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The Home Buying Process

Buying Capacity
The process of buying a home or investment generally starts with determining your buying capacity; that is, your financial reserves plus your borrowing capacity. If you give a real estate representative some basic information about your available financial resources, e.g. savings, income and current debt, he/she can recommend the lender/s best qualified to help you. Lenders often specialize in certain types of mortgage loans.

Home Finding Preparation
Once you know how much you can and want to invest, the next step is to find the properties that most nearly fit your needs. You will need to make two lists: your "Want List" (the extras: pool, den, fireplace, etc.) and your "Need List" (e.g. # of bedrooms, garage, # of bathrooms, etc.). Items for your lists also could include such things as privacy, size and architectural features to name just a few. This is also the time to choose a real estate agent. You should strongly consider choosing a Buyer's Agent who can represent you throughout the home buying process.

Finding the Right Home
Discuss openly your likes and dislikes about the houses you visit with your agent. The more information your agent has, the more likely he/she will be to find the right properties. Excitement and emotion usually run high at this time. Your real estate agent can assist you in the selection process by providing objective information about each property. Agents have access to a variety of informational resources, and can provide local community information on utilities, zoning, schools, etc. There are two things you'll want to know. First, will the property provide the environment I want for a home or investment? Second, will the property have resale value when I am ready to sell? Once you have found the right property, ,your agent can provide you with sales data of comparable "sold" properties in the area which can help you in formulating an offer. Of course, only you can determine the amount of offer you are willing to make.

There are a myriad of negotiating factors, including, but not limited to price, financing, terms, date of possession, down payment and often the inclusion or exclusion of repairs and furnishings or equipment. The purchase agreement should also provide a period of time for you to complete appropriate inspections and investigations of the property before you are bound to complete the purchase. Your agent can advise you as to which investigations and inspections are recommended or required. You might also consider purchasing a home warranty which will cover many household repairs form plumbing to appliances.

Due Diligence
With a negotiated agreement in hand, it is time to complete the evaluation of the property. Depending on the area and property, this could include inspections for termites, dry rot, asbestos, faulty structure, roof condition, septic tank and well tests, just to name a few. Your agent can assist you in finding qualified responsible professionals to do most of these investigations and provide you with written reports. You will also want to see a preliminary report on the title of the property. Title indicates ownership of property and can be mired in confusing status of past owners or rights of access. The title to most properties will have some limitations; for example, easements (access rights) for utilities. Your agent, title company or attorney can help you resolve issues that might cause problems at a later date.

As soon as you are reasonably sure the property is right for you, the process of obtaining financing begins. Your agent can help you in understanding different financing options and in identifying qualified lenders.

Closing or Settlement
Finally, there is the closing, or settlement, as it is known in different parts of the country. Every area has its own unique customs. In some areas, the title or escrow company will handle this process. In other parts of the country, an attorney does it all. Again, your real estate agent can guide you through this process and make sure everything flows together smoothly.