Step One: Choose An Experienced Buyer Representative

An important but often overlooked step in buying a home is finding an experienced real estate professional to represent you during your home purchase. A Buyer Representative (or Buyers Broker) can assist you in every step of the process including locating the property, negotiating offers, finding a lender, and understanding inspection reports. Learn more about Why You Need A Buyer's Representative. 

Step Two: Check Your Credit

Before seeking a lender, you should request a copy of your credit report from all three credit reporting agencies: Equifax, Experian, and Transunion. You can get one free report a year from annualcreditreport.com. Check these reports for any inaccurate information that may lowering your credit score.

It is quite common for creditors to "forget" to close out paid accounts. Old mortgages or car loans that you have paid off but do not appear as "Closed and paid as agreed" can have a dramatic negative effect on your credit score.

Old bankruptcies and collections can be legally removed from your credit report after the statute of limitations for credit reporting has expired (the statute of limitations for Arizona is 7 years for credit card collections and 10 years for bankrupty information).

Additonally, you should avoid incurring some types of new debts (like car loans) right before you try to qualify to a loan. Click here for more information about how to Check Your Credit Before Applying For A Home Loan.

Step Three: Get Prequalified by a Mortgage Lender

Assemble the information and documents a lender will need:

• Valid Identification - Driver's License and Social Security Card
  
• Gross monthly income - paycheck stubs, checking account statements.
  
• Total monthly payments - Make a list of all your monthly payments (car payments, school loans, minimum monthly payments on credit cards, child support payments, utilities).
  
• Tax forms - your lender may request to view your tax forms for the past few years, especially if you are self-employed or have been at your job for less than 2 years.

Ask your Buyer Representative for a referal to a local mortgage lender and make an appointment. The lender will pull your credit report and use your credit score, debt to income ratio and other risk factors to calculate the loan amount you can afford.

Ask the lender to write a letter of prequalification that you can provide to Home Sellers. Prequalification does not obligate you to use that lender for your actual loan, it is a tool that can make your offer more attractive to a Seller.

Prequalified is not the same as preapproved. In a Sellers market, homes sell quickly. If that's the case you should take the extra step of getting preapproved for a home loan before you make an offer on a home.

Step Three: Begin House Hunting

Now that you know your price range you are ready to start looking for the perfect property to purchase. First, make a list of a property and community features that are important to you. Prioritize what is most important to you in a home (architectural style, size, neighborhood/subdivison, schools, cost, lot size views, etc.) Be realistic about the difference what you need and what you would like but may not be able to afford.

Provide as much imformation as possible to your real estate agent, as their knowledge and experience can help you target the right community to suit your needs and price range.

Click here to provide the Benjamin Team your preferences and get a FREE list of available properties.

Step Four: Make An Offer

You've found your dream home, but there are a few important steps to take before making a formal offer. Ask your Buyer Representative's opinion of the asking price.  They may want to pull some "comps" (sale prices of similar homes) to determine whether it is priced correctly. After you and your real estate agent have determined a fair price to offer, go over the purchase contract to make sure it includes safeguards to protect you if something goes wrong.

Important Safeguards in a Real Estate Purchase Contract:

• Require an independant home inspection and make sure you have the option to cancel the contract if the inspection turns up major repair problems that cannot be resolved with the seller.
  
• Make sure the contract offers you an out if the home doesn't appraise to expected value or you cannot obtain financing.
  
• Add any necessary contingencies (clauses that, if not met, will render the contract null and void), such as selling your existing home before closing on this new purchase.  

Step Five: Get An Independant Home Inspection

Arranging your own home inspection by a licensed home inspector can save you a lot of future hassles.  Always arrange for independant inspection, especially with new construction homes.  It is helpful to be present during the inspection, as you can see problems for yourself and ask questions if needed. 

Licensed home inspectors inspect homes to determine if the home has any structural defect or needs any repairs. Major portions of a home inspection focus on these areas: 

• Termites - Inspector looks for signs of termites in the home or foundation.
  
• Plumbing - Inspector checks for leaks, dripping faucets, toilet tank leaks, etc..
  
• Electrical - Inspector checks if wiring and electrical equipment is up to code, and whether all light switches and wall sockets are working properly.
  
• Home Exterior - Inspector checks for settling cracks and peeling paint.
  
• Home Interior - Inspector checks for signs of leaks in walls or ceilings, examines the structure and general condition of the property.
  
• Roof - Inspector checks for checks for leaks or damage to the roof.
  
• Windows- Inspector checks condition of windows and seals.
  
• Insulation - Inspector checks condition of insulation and its code compliance.  
  
• Appliances and Mechanicals  - Inspector checks that appliances, heating and air conditioning units are in working condition.
  
• Radon Gas - Inspector checks for presence of radon, an odorless and colorless but harmful gas that comes from decaying granite.
  
• Lead-Based Paint - Inspector checks older homes for lead-based paint that can be hazardous if ingested.
  
• Asbestos - Inspector checks older homes for presence of asbestos in floor and ceiling tiles and insulation. Asbstos poses a health risk and must be removed from the property.

At the conclusion of the inspection, the home inspector will write an inspection report with all minor and major defects itemized. While thorough inspectors will find minor flaws in most homes, knowing about these problems is important. While you may not mind a performing a few repairs on an otherwise fantastic home, do you really want to face a major structural renovation?

Step Six: Close Escrow

Before you can close on your new home, a few more steps must be completed:

• The appraisal - Lenders require appraisals to minimize their risk is providing you a loan. An appraisal ensures that the home that you are buying is worth the amount you're paying. Appraisers are usually hired by the lender with the cost of the appraisal factored into your closing costs.
   
• The Survey - Sometimes lenders also require a Location Survey to certify the house is within the boundaries of the lot. Again, the lender normally selects the surveyor and the cost of the survey is factored into your closing costs.
  
• Title check and title insurance - Your title company checks the title and deed history of the property to ensure there are no problems with obtaining clear title to the property. Without a title check, you could be vulnerable to claims on your property. The company also provides title insurance to protect you against any problems. 

Once you've had your inspection, appraisal, survey etc. all parties will agree on a closing date and location. In Arizona, it is common for title companies to handle the escrow portion of the transaction, serving as a neutral party to exchange escrow funds and enforce the  terms of the sales contract.

The escrow agent (who works for the title compnay) will conduct the closing and prepare a closing (or settelment) statement. This document outlines what funds are required from whom, and how the funds will be disbursed.

Step Seven: Move in to your new home.

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