Buying A Home? What to expect

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So you're buying a home! Here's what's in store for you.

The purchase of a home is typically the largest investment that a person (or family) will make during their life. Because of this, great care and thought should be given to this process so that you're prepared for what will happen. Here's a brief discussion of what to expect.

There are a lot of decisions that you will have to make during this process:

Should you buy now?
Can you qualify for or afford a mortgage now?
What's the best mortgage right now?

Getting Started
Before we really get heavy into this, let's assume that you've already made the decision to buy a home (or a new one). What happens first? Well, first start by finding a home to buy. Once you've found your dream home, you'll need to haggle with the current owners to agree on a price. Don't feel bad if you disagree with what the owner is asking for their house - asking prices are typically starting points for negotiations to begin. Your goal in this stage is to pay as little as the owner will take for the house. It is not unusual for this process to take several days or weeks, and is also not out of the question to start negotiating and to not come to an agreement.

Once you've agreed on a price for the house you'll need a real estate attorney. You will need this attorney to represent you in the development and the signing of a sales contract. Once you sign this contract, you are "at risk". This basically means that you can lose your deposit if you fail to get a mortgage to pay the owner for the house, unless you had a mortgage contingency clause in your contract.

Now that you've signed the next 30 years of your life away, you have to find someone to give you the money to give to the person that is selling you the house. This can be done by going directly to a lending institution, or using what is known as a mortgage broker. The guy in the alley charging 350% interest a week is typically not the best choice for a lender. When going through the lender selection process, you should be aware of some things that most lenders will require you to do. Many of these things will cost you some money. It is not unusual to feel like everyone has their hand out trying to take some of your money, they are. During the lender selection process, have each lender that you talk to provide you with a good faith estimate of the settlement services (closing costs).

Some of the services (and costs) that you can expect are:

Loan Origination Fee	Loan Discount Fee (points)
Appraisal Fee	Credit Report
Lender's Inspection Fee	Tax Related Service Fee
Underwriting Fee	Application Fee
Document Preparation Fee	Commitment Fee
Messenger/Delivery Fees	Flood Certification Fee
Rate Lock-in-fee	Buydown Fees
Prepaid Interest Mortgage Insurance Premium	Flood Insurance Premium
Hazard Insurance Premium	Mortgage Insurance Escrow
Property Tax Escrow	Settlement Fee
Lender's Attorney Fees	Title Insurance
Recording and Filing Fees	State Taxes
Assignment Fees	Survey
Pest Inspection	Survey Inspection

As you can see, the list of fees can be exhaustive. You may not have to pay all of these fees and depending on your lender, you could end up with some other fees that are not listed above. In addition to the above, you will also need to provide information on whether or not you can pay the loan back.

This has been just a short introduction to the joys of home ownership. We'll be going into much more detail in coming articles.