Are you new to the home buying process or has it been a while since? Here’s a guide to the home buying process and the main steps in the home buying process.
Find A Great Real Estate Agent To Assist You Through The Albuquerque Home Buying Process
You may think you will be able to search for a home without a real estate agent. You do not pay a fee for a buyer’s real estate broker in the Albuquerque home buying process.
The seller agrees to pay a fee to a buyer’s real estate agent if they bring a buyer to the table. However, the buyer’s real estate broker is required to represent you in the transaction.
Many buyer’s make the mistake of calling the listing agent to purchase a home. In many cases, the listing agent has more loyalty to the seller than the buyer.
Theoretically you might be able to search for a home without the assistance of an agent. Having someone who knows your needs, understand the Albuquerque home buying process, and also understands the real estate market will make your search easier.
Find a great agent who:
- You like and feel like you can work with
- Your trust
- Has intimate knowledge of the local market
- Has a lot of experience, measured in the number of transactions not years as an agent
- Acts with your interests as most important
- Understands your real estate goals
- Understands the Albuquerque home buying process
- Get Your Finances in Order
Get Prequalified or Preapproved For A Mortgage
The first step in the Albuquerque home buying process is to get prequalified or preapproved for a mortgage for most home buyers. If you are not paying cash for a home, you will need to get a mortgage. Getting prequalified or preapproved will answer two very important questions, can I get a mortgage and how much home can I afford.
Just because you can qualify for a mortgage does not mean you should max out the mortgage. Determine a mortgage payment that matches your lifestyle and then purchase a home to meet that mortgage payment.
Getting prequalified or preapproved will save you time and effort. There is no sense looking at $300,000 homes if you can only purchase a $200,000 home.
There are many types of mortgages and meeting with a lender will help you choose the mortgage that best meets your goals. One way to figure out what type of mortgage will work best for you is by getting preapproved or prequalified.
After you meet with a lender, you should decide on the payment that best meets your budget. Just because you qualify for a $2000 per month house payment, does not mean you should spend that much. Calculate your monthly budget and choose a house payment that fits into your lifestyle.
Make sure you include the new expenses of owning a home into your monthly budget such as home owner’s association dues, maintenance of the home, etc.
Don’t forget to determine how much money you will need to purchase your new home, your lender will help you calculate your down payment, closing costs, escrow accounts, inspection costs, and potentially repair costs.
Define Your Needs
- What is it you need in your new home?
- Number of bedrooms
- Number of bathrooms
- Number of stories
- Kitchen amenities
- Garage size
- New home or existing home
- Flat roof or pitched roof
- Detached home, town home, or condo
- Number of Living Areas
- Square Footage of the home
- Size of the lot
We take the time to help you think through these decisions. Our goals are to make sure you find the right home, you don’t pay too much for the home, make sure you don’t miss out on any homes that meet your needs.
With assistance from your agent, searching for your dream home is easier than ever. Our web site has every home for sale in the Albuquerque metro area listed in the Southwest Multiple Listing System. You can view hundreds of homes on line and decide which homes you want to view in person.
We recommend you view at least 3 to 5 homes before you make an offer. Keep track of the home homes you like. We recommend you keep a rolling top 3 picks. You should go back and view the home one more time before you make the offer.
You need to understand whether the market is a buyer’s or seller’s market. Move quickly when you find the right home. Great homes that are priced right will sell fast and you don’t want to miss out.
Make an Offer
When you find the right house, make a reasonable offer based comparable home sales. We provide our clients with a competitive market analysis to choose the right price to offer on your new home.
You can make an offer below asking price, however, be prepared to receive a counter offer. If your offer is too low, the seller may not respond to your offer.
Your offer should be based on whether the market is a buyer’s or seller’s market.
All real estate agents use the same purchase agreements to submit your offer in the Albuquerque home buying process. The purchase agreement will have five basic components, which your agent will prepare:
- Price: The amount you are offer to purchase the home for
- Terms: This will cover the time frames for closing, inspections, earnest money delivery, etc.
- Fees: There are several fees associated with the purchase of a home, who is paying for which fees.
- Schedule: There are many milestones that must be met by certain dates identified in the offer, such as closing date, inspections, repairs, home owners insurance, loan approval, title commitment and review of certain documents. Make sure you understand when the milestones must be met.
- Contingencies: There are clauses that will release you from the deal. The main contingencies are, you must be approved for a mortgage, home inspections, appraisal, and home owner’s association documents.
Negotiate a Deal
If your offer was below the seller’s asking price, you should expect a counter offer. You may get a counter offer if you off full price in some cases. The seller may counter your price, terms, fees, schedule, or contingencies.
You can counter back to the seller’s counter offer. We recommend an offer and no more than 3 counter offers from the buyer. If you don’t have an agreement after 3 counteroffers, you probably will not reach an agreement with the seller.
Provide Information To Your Lender
After you have reached agreement on your new home, make sure to submit all documentation to your lender. Your lender will need the fully executed purchase agreement, all counter offers, amendments, and addendums.
You will need to fill out an application and provide financial documents to your lender. We recommend you talk to your lender at least once per week. Ask your lender if they need anything from you and if they will have the loan approved prior to your closing date. We recommend you call your lender every other day the week before you are scheduled to close. The loan process is typically the longest process in the home buying process.
Deliver The Earnest Money
You probably committed earnest money as part of the purchase agreement.
Earnest money is the money you pay 1-3 days after the seller has accepted your offer. In the Albuquerque metro real estate market, it is customary to offer 1% of the sale price in earnest money.
You’ll pay earnest money by cashier’s check, personal check, or a wire transfer. Your earnest money will be deposited into an escrow account. Once the sale of the home has been completed, the earnest money you paid will be applied toward your down payment or closing costs. If you back out of the sale due to a failed contingency (eg: inspection report), you can recover your earnest money in full. If you back out of the sale for reasons not covered by contingencies, you will forfeit your earnest money.
Inspect Your Home
After you reach agreement with the seller you need to schedule your home inspections. You may want to do some research to determine the type of inspections you want done on the home and who you want to perform the inspections.
We highly recommend all home buyers hire professional home inspectors to determine the condition of the home.
After the home inspections are complete, your real estate agent will negotiate on your behalf to get the seller to make repairs to the home. We recommend buyers not worry about the small things that can easily be fixed. In the Albuquerque home buying process, if the buyer and seller cannot agree on repairs, the purchase agreement terminates and the buyer will have their earnest money returned.
Have The Home Appraised
If you are purchasing your home with a mortgage, your lender will require an appraisal. Your lender will acquire a professional appraiser to determine the value of the home you are purchasing.
If the appraisal comes in lower than the agreed to sales price, the lender will not lend you the total purchase price of the home. The lender will base their loan amount on the lower of the purchase price or appraisal. You can try to negotiate a lower price on the home if the appraisal is lower than the purchase price. In the Albuquerque metro real estate market, you can terminate the agreement and get your earnest money back if the buyer and seller cannot reach an agreement.
If the appraisal is higher than the purchase price, you made a good deal and have instant equity in your new home. In the Albuquerque home buying process, the seller has no recourse in this situation.
Prepare To Move
You need to make arrangements to move into your new home. Whether you are moving yourself, hiring someone to move your furnishings across town, or moving across the country, you need to make arrangements. Not all deals will close on time or may not close at all. Make sure you have some wiggle room on the timing when you schedule your move.
Prepare to Close
In addition to gathering all the necessary paperwork, you should stay in touch with all parties involved in the sale to deal with any potential problems as they arise. Prior to closing you should also:
- Conduct a final walk through of the home with your agent
- Transfer all utilities into your name
- Confirm that you have all of the paperwork
- Stay on top of your finances, and avoid making any large purchases without first talking to your lender
- Make sure the mortgage is approved
You are now ready to close on your new home. You will meet at the title company and be prepared to sign all documents required to complete the transaction. In the Albuquerque metro area, closing will take about 30 minutes to an hour. Make sure to bring your driver’s license and a cashier’s check for your down payment and closing costs.
After closing of the buyer and seller, your lender must review all documents for accuracy. Title company must record the deed at the county and must fund the loan. In most cases, you will not get keys to your new home the day of closing. You will most likely get keys to your new home the following business day after closing.
Congratulations on making it through the Albuquerque home buying process.
Congratulations on making the decision to become a homeowner! We hope this introduction to the Albuquerque home buying process has been helpful.
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