Monday, May 9, 2011

Stepping Stones to Homeownership

Cheyenne Ison
Consuming Activity: Stepping Stones to Purchasing a Home

The home buying process for a first-time homebuyer is often an experience that is prideful and exciting; however, the experience can also be confusing, stressful, and wearing. The majority of first-time homebuyers does not know all of the steps in the home buying process, and are often surprised by the complexity of the real estate transaction process. Some of the steps when purchasing a home include: choosing a real estate salesperson, getting pre-qualified and pre-approved for financing a home, choosing the best home based on needs and wants, signing multitudes of paperwork, and understanding the escrow and closing process.

One of the most important steps in purchasing a home is choosing the right salesperson to assist in the multifaceted buying process. A Realtor can be a wonderful tool in guiding the homebuyer in understanding real estate documents, finding the most qualified inspectors, and narrowing down the mass number of homes available based on the individual’s needs and wants.
Many people throw around the term “Realtor” when describing any real estate salesperson, but the term “Realtor” is not correct for all sales agents. Only real estate salespersons who are members of the National Association of Realtors are appropriately called Realtors ( Realtors are held to a higher standard than any other real estate salesperson; including but not limited to, subscribing to a strict code of ethics, treating clients with the utmost fiduciary duty, and they are expected to maintain a more advanced level of information when it comes to the home buying and selling procedures (

The bulk of first-time homebuyers are not able to afford a home without the aid of a real estate loan. Due to this fact, additional extremely important steps in purchasing a home are getting pre-qualified, pre-approved, and assisting the final underwriter to approve official funding of loan. The terms pre-qualification and pre-approval sound the same, but are actually very different. With pre-qualification, the loan officer obtains basic information from the potential homebuyer such as names, addresses, yearly income, basic debt, and social security numbers (Resource Lenders). This information allows the loan officer to give a basic qualification amount to the home purchaser without the guarantee of funding a loan to him or her. The pre-approval is a much more detailed process, as the loan officer will require two years of W2’s, income tax returns, all employer information, bank statements, current paystubs, and will run a credit report (Resource Lenders). The loan officer will run all of the buyer’s information and complete some debt ratios in order to determine the amount of money they will loan out (Resource Lenders). Once the buyer is pre-approved, the financing is typically guaranteed unless the appraiser comes back with a lower home value or there turns out to be some major health and safety concerns in the home that can’t be fixed.

The most vital and rewarding step in purchasing a home is of course finding the perfect home that is suitable to all of the homebuyer’s needs and wants. A Realtor will help in weeding out the undesirable homes by asking a variety of questions to the homebuyers, such as:

1. How many beds/baths are you looking for in a home?
2. Do you wish to have a smaller or larger lot?
3. Is living next to a certain school district important for you?
4. What style of home do you like most, one-story, two-story, etc.?
5. Are you looking for an older or newer home?

There are a hundred more questions a Realtor could ask in order to narrow down the home choices, but it usually starts out with those five questions ( Once the Realtor spends more and more time viewing homes with the homebuyers, he or she will listen and pick up on the little things that the homebuyer likes and dislikes in a home. The home searching process can be a lengthy one, for it is no small purchase.

Once the homebuyer finds his or her perfect home, the Realtor will write an offer based on the buyer’s terms, collect a deposit (in most cases one percent of purchase price), and will submit offer, copy of deposit, and pre-approval letter to the selling agent. The selling agent will present the offer to his or her seller and the seller will either accept or counter back with new terms. If the seller does accept than an escrow will open, and the deposit will be deposited into the escrow account. A typical escrow ranges from 30-45 days and all paperwork, appraisal, inspections, and loose-ends are tied up within this time period (HUD). In most real estate transactions a buyer will have 17 days to complete any and all inspections they wish, and within this time period are allowed to back out without losing their deposit if he or she does not like the outcome of the inspections. The buyer will sign a large amount of loan and disclosure documents within their escrow period. Once their loan is funded, the deed is recorded in new owners name within 3-5 days of loan funding and escrow will be closed.

It may seem to most that the home buying process is a tedious one, but the end result is what makes it all worth it: THE PRIDE OF BEING A HOMEOWNER. With pride also comes a bundle of rights, tax benefits, and the potential for building a high amount of equity (HUD). It is important for a potential homebuyer to find honest, trustworthy professionals to support them in the real estate purchasing process. The potential first-time home buyer will benefit greatly from better understanding the stepping stones to purchasing a home, thus not having to walk blindly into a real estate transaction.

Works Cited

"Buying a Home/U.S. Department of Housing and Urban Development (HUD)." Web. 10 May 2011. .
Mortgages, Refinance, New Home Purchase, Free Mortgage Calculators, and More. Apply Today. Web. 10 May 2011. .
My experience as Realtor: Cheyenne Ison
" Why Use a REALTOR®?" Find Real Estate Listings, School and Neighborhood Information and More -®. Web. 10 May 2011. .

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