When you are buying a home there are a lot of things to think about, it is a big process and it can at times be overwhelming. For many people purchasing a home is often the biggest financial purchase they will make so it is important that you understand what you are getting in to. So lets begin, first things first!
*Some steps in this contract are specific to Utah real estate and might have a different order or purchase process in other states which could add or rearrange steps.
How do you plan on paying for the home? If you have cash then you can go to the next step. If not figuring out how much you can afford in your monthly budget is an important first step. Understanding your budget is important because often clients can qualify for more than they really want to spend in their monthly budget or on the other side sometimes clients feel they can afford more than they can qualify for. In an ever changing market and with so many variables that go in to qualification it is always best to meet with a lender (or a few lenders) to figure out 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 i.e. mortgage brokers, bankers, credit unions and for the most part they offer similar loan product but there are individual cases where one might have a different loan product than another so it is important to do a little research so you can compare loans and costs.
After you are pre-qualified and ready the next question is do you need representation? There are many things that can go wrong in a transaction and having someone who knows the process and can help with the negotiating, market knowledge, and due diligence, These steps are vital to help 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 some 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.
3. Find a home
An agent will have access to the MLS database and can put you on email lists of listings so that you can start looking 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 things you like and what things you don’t, as you try to narrow it down to the home that is perfect for you. Notes often help you remember particulars about each house when trying to make decisions later. Do some pre-evaluations as you walk through the house so you can try to understand what future costs you will have, look at the neighborhood, evaluate the location does it work for you. Once you feel comfortable with a home it is time to make an offer and begin negotiations. Keep in mind that mot contracts will want to determine an amount to be used for an Earnest Money deposit, this can be a refundable cost based if you follow the right contractual steps. It is always recommended to use state approved forms when negotiating a purchase and 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 the path eventually you will have a home under contract and the following process will start.
4. Contract Deadlines-Due Diligence
In the Utah Real Estate Purchase Contract you will have certain deadlines that apply to the buyer if applicable. Due Diligence, Financing and Appraisal and Settlement. Once you have agreed to terms with a seller and have a house under contract the next step is evaluating the home. In Utah the contract states that you are buying a home As-Is and it is up to you to determine what that means. If you make the contract subject to Due Diligence you have this time to do any evaluations you want 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 any thing that you want to know about the home that is important to you. This is your opportunity to make sure you are comfortable with the home. You will have until the deadline to renegotiate for any findings or cancel the contract.
4. Contract Deadlines-Financing and Appraisal
After you get a home under contract you are going to want to work hand in hand with your lender to make sure you have everything ready for your final approval of your loan, you might be asked to submit things for a second time or get more recent pay stubs if you are prepared and ready you can make the financing portion easier on yourself by understanding that and having things ready. This is when you will want to talk with your lender about the best time to lock an interest rate. The lender will order an appraisal at this time to make sure that it appraises for no less than the purchase price.
4. Contract Deadlines-Settlement and Closing
You will want to schedule a pre-closing walk-through of the home to make sure everything is in substantially 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 usually takes a day or two to fund and record and would usually get your keys after that, depending upon when you negotiated possession.
5. Moving and transferring utilities in to your name