Home Buying

Now that you have just a vague idea of this home buying process, I would like to establish a well known truth – though everyone wants the most perfect, flawless and ideal place to inhabit, there is usually some percent of adjustment that the buyer and the seller should be willing to accept at any given point. I would not say that it is practically impossible to find a perfect house with no flaws at all whatsoever if you are willing to spend a fortune for the same, but if you are looking for an averagely priced house that fits within your budget then you can try to pick one that has the least number of flaws from the ones you have looked at. Before you start looking it is important to put together a list of things that you want in your home that you cannot live without – usually this is related to the number of rooms, square footage, location/neighborhood characteristics, architectural style and not other cosmetic things such as paint or fixtures as you can always change them. Also, if you are very particular about having granite counter tops or nice kitchen cabinets, then try to get them with the house as remodeling a kitchen could come up to a couple of thousand dollars in the future. There are some high cost attributes within every house, which you need to be very careful to evaluate and this would include the condition of the water heater, roof, air conditioning, foundation, etc which will be reported by the home inspector, at a later stage in the home buying process.

If we were to put down the steps that entail the home buying process, then it would include: (a)firm decision to buy and not rent (b)deciding on locality/neighborhoods (c)characteristics that you certainly cant live without & preferences which would include not really that important but good to haves (d)looking around for houses, gathering information from websites on details that are important to you (this may include demographics, neighboring schools & their ratings, crime statistics, proximity to amenities/shopping etc, this varies based on what is important to you) (e)shopping for lenders who can give a competitive interest rate, getting quotes, assessing the closing cost, deciding whether you need conventional or FHA based on the down payment you can afford (some lenders don’t charge origination fee or have any point system), clarifying doubts you may have (f)selecting a lender and starting the loan process, a loan status report (LSR) is needed to put an offer on any house, so some lenders provide this document without running a credit check but at the same time some others do a credit check to verify credit worthiness, also ask for a good faith estimate based on the total amount that you plan on lending which would give you a fairly good idea about the closing costs, interest rates, some may help you lock a good interest rate in case the market rate is expected to go up etc (g)finding the right house, evaluating cost of neighboring properties using online tools, obtaining information from realtor (the realtor would be able to provide details of any past sales from county records, minimum as well as maximum price as estimated by the county as well as tax evaluations) (h)verifying if there is any home owners association, monthly charges, requirements etc (i)putting a reasonable offer for the house based on the price evaluations (j)seller accepts the offer and signs the document, in some cases if you quote a price that is not acceptable to the seller then they may either reject your proposal or counter that with a different price (you can always put a counter offer, but some sellers may get annoyed if the number of counter offers are not very reasonable and decide not to continue working with you anymore) (k)informing the lender that the seller has accepted the offer and you want to move further, normally you would get 10 days to collect any further information on the house depending on what is important to you, as well as to order appraisal and get the inspection completed, deciding closing date etc (l)ordering appraisal for the house by a certified appraiser in the area (appraiser is chosen and this is initiated by the lender, if you have a loan and you pay for this later as part of the loan) (m)confirming that the house is worth the price that the seller is requesting and the amount the lender is willing to provide (n)ordering home inspection by a certified inspector needs to be done by you, this is the key to analyzing flaws in the house (read carefully through the inspection report and get a quote for the work that needs to be performed from a provider in order to make it livable for you – this may not include fancy modifications, say necessities such as fixing leakage in plumbing). Generally inspectors look at the foundation, roof, appliances, structure etc, to name a few in detail, some also do termite inspection (this is particularly very important in certain states) to provide a report, they may also suggest other inspections such as mold inspection, soil inspection, depending on their inspection (o)negotiations between buyer and seller on the price, repairs, requesting receipts if the seller agrees to get repairs done, documents that indicate termite treatment if already completed etc (addendums provided to seller with details on repairs, realtor would be able to help better on what forms or addendums are needed) (p)signing the contract after agreeing on a closing date (q)finalizing and signing the loan application and documents that lender provides (it is important to read through this document to ensure the interest rate, closing costs, ensure that there is no prepayment penalty etc and verifying if this is close to the good faith estimate provided earlier) (r)waiting for final loan approval and release of amount by lender (s)during this period your realtor would help and find an escrow company, the assigned escrow officer would work with you on making sure that you are clear about everything, providing you clarifications etc (t)deciding on home insurance, home warranty etc and letting the escrow officer know the names of companies chosen (u)lender releases the loan amount to escrow officer, seller and buyer sign the final documents, providing the down payments etc (v)getting the keys and then enjoying your new home.

A comment that you hear recently from friends, family, colleagues if you don’t own a house, is that this is the best time to buy one and to avail the first time home buyer tax credit of eight thousand dollars. Besides the concept of having a place of our own thrilled us so much that we jumped on this venture of house hunting. It seemed to me for the first time in life that job hunting, deal hunting etc are a piece of cake when compared to getting the ideal place which you plan on inhabiting for a couple of years. This adventurous journey for almost six months, took us through a turmoil of bitter sorrow, grief, despair, frustration and a mixture of other emotions – but when fulfilled we realized ultimate happiness or joy which wipes away everything else.

There are quite a few things that you would need to prioritize in order to buy a house and the primary factor is where you want to be or the location. Phoenix is similar to a complicated maze with reasonably fair as well as bad areas intertwined closely with each other that you may need to be careful and observing while driving through to figure it out. The next most important thing is to select a realtor who has the time, patience and willingness to work with you until you find the right place. I would recommend that entering into an agreement with this person during the early stages of this relationship may prove to be a disaster, just as all things it may look way too good to be true or last. So give it enough time, just like any other relationship or partnership and see if you get along well with each other, and they are able to understand your requirements, make constructive suggestions for improvement and provide quality outcomes which meet your standards in terms of location as well as price and are worth looking at. Again, as first time home buyers you would not be very knowledgeable and new to this process, so there is a lot of reading/catching up to do in the meantime. Trying to be reasonable is a trait that comes with knowledge about the process, so don’t let yourself be carried away by greed or lack of understanding – ask questions, discuss with friends/family, colleagues etc who are experienced in the process, and the internet mainly the buyer advisory.

Some links on the web that might help you in making a better decision especially if you are a first time home buyer, scrambling on the internet for some information.

a) Buyer Advisory – http://www.aaronline.com/documents/buy_advis.pdf

b) Great Schools – http://www.greatschools.org/

c) City of Glendale (lot of information on the left tab) – http://www.glendaleaz.com/police/

d) Demographics (just a random community serach) – http://parkpaseo.aznb.com/Demographics/

e) Arizona Department of Public Safety (again to get information on things that are priorities for you) – http://www.azdps.gov/

f) Zillow (provides an approximate estimated price of house, if address is provided) – http://www.zillow.com/

These links did help us with finalizing on our house, mainly the buyer advisory. It totally depends on what information you are looking for, but post comments if you need information on something – it could be possible that we looked at them too.

Have fun shopping for a home!