2015 was a fantastic year for Nashville. Our economy is booming, lots of new people moved to the area, and the food and arts scenes are thriving. 2016 promises to be an even better year.
As customary, people have written goals or even created a vision board based on what they would like the New Year to bring. For many this includes purchasing a home. For those of you who fall into this category, the list below will guide you through the steps you have to take to become a homeowner in 2016.
Get your financial house in order
Most people finance their home purchase so get prepared for the loan application process. Know your credit score. Go to a site like www.creditkarma.com to view your credit reports from all three credit bureaus and your credit score. Make sure that there are no mistakes on your reports and that your score is as high as it can be. CreditKarma allows you to run scenarios and see how different actions will affect your credit score. This can be particularly useful if you are trying to increase your score. I prefer this site to others that only provide reports without a score and it is very user friendly.
Saving for a down payment can seem daunting and certainly takes time, but if you set a budget and stick to it you will have the right amount in no time. It may be tough to cut out the Starbucks trips or fancy dinners out but it will be worth it in the long run. Those wanting to speed this process along can get a second job or monetize a hobby. If you are crafty you can sell your goods online. Some sell assets like a second car or the extra television. People save anywhere from three to twenty percent of the purchase price of the home they want.
When you have your down payment and have a credit worthy score it is time to speak to a reputable lender who will run your credit and assess your financial situation. They will look at your income and liabilities to determine whether or not you qualify for a loan and the amount. A good lender will not only evaluate your current financial state but also comfort level and long-term goals in order to help you decide how much you can and want to invest in a home. They will also make recommendations on different loan products to best meet your needs and finally provide a pre-approval letter. Many times this letter required by the seller when submitting an offer to purchase their home.
Start Your Home Search
Over 90% of home buyers start their search online. This is not a bad place to start to get the lay of the land and understand what kind of homes are for sale and see prices in different areas. Once you are seriously searching it is important to find and meet with a great realtor. A realtor’s job is not just helping the buyer view and find a home, but they also educate buyer’s on the process, the market, and make them aware of the choices that they should consider.
Matching a buyer with their ideal home is a function of budget, priorities, and lifestyle. All three areas should be discussed with your realtor during your initial needs assessment meeting. You should collaborate on crafting a profile of your ideal home and start the search process. Technology has greatly facilitated the house hunt, but with such low inventory, many times realtors implement alternative strategies such as door knocking or tapping their network to find a home for you before it hits the market.
Find and Secure Your Home
Motivation plays a big role in the amount of time it takes a buyer to find a home. Some buyer’s fall in love with the first home they see because they have previewed many homes online and know exactly what they want, others take a bit longer. Once the ideal home has been identified, your realtor will guide you through the process of writing a competitive offer and will negotiate on your behalf. Negotiations happen not just around purchase price, but also around terms such as closing date or seller contribution to buyer closing costs. Once both parties have reached an agreement the contract is accepted and bound and the process continues.
Remove Contract Contingencies
Once the contract has been executed the buyer and seller work towards satisfying the contingencies found within the purchase and sales agreement. The buyer is entitled to obtain a home inspection and to negotiate repairs with the seller. There are many reputable home inspectors in the Nashville area. Your realtor will recommend inspectors that they trust, but do not feel intimidated to do your own research and talk to several inspectors to find the right one for you. Their fees usually depend on the size of the home and can range from $300 to $750. In addition to the general home inspection some buyers opt for additional inspections such as termite, and radon. Once inspections are completed your realtor will review the results and recommend a course of action. This usually opens another round of negotiations with the seller around repairs. If an agreement has been reached the inspection contingency can be removed.
The same is true for the appraisal and financing contingencies. The buyer works with their lender to process the loan. The lender will request a series of documents such as proof of employment and income. It is crucial that this is provided in a timely manner as it can make the difference between closing on time or not. The lender will also order a professional appraisal of the home to ensure its value. An appraiser to study similar homes that have sold in the area and provide the lender with a report that justifies the value they have given to the home.
The Final Steps
Once all contingencies have been removed from the purchase and sales agreement, the buyer gets home owner’s insurance and is ready to close on their home. It is wise to shop around and contact different insurance companies or brokers to ensure the right coverage for the best price. Some homes may even require flood insurance. When money has been exchanged and necessary paperwork signed, ownership is transferred to the buyer and they receive keys to their new place.
If you are considering buying a home in 2016, check out the resources below and contact me for a free consultation at email@example.com or 615-440-6327.
(Originally written for 12th&Broad: 1/7/15)