Home Buying Checklist {What Happens in Escrow} 2

Home Buying Checklist {What Happens in Escrow}

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Do you want to know the exact steps to buying a home? I’ve created a home buying checklist that will guide you through the process of buying or selling a house (whether or not you’ve hired a Realtor® for help). The process of homeownership shouldn’t be difficult, and as a former Realtor®, I know that there are so many steps involved. You don’t want to make any costly mistakes. At the end of this post, you’ll find my printable home buying checklist to help guide you through the process.

home buying checklist what happens in escrow

Home Buying Checklist

  1. Budget– First Thing’s First-Set a Budget and Stick With It. Decide what you’re looking for in a house (wants vs needs) and set a budget within your comfort zone. Your total housing costs (mortgage payment plus taxes and homeowners’ insurance) should never exceed 30% of your monthly income. Dave Ramsey recommends no more than 25% of your take-home pay is to be allocated for your mortgage payment and not to exceed a 15-year fixed mortgage. He says you simply cannot afford it. Whatever you do, just don’t exceed 30% of your gross pay. You’ll then be what’s considered “house poor” and not have enough money to enjoy the lovely costs of homeownership (ie fixing stuff when it breaks).
  2. Pre-Approval– It’s time to find out if you’re even in a position to buy a home. I highly recommend using a local bank or credit union rather than a big, commercial bank. The underwriters are usually in-house and can accomplish more than the mega-bank commercial lenders (Wells Fargo, anyone?) My fellow Realtor® friends just cringed! lol A little side note for you….we can’t stand working with Wells Fargo. Wells Fargo is the absolute worst company to work for (I’m also a former employee), work with (my first loan with them took 3 months to close), and bank with (I think you all know what it’s like to deal with cross-selling in banking at Wells Fargo). I wrote about that here. I’ve also got a great post that breaks down the different types of home loans (and why I think conventional loans are the best way to buy a house).
  3. Realtor®– Armed with your pre-approval letter from your local bank or credit union, start searching for a Realtor®. Do your research and find someone who cares about your needs. A great real estate agent will listen for facts and work hard to find a home you’ll love. If the person you are working with keeps showing you homes that are the exact opposite of what you’re looking for, run the opposite direction. For a great referral to a reputable Realtor®, send me an email. I am still licensed in the State of Illinois and can refer you to someone awesome (at no cost to you) anywhere in the Country!
  4. Start your Search– Your Realtor® will send you a list of properties that match your criteria. You don’t have to look at all of them! Narrow it down to get started on a short list of prospective homes. Remember to get your printable home buying checklist at the bottom of this page and keep it handy. That way you’ll be prepared throughout the entire process, knowing what to expect.
  5. Make an Offer– Many homes are priced to sell quickly. Remember: while you’re thinking about whether or not to put in an offer, the person who saw the home yesterday is writing an offer. Don’t hesitate if you know it’s the perfect home for YOU! Your Realtor® knows your market, and they will be able to negotiate on your behalf. And remember, if you aren’t comfortable paying a certain price, don’t settle. If it’s meant to be, it’ll happen. That, however, is not permission to low-ball every single house you come across. Don’t settle, but be realistic. Put yourself in the seller’s shoes.

So You’ve Got a Contract. What Happens in Escrow?

  1. Apply for the Loan– A pre-approval is just the smallest, easiest part of the whole home buying process. Take all necessary paperwork to your lender (preferably in person). Your lender will probably ask for at minimum the last two years of tax returns and paycheck stubs, alimony or child support received (if being considered as income) etc. Be sure to respond as quickly as possible to requests. Time is of the essence in real estate contracts.
  2. Schedule Inspections and Appraisal– Your new home needs to be inspected by a licensed professional. Termite inspection, well or septic inspections must also be done. You’ll also have to get the home appraised. Your lender will schedule the appraisal, and it will be with a random lottery-drawn appraiser. (Back in 2008, we found out that banks and lenders should never be allowed to choose their own appraisers cause they were in cahoots on some shady deals!) These will have to be paid out of pocket prior to closing (in most cases). Be sure to budget for them as they are very important!
  3. Repair Addendum-After the inspection is complete, go through the repair addendum and ask for any structural/major repairs to be completed prior to closing. Depending on your state real estate laws, you may or may not be able to negotiate for latent defects to be repaired by the seller. Be sure to ask your Realtor® about the difference between material and latent defects and what’s eligible to be covered by the seller.
  4. Closing– After you’ve received the “clear to close” from your lender, and they’ve dotted all i’s and crossed all t’s, you’ll meet at a title company, closing attorney, or the bank to sign all loan documents and deed and receive the keys! P.S. Don’t forget to ask for the garage door openers! You’d be surprised how many people forget that! 😛
  5. You Got the Keys Keys Keys…as DJ Khaled says 🙂 The home is yours! Now you get to enjoy all of the fruits of your labor! Buy that wreath for the front door! Paint those walls (since you can choose a color other than plain white apartment paint)! Now that you own a home, there’s no better time than the present to get started paying off your debt and saving for retirement and college.

Don’t Forget your Home Buying Checklist!

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