Home Buying Process

You’re buying a home — congratulations!

Whether you’ve decided to purchase an existing home or build a new one, there are important decisions to make — choosing a mortgage lender, sifting through different options like adjustable- or fixed-rate mortgages, and even finding real estate agents. The list goes on. At first, the process of purchasing a home may seem overwhelming, but the choices you face don’t have to be difficult. You’re really only a few steps away from realizing the dream of homeownership.

As your mortgage broker, Trimax will answer your questions and work with you throughout the mortgage loan process. That way, you can stop worrying about the decisions and start enjoying your new home sooner.

Common questions about the mortgage loan process

Should I buy or rent?

The greatest advantage of owning your own home is that your monthly payments are no longer just a living expense but also an investment. As you make payments on your residential mortgage each month, you’ll build equity as you pay down your mortgage. Plus, you may be able to deduct the interest portion of your payment, along with your property taxes, from your federal taxes each year (please consult with your tax advisor).

But homeownership has added costs that renters don’t have to worry about. When you own a home, you’re responsible for the cost of maintenance and repairs like replacing the roof, furnace or plumbing as they wear out. You’ll also pay taxes and insurance premiums and have other expenses that you may have never thought about when you were renting.

In the end, only you know if renting or buying is best for you. For help with the decision or for more information about the home-buying process, please call a Trimax advisor at (310) 954-0808 or contact your local Trimax Realty & Loan branch.

How much can I afford to pay for my new home?

If you’ve decided to buy a home, the next step is to determine where you’d like to live and how much you are comfortable paying. Generally, a figure between two and three times your annual income is a good guideline in determining how much to pay. However, you also need to consider how much you earn, how much you owe and how much you have saved.

Your monthly residential mortgage payment should be approximately 30% of your monthly income before taxes are deducted (gross income), while your total debt payments each month (mortgage, car, credit card and other payments) should not exceed 45% of your gross monthly income. Although these percentages will vary depending on the type of mortgage you are applying for, they are a good starting point for determining guidelines for your mortgage loan.

What’s next in the mortgage loan process?

You’ll need two important items: a wish list and a mortgage preapproval.

Choose your residential mortgage lender

To obtain your residential mortgage preapproval, you will need to select a mortgage broker like Trimax. Be sure you are comfortable with the mortgage broker you select and that they will walk you through the home purchase process, as well as answer any questions you have about your mortgage loan and borrowing options. They should be able to tell you about fixed- and adjustable-mortgage rates, and explain the process from mortgage application to closing.

Define your ideal home

The next step in the mortgage loan process is to make a list and define exactly what features your new home must have. This will you save hours of time and miles of travel. Your list should describe physical requirements, such as the number of bedrooms, as well as what you expect from the neighborhood and surrounding community. In addition, you should consider factors such as the quality of schools and access to shopping and recreation. While a wish list helps you define what you want in a home, a mortgage preapproval will tell you what you can afford. It will help you narrow your search by focusing on homes within your mortgage loan preapproval amount that also match your wish list. And once you find a home you like, the preapproval will immediately demonstrate to the seller that you’re a qualified buyer. This can save you time and money, especially when you’re competing with other potential buyers.

 

Find a real estate agent

A real estate agent can be a valuable ally in your search for a new home. Because the seller customarily pays the agent’s fee or commission (usually 3%-6% of the sale price of the home), a good agent will work with you to locate a home that meets your needs.

With your wish list and mortgage loan preapproval in hand, you’ve identified yourself as an informed and qualified buyer. You should expect the same from a real estate agent.

To find a qualified agent, seek recommendations from family and friends who have recently been through the home purchase process, but don’t stop there. Interview several agents by phone or in person until you’re comfortable that he or she:

  • Understands your needs.
  • Is familiar with the communities you’re interested in, particularly in relation to your price range.
  • Is a committed, full-time professional.
  • Is someone you feel comfortable working closely with over a period of weeks or even months.

If you need more help choosing a real estate agent, ask Trimax. We work with many real estate agents all around the country and can recommend a qualified professional in your area.

Next in the home purchase process: house hunting

The next step in the home purchase process is house hunting. Using your wish list and mortgage loan preapproval, your real estate agent can find listings for you to check out.

However, you can speed up the house hunting process by doing your own research. Begin with the Internet. Several sites allow you to view listings based on ZIP code and price range. Check the real estate section of your local newspapers, too.

Then do some legwork. Drive to the homes you’ve found and see them firsthand. Walk through some homes that are holding an open house or have your agent schedule an appointment for a walkthrough.

Your wish list is a great tool for grading the homes you visit. Make enough copies to create a scorecard for every property you see. This will come in handy later when comparing two closely matched properties. Remember to look beyond the house as well. The neighborhood, schools and proximity to work, shopping, recreation and other amenities should play a major role in your choice.

How do I make a formal offer?

After you’ve selected the home you want to buy, the next step in the home purchase process is to make an offer. Making an offer or bid on a home is just one step short of creating a legally binding contract. That’s why it’s essential that your offer states your intentions clearly and precisely.

Your offer should include:

  • Your proposed price.
  • Any concessions you want the seller to make.
  • Any financial contingencies, such as making your offer dependent on your ability to obtain a residential mortgage.
  • A specific inventory of what you want included in the sale. (Don’t overlook appliances, window dressings and other items that you want the seller to leave behind.)
  • Any home inspections contingencies.
  • The amount of earnest money being tendered with the offer.

What is the negotiation process like?

When you make an offer on a home, you should be prepared to negotiate with the seller to arrive at what you both believe to be a fair value for the home. Although this can be an involved process, it has the potential to save you thousands of dollars on the price you ultimately pay.

To prepare, gather as much information as you can about comparable homes in the immediate neighborhood that have recently been sold. Look at houses with square footage, number of bedrooms and bathrooms and other characteristics similar to the home you’re considering. A drive-by to compare the general condition of these homes can also be valuable.

If you are working with a buyer’s agent, he or she can provide you with a comparable market analysis that can be very useful in your negotiations.

If you can learn the owner’s reason for selling the home, you may have a better idea of how much flexibility there is in the asking price.

Interest rate

Once your offer is accepted, it’s time to get your mortgage loan. Hopefully you already had your questions about fixed- and adjustable-interest rates answered. When it comes to the mortgage loan process, the more information you have, the better choices you’ll be able to make.


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