1. Prequalification: Ask your bank or mortgage company whether they will allow you to prequalify for a loan. This should be your first step in the homebuying process because it will provide you with a realistic view of your price range. A lender will examine your income, debt and credit history in order to determine and qualify you for a maximum loan amount. Once you know your maximum loan amount you can narrow your search to only those houses within your price range.
   
2. House Hunting: Many buyers use real estate agents to assist them in finding a new home. An agent will look for houses which meet your particular needs and desires and eliminate those that do not, thereby saving you time in the house hunting process. Additionally, a real estate agent's commission is almost always paid by the seller, thereby allowing the buyer to benefit from the agent's services free of charge.
   
3. Sales Agreement: After you find the right house you will need to reach an agreement with the seller and obtain a written sales agreement. Keep in mind that a sales agreement is a contract and the terms are negotiable. The sales agreement will contain the entire agreement between the buyer and the seller. Make sure your sales agreement contains (1) the sales price; (2) any down payment made; (3) whether the down payment is refundable; (4) how closing costs are to be divided between the parties; (5) when the closing will take place; and (6) any terms on which the agreement is contingent (i.e., buyer obtaining financing, seller making certain repairs, house passing inspection, etc.). The sales agreement is a binding contract. If you are confused about the terms of the sales agreement, you should have an attorney review it before you sign. Get a copy of your sales agreement.
   
4. Loan Approval: Although you have already prequalified for a loan, the lender has to be sure that the house you have chosen has a clear title and that its value is sufficient to secure the loan. Therefore, the lender will need a title search, usually charged to the seller, and an appraisal, usually charged to the buyer. Additionally, the lender may require a survey to obtain the legal description of the property as well as its boundary lines. Ask your lender how long the loan approval process will take.
   
5. Appraisal: A licensed appraiser will determine the value of the house by noting the home's amenities and then comparing it with similar houses with similar amenities that have recently sold in the area. The sales price of each comparable house is listed and additions and subtractions are made in comparing each house with the subject house. The appraiser will then determine the value of the house based upon all of the information he has gathered.
   
6. Title Search: Public records of the county in which the house is located are searched and examined to ensure that the seller has clear title to the property and there are no unsatisfied mortgages, judgments or other encumbrances filed against the property.
   
7. Home Inspection: Although it is not a requirement for buying a house, it is a good idea to spend the money for a professional home inspection. The seller may not be aware of certain defects in the house, and even if he is, he may not volunteer such information unless you specifically ask. A home inspector thoroughly checks the house and informs you of any defects found.
   
8. Homeowner's Insurance: It is your responsibility to obtain insurance prior to closing. There are several insurance companies that offer homeowner's insurance and their rates may differ. So take a little time and compare the rates and coverage of at least a few companies.
   
9. Closing: This is when all the documents are signed and the house is transferred to you. Generally an attorney will go over the documents with you and give you the opportunity to ask any questions. The closing is when you are required to pay the difference in the sales price and your mortgage amount. Your lender will let you know in advance how much you will have to pay. After the closing, your deed must be filed with the Judge of Probate so you will be the record owner of the property. If the attorney files the deed you will likely receive the original filed deed in the mail shortly after the closing.
   
10. Homestead Exemption: After receiving your deed, go to the tax assessor's office and have the property taxes assessed in your name and claim your homestead exemption. If you do not claim your homestead exemption, your property taxes will be approximately double the amount they would have been if you had claimed the homestead exemption.

THIS IS FOR INFORMATION ONLY AND IS NOT INTENDED AS LEGAL ADVICE.

Rita P. Farris, Attorney
St. John & St. John, LLC
            
               
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