Attention, first-time homebuyers, I am going to walk you through the process of buying a house.  Though each transaction is unique and there may be things  that come up outside the scope of this overview, this will be enough to make you an informed buyer.

First of all, you need a team working for you. Choose a Realtor and a lender. How do you find them? That's up to you. Ask friends for a referral, do some research, interview a bunch…whatever. Just find a team you can trust to work hard for you.

The mortgage lender is up first. You will want to be pre-qualified or pre-approved for a loan. A pre-approval is better…it means the lender is ready to fund a mortgage for you. But it takes a bit of paperwork to get that done. You can get pre-qualified (meaning the lender has assessed the information you have given to him or her, but not submitted it for approval) in an hour or so and begin your search in the price range for which you can purchase.

So now begins the fun…looking at houses on the market!  Today it is easy for consumers to search for homes on their own…the Internet allows free access to what is available. The best website for searching is www.mlslistings.com.  It is the one all real estate agents actually use, and has the most accurate information.

Talk with your real estate professional about what you consider must-haves, and what would be nice to have.  For instance, you might need a fenced yard for Rover but would like to have a fireplace as well. This will save you time when you actually view homes. The clearer you are on your priorities, the easier it will be.

There may be more homes in your price range than you can view in one tour. It is my experience that after four homes they all begin to blur together. You might want to bring a notebook and a camera so you can keep the details fresh.

Searching for a home is not a process of finding your dream home. Rather it is finding the best home available for you at the time. If you have looked at dozens of homes and can't find one you like, there is something  wrong. You will find most of the homes in your price range have similar amenities. Don't be looking for a miracle….like someone accidentally listing their home for three hundred thousand when it really is worth seven hundred thousand. If you can't find one you like, you might want to keep saving your down payment money and wait for the next raise or two at work.

But when you find one you like, your agent will write an offer for you. At this time, you will need a check for earnest money.  This is generally a few thousand dollars.  If your offer is accepted, the check will be cashed and held by the escrow company.

Whoa, doggies!  Hold on. What the heck is escrow? 

An escrow company is a neutral third-party company which holds all the documents and money until the transaction is completed and the title change is recorded with the county.

When your offer is accepted, it is not a done deal by any means.  Now you as the buyer have some time (usually 17 days) to inspect the property and make sure it is what you thought it was.  You might want a home inspection.  A termite clearance may be required by your lender.  If you are worried about the roof or a septic system, you will want experts to check it out.

What happens if something is found which changes your mind about the property?  For instance, you find out the house is slipping off its foundation. You can either say, "I no longer am interested in buying this house," (you back out of the deal and the earnest money is returned to you) or you can say, "I still want to buy this house but the seller must repair the foundation and bolt it before the close of escrow."  At this point, the seller would be free to end the transaction as well, saying "No way!" or agree to make the repair or suggest you split the cost.  No matter what the situation, your agent will negotiate on your behalf, and iron out the wrinkles if possible.

At the end of the inspection period, if all is well, you remove your contingency to back out of the deal due to the physical condition of the property.

While this is going on, you will be working with your lender to get all your information to the funder and get your loan ready to go.  When it is approved, that contingency will be removed.  Please note. Do not make any major purchases (vehicle, furnishings, new credit cards, etc.) during this time. It may negate your ability to get your loan funded.  (Don't laugh…it has happened more than once.)

You will also need to get insurance for your new home. The transaction not close until the escrow company has proof of insurance.  You also might want to get a home warranty.  This is like an insurance policy for a year on items like the heater and the dishwasher.   

Your lender will send an appraiser out to verify the value of the home.  No matter how much you want the home, you can't get a million dollar loan for a thousand dollar home!  When the appraisal comes in, that contingency will be removed.  If the appraisal comes in lower than the agreed sales price, you can back out or possibly negotiate a reduction in the sales price or bring more money in to the closing.  These are issues your Realtor can help you make good decisions about.

You may note that as you move through the process, you give up the escape routes you have to get out of the transaction.  Eventually, all contingencies are removed, and the transaction is ready to close.  If you just decide randomly at that point not to go through with the deal, the seller may be able to keep your earnest money if costs were incurred by them.

When all the final paperwork is completed, the escrow company will have you come in to sign the documents.  There could be a ton of paper, so be patient!  You will need to bring your driver's license or other proof of identity. 

When the seller has signed as well, the money from your mortgage is brought in by the lender to add to your down payment.  When all the paperwork is signed and the money is there, the escrow company gets all the money and paperwork to the correct people, and records the sale at the county. 

Congratulations! You are now a homeowner.

This was just an overview.  For more information, make an appointment with a Realtor to discuss questions you may have.

It's a good life!

Nants Foley is a Broker Associate at Flora Real Estate Group in Hollister.  Direct questions, comments or suggestions for column topics to [email protected] or call 831.801.5110.