You've decided to buy a home, but where do you begin the process?
Here’s an overview of the buying process from start to finish:
Start with some preliminary online searching. Check into what homes are selling for in the areas that interest you to give you an idea of what's available. This will help later on when we talk about your preferences. If you like certain architectural styles but those were not built in your preferred neighborhood, you may have to make some choices.
Figure out your budget. If you plan to make a cash purchase, determine how much you feel comfortable spending, and if you plan to take out a loan, start a conversion with a lender to understand your loan options. Use our mortgage calculator to determine what your monthly mortgage payment would be for various loan amounts. Don't forget to include property taxes, which in LA are 1.25% of the purchase price, homeowner insurance costs, and any HOA fees if you are purchasing a condo. Consider whether there's a difference between what the lender will lend you, and the payment amount that lets you sleep at night.
Get pre-approved. To get you pre-approved for a mortgage, a lender will check your credit score and ask for documents like pay stubs, W-2s, bank account statements, and tax returns for the past two years. Sometimes the best source of a loan will be your current bank, but make sure you check out mortgage brokers and direct lenders as well, since you might get a better deal by shopping around. Keep in mind that low rates aren't everything, and that you also want to look at fees, costs, and other terms, and most importantly, you want a loan officer who will respond when you need to reach them.
Start going to look at homes. Be patient at this stage, you have to try on some ideas. You might think you want to live in a certain neighborhood or type of building until you experience it. Pay attention to your instincts, and try not to feel pressured to make a decision if the right place hasn't presented itself.
Make an offer. Once you’ve found a place that works, you will probably need to move quickly. Together we will study the comps and market activity, and decide on an offer that makes sense for you. We will also review the contract so that you are clear on your rights and obligations. With any luck, after some negotiating, we will make a deal with the seller.
Open escrow. Once you and the sellers reach an agreement, the contract is sent to an escrow company, and they will begin processing your file. The escrow company will distill the contract into instructions for each party to complete before ownership of the property changes hands. You’ll make an earnest money deposit to escrow of 3% of the purchase price.
Begin your investigation of the property. Even if the home appears to be flawless, it's important to have a professional home inspector review the property to determine the condition, discover any defects., and make recommendations. You may also consider having other inspections, like a chimney, termite, sewer-line, structural, foundation or roof inspection. Try to learn as much as possible about the property so you can prioritize repairs after closing. If something big comes up, you have the right to cancel the purchase, or perhaps share repair costs with the seller.
Closing. After you are satisfied with the condition of the property, and have been approved for any financing, you will transfer in your down payment and sign the loan docs. Then the lender will fund the loan, the title company with record the deed with the county and you will be given the keys!
After closing. Don't forget to have the utilities changed into your name, and change the locks. Pro tip: measure the doorways to make sure you can get your furniture in!