Services & Providers Needed for a Home Purchase
When it comes to buying real estate, there are more things to consider than you may realize. After all, it’s a lot more complicated than walking into the grocery store to buy an apple! A home is one of the biggest purchases the average person makes in their lifetime. As such, you can expect a lot of preparation, negotiation, and paperwork. In addition to obtaining a mortgage and signing documents, there are a number of other tasks that need to be completed before you spend your first blissful night in that dream home.
If you’re not an all-cash buyer, you should start talking to lenders before you even begin looking for homes, and get pre-qualified for a mortgage as soon as possible.
The pre-qualification process involves a review of all your finances, including income, expenses, and savings, with a lender. The lender then calculates that information to let you know the amount and cost of the money the bank is willing to loan you.
When the timing is right and a property's attributes align with your goals, it’s time to review a home inspection report. Having a home inspected is important because it is an inexpensive way to discover the universal condition of a home and become aware of any issues that could lead to major problems or repairs. The average home inspection costs around $315 or more depending on the size of your home and other variables. For a residence greater than 2,000 square feet, it may cost upwards of $400 or $500. The home inspector will carefully survey the property in its entirety (including the basement, attic, and roof) to ensure everything is in proper working order and reveal any major hazards or issues. Besides helping to anticipate irksome challenges down the road, understanding the report early means the repairs can be included in negotiations with the Seller.
After addressing the home inspection reports, the appraisal becomes the next order of business. Lenders require an appraisal to make sure the home they’re letting you borrow for is worth at least as much as they’re letting you borrow. The appraiser determines the home value by comparing key features of your potential property to the features and sale prices of similar, nearby houses. Due to the current highly competitive market, homes are often selling OVER their list price while appraisals are often coming in BELOW the sales price. Lenders base their loan amount the the sales price or appraised value, whichever is LOWER. So, you have a few choices if your appraisal comes in low:
1. Ask the Seller to lower his/her sales price to the appraised value - very unlikely in this market.
2. Come up with the difference.
3. Use secondary financing.
Title insurance offers promises of peace of mind when buying a home. When you purchase title insurance, the title company guarantees the Seller actually owns the home and that the title is valid. This protects you in case any issues come up regarding past taxes, contracts, or prior mortgages with the home’s title. It’s also a good idea to purchase owner’s and lender’s title insurance to protect yourself and your lender from any issues with claims to the title of your property. The cost of title insurance depends on your location and the size of your mortgage.
Representation from a knowledgable, licensed agent is important when purchasing real property. Besides handling a bulk of the paperwork, their fiduciary responsibility is to you. That means you have an expert who is looking out for your best financial interests and is contractually bound to do everything in their power to protect you. Contract negotiations are just one example of where it really pays off to have an experienced agent on your side. Adept agents know the rules and regulations of buying a home, so they’ll be able to negotiate a contract with the Seller to ensure the best terms for you.
We will keep you on top of the market, show you hard-to-find homes for sale, negotiate your buying terms, handle the bulk of your paperwork, and always put you first.
If you're thinking about buying a home or adding to your real estate portfolio in Silicon Valley, give us a call today!