When buying a home there are many things to consider. It’s a long process and can, at times, be overwhelming. For many, purchasing a home is the biggest financial purchase they will make, so it is important to understand what you are getting into. This is a simple guide to getting started!
*Some steps in this contract are specific to Utah real estate. Other states may have a different order or purchase process.
Financing
How do you plan on paying for the home? Those who can pay with cash are welcome to move on to the next step. If not, figuring out monthly budgeting is your first important step. Understanding your budget is crucial. Often clients can qualify for more than what their monthly budget demands. On the other hand, clients sometimes feel they can afford more than what they qualify for. In an ever-changing market, with so many variables that go into qualification, it is always best to meet with a lender to examine your options. They will check your credit, debt to income (DTI), down payment options, financial documentation (W-2 statements, paycheck stubs, bank account statements, taxes, etc.), and financial goals to find out which loans are available and what your payments will look like to help you get pre-qualified. There are many different kinds of lenders. For example mortgage brokers, bankers, and credit unions, for the most part, offer similar loan products. However, there are individual cases where one might have a different loan product so it is important to research so you can compare loans and costs.
Representation
Once you are prequalified, the next question is; do you need representation? Many things can go wrong in a transaction and having someone who knows the process can help with the negotiating, market knowledge, and due diligence. These steps are vital to helping you avoid potential liabilities and protect your interest. Finding the right real estate agent will not only help make the process run smoothly but can add peace of mind knowing you have someone to walk you through all of the steps. REALTORS will have access to their local multiple listing service(MLS) which nation-wide is the most accurate listing database in the country. MLS listings offer a Buyer’s Agent Commission paid by the Seller which often covers the agent’s commission. Another advantage in Utah to using an Agent is that Utah is a Non Disclosure state and the MLS has the most accurate sales data to help you make the best financial decisions when it comes to price.
Find a home
An agent will have access to the MLS database and can put you on email lists of listings. This allows you to start searching for your perfect home and receive the most reliable “up to date” listing information. As you walk through homes it is recommended that you take notes to help you determine what you like and what you don’t. Notes often help you remember particulars about each house when making decisions later. Conduct pre-evaluations as you walk through the house so you try to estimate future costs you will have. Look at the neighborhood and evaluate if the location works for you. Once you feel comfortable with a home it is time to make an offer and begin negotiations. Keep in mind that most contracts will determine an amount to be used for an Earnest Money Deposit. This can be refundable cost-based if you follow the right contractual steps. It is always recommended to use state-approved forms when negotiating a purchase. National Law requires that all contracts dealing with real estate are to be in writing to be enforceable. The negotiation process may go back and forth with counter offers, it may be quick and easy or you could get in a multiple offer situation. However, eventually, you will have a home under contract and the following process will begin.
Contract Deadlines-Due Diligence
In a Utah Real Estate Purchase Contract, you will have certain deadlines that (if applicable) apply to the buyer. For example, due diligence, financing & appraisal, and settlement. Once you have agreed on terms with a seller and have a house under contract the next step is evaluating the home. In Utah, contracts state that you are buying a home as-is and it’s up to you to determine what that entails. If you make the contract subject to due diligence, you have this time to do any evaluations as needed. To do this can include, but is not limited to: home inspections, surveys, mold meth, and radon testing, sex offender search, HOA research, etc. This is your time to learn anything you feel is important to know about the home. This is also your opportunity to make sure you are comfortable with the home. You will have until a specific deadline to renegotiate for any findings or cancel the contract.
Contract Deadlines-Financing and Appraisal
Once you get a home under contract, you will want to work hand in hand with your lender to confirm everything is ready for the final approval of your loan. You might be asked to submit some items for a second time or get more recent pay stubs as well. You can make the financing portion easier on yourself by being prepared. This is when you will want to talk with your lender about the best time to lock an interest rate. The lender will then order an appraisal to make sure that it appraises for no less than the purchase price.
Contract Deadlines-Settlement and Closing
You will want to schedule a pre-closing walkthrough of the home to make sure everything is in the same condition or that any agreed-upon repairs have been completed. This is the deadline to sign all of the loan docs provided by your lender and bring in funds for closing. The title company will receive most of the documents from the lender but will also need copies of the contract documents and they will arrange for title insurance and will handle the funding and recording. It takes a day or two to fund and record and would usually get your keys after that, depending upon when you negotiated possession.
Moving and Transferring Utilities into your name
Up to twelve weeks before moving get estimates from professional movers or truck rental companies. There is always the option of doing it yourself but we recommend using a professional service. To put a utility bill in your name, call or visit the utility provider and request a bill transfer. From there you must provide proof of identity (ID/Drivers License) and proof of billing address such as a lease agreement.