lvb626
LIF Adolescent
Member since 12/11 705 total posts
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House buying process
Can someone help explain to me the process you go through in buying a house and who is involved.
We already got pre-approved by a mortgage broker.
We found a house we are very interested in and will be making an offer this week.
What happens after you make an offer?
Inspection, contract, closing?
We have a friend that is our real estate agent, do we need to get a real estate agent?
Besides closing costs, what other out of pocket costs are involved?
Real estate comission, lawyer fee, and do we pay a fee to our mortgage broker?
Just trying to see how much money we need in order to close.
Any help is appreciated!
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Re: House buying process
I think you should have a real estate agent working with you. I couldn't tell from your post whether you are already working with your friend who is a real estate agent, or just considering it. But if you are working with a good real estate agent, they can guide you through the entire process, helping you navigate each step. As a real estate agent, I consider myself a project manager, so I interact with the attorneys, inspectors, the bank --- if everyone is working together to get the transaction done, it goes more smoothly.
I explain all of the questions you are raising now when I first consult with a buyer, and I think my customers appreciate that. I also think being able to email me or call me at any time with questions puts their mind at ease. You don't want to be in the dark - it's too big of a deal!
As far as the process:
1) You find a house you like, and then you make a written offer (signing what's called the sales agreement). Your offer should outline all terms of the transaction, not just the price (so how much you are putting down on contract and at closing, when you want to close, which lender you are using), and include your preapproval letter;
2) Your agent, or the listing agent, if you don't have an agent of your own, will present the offer to the seller, and negotiations ensue;
3) Once you have an accepted offer, you want to try to go to contract asap. Until all parties sign the contract, no one is truly locked into the deal. The seller is free to take a higher or better offer that may come in until they sign the contract. Typically, buyers have a home inspection before signing the contract. A home inspection usually costs in the range of $400-500 dollars. If you find an inspector that can do a termite inspection, too, that is all the better (get it all done at once);
4) Once the inspection is done (and if anything comes up, you want to negotiate those items immediately), the attorneys will prepare the contract. So you will need a real estate attorney to handle this, as well as the closing. The seller's attorney prepares the first draft, and then when the attorneys agree, you will sign first, and the seller will sign second. When you sign, you will put down part of your down payment, which is held in escrow until closing. So if you are putting down 20%, you may put down 10% at contract and the other 10% at closing. You will need to write a check for 10% upon signing the contract.
5) Once you are in contract, you need to apply for your mortgage. You have a set period of time to secure your mortgage commitment... usually 45 days. Once you have an accepted offer, it's a good idea to let your lender know so you can start gathering the documents and info you will need to provide to the bank with your application. After you apply for a mortgage, the bank will do an appraisal on the house to make sure value's there. Once everything's in place (appraisal is done, you have your commitment, title is clear), the bank will clear your file to close.
6) You will need to get homeowner's insurance in place prior to the closing.
7) You will do a final walk through of the property before closing to make sure everything's as it should be and as it was represented on the listing and when you saw the property. (Nothing's broken, been removed, etc.).
8) At closing, you will sign a bunch of paperwork, pay the remainder of your down payment and any closing costs, and get the keys to the house (unless arrangements have been made for the sellers to stay in possession after closing).
As far as fees, the real estate agents are typically paid out of the seller's proceeds at closing. So even though you, as the buyer, bring the money to the table, you are not technically paying the real estate agents, unless you specifically agree to pay something to your agent above and beyond. But 99% of the time, the realtor fees come out of seller's proceeds.
Each bank is different in terms of fees and how they make $, but that is part of the closing costs. The bank should be able to give you a rough idea of closing costs now, but once you apply for your mortgage, you will get a "good faith estimate" that shows your closing costs and the breakdown. But it includes all fees you need to pay (to the title company, the bank, etc.).
Closing costs are usually in the range of 4% to 6% of the purchase price for the buyer, and the bulk is often not fees to the bank but prepayment of items like property taxes.
But my advice is to definitely find a knowledgeable realtor and attorney you trust who can advise you on the specifics of your situation/circumstances.
Good luck!
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Re: House buying process
Posted by blu6385
can i jump in on this thread. question about other fees.
If we put are closing fees into the loan (Its an FHA loan)
what other out of pockets cost will i have to come up with money for?
Our lawyer is covered thru my job, we are using i guess whats called a morgatge banker.
If you are rolling all of your closing costs into your loan via a seller's concession (which can be up to 6% of the purchase price with an FHA loan), and your lawyer fees are covered, then there's not much else.
You will want to do a home inspection, which on average will cost you $400-500. And you will want to do a termite inspection, if your home inspector isn't qualified to do it, which costs around $150 or so.
At the closing table, it's customary (but not required) for the buyer to pay an attendance fee or "tip" to the title closer, and that is usually in the range of $150-$250.
I can't think of anything else...
ETA - Of course you will need to pay for your down payment with cash. With an FHA loan, the minimum is 3.5% down.
Message edited 6/12/2012 2:42:20 PM.
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blu6385
Member since 5/08 8351 total posts
Name:
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Re: House buying process
Posted by Century 21 Dallow - Christine Braun
If you are rolling all of your closing costs into your loan via a seller's concession (which can be up to 6% of the purchase price with an FHA loan), and your lawyer fees are covered, then there's not much else.
You will want to do a home inspection, which on average will cost you $400-500. And you will want to do a termite inspection, if your home inspector isn't qualified to do it, which costs around $150 or so.
At the closing table, it's customary (but not required) for the buyer to pay an attendance fee or "tip" to the title closer, and that is usually in the range of $150-$250.
I can't think of anything else...
ETA - Of course you will need to pay for your down payment with cash. With an FHA loan, the minimum is 3.5% down.
thanks so much for the info!!!
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