to purchase the home.

  4. When your offer has been accepted, the next step is to secure your financing. The more documentation you can bring to support your loan application, the faster the loan process will go. You should wait until you have chosen a home loan consultant whom you trust and are comfortable with before providing personal information such as your Social Security number.

  5. Within three days after submitting your loan application, the lender is required by law to provide you with a Good Faith Estimate listing all costs involved in closing on both the home loan and the property that you are purchasing.

  6. There are several types of insurance required when purchasing a home. Private Mortgage Insurance (PMI) is usually needed if you have less than a 20% down payment.

  7. Homeowners insurance is required to protect against hazard and liability. Title insurance is necessary to protect against someone making a claim to your property, and flood insurance protects you in federally designated flood zone areas. Other types of insurance can be beneficial (such as disability, umbrella, earthquake and mortgage life insurance) but are not required.

  8. Before you go through with the purchase of a home, you’ll want one or more experts, selected by you, to conduct inspections of the property. A regular home inspection covers the structure of the home plus all major systems such as electrical, plumbing and heating and cooling. A structural inspection examines the existing condition of the structural elements and determines whether repairs are warranted based on those conditions. You may also want to have an environmental inspection to check for radon, lead-based paint or mold.

  9. The actual closing of the loan varies depending on which part of the country you live in. Whether done “in escrow” or in a face-to-face closing, this is the day where the property is conveyed to you, the seller receives the money and you receive the keys. You should be prepared to pay closing costs at this time. All closing costs, with credits and debits to both buyer and seller, will be shown on the HUD-1 Uniform Settlement Sheet. Make sure you have compared these costs to the Good Faith Estimate document you received from your lender when you applied for the loan. Do not hesitate to ask the settlement agent to explain any costs you do not understand before signing the closing documents.
Next Step
Now that you have reviewed the Key Points Summary test your homeowner knowledge with our Quick Quiz.

When you are finished, continue to Life as a Homeowner to learn how to become a successful homeowner and maintain your valuable investment.
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