A first time homebuyer's guide to the Boston homebuying process
Thinking about buying a home? The outline I have provided below will walk you through the steps of buying your first new fabulous home. Don't forget to keep your emotions out of it, be open minded, and do your preliminary homework!
Meet with a couple of mortgage lenders - Discuss your finances (be as honest as possible, they wont judge you for how much money you make or if you missed a payment). Be prepared to hand over your past few pay stubs-or a type of proof of employment, your W-2, your social security number, and your bank statements for the past three months.
Obtain a preapproval - Once you have given everything above to the mortgage lender, he/she will be able (or unable) to preapprove you. This preapproval comes in a simple letter format. A preapproval will state that the bank will loan you a specific amount on a property. In this ever changing economic climate be prepared to put down at the bare minimum 5%, but more likely 10%. Don't forget that the more you put down, the more attractive of a buyer you are to the seller and sometimes the lower your rate will be. Most reputable agents will not take you to view properties without this, as financing has become very difficult in this market.
Note: It should not cost you anything to get a preapproval. It should be an easy and educational experience. Keep in mind that just because Bank A preapproves you, you can still use Bank B to give you a loan...shop around for the best rates-although it is a very good idea to use a lender within Massachusetts who may be more familiar with state specific real estate rules and regulations.
Consult with a Buyer Agent - Sit down and discuss the home buying process with a Buyer Agent of your choice. As a buyer, you want to have your best interest protected, this is exactly what a Buyer Agent provides.
a. Get signed up on a property search tool - There are several wonderful online tools out there. Charlesgate has an amazing search tool that lists all of the properties on a map (INSERT LINK HERE).
b. Sign a contract with your buyers agent - He or she will work much harder for you if you do so. Don't be afraid to ask how they get paid!
3. View properties - Now the fun begins! An agent can usually get you into about five properties each time you meet. Leave a 25 minute window for each property (this includes travel time).
4. Select a home - It is important to not let your emotions get the best of you here. There are many variables that are involved and can cause a deal to fall apart (even a few weeks before the closing).
a. Establish an offer strategy with your agent - Have your agent prepare a comparative market analysis for you.
5. Offer accepted - All that hard work was worth it!
a. Binder deposit of $1000 payable to the listing agency or the sellers attorney - This money is given back if the deal falls apart due to your contingencies (mortgage, inspection, etc) or, it will be used towards your down payment at closing.
b. Home inspection - This will cost between $300-$550. Make a "punchlist" of all items to be fixed found from the home inspection - This list will be negotiated with the sellers.
c. It is highly recommended to hire an attorney at this time.
d. Review Condo Docs - Rules and regulations of the condo
(where applicable).
e. Review financials of the association
f. Review meeting minutes of the association - Make sure there is
nothing said at their association meetings about an upcoming
special assessments.
g. Negotiate purchase and sales - We like to leave this up to the6. Sign the Purchase and Sales (7-12 business days after the offer has been
attorneys.
accepted)- This is similar to signing a lease to your condo. Once the P&S has
been signed the only remaining contingency is your mortgage contingency.
a. Earnest money deposit - Usually 5% of the total purchase
price less the $1000 deposit.
b. Submit mortgage application - Decide who you will be using
for your loan and lock-in your rate with them (you usually can
only lock in your rate within 60 days of the closing). Work with
your mortgage lender to provide all necessary documentation to
get the loan approved.
c. Loan commitment (No less than three weeks after you sign7. Arrange homeowners insurance - Required for mortgage. It is recommended to
P&S)- The bank approves your loan.
use the same insurer that insures the building.
8. Prepare for the move - Be sure not to spend too much money on new furniture,
or open up any new credit cards for the furniture. You don't want to change
your credit history in any way prior to the closing.
a. Transfer utilities - Gas, Electric, and Cable.9. Title search and legal documents prepared - All done by your attorney
10. HUD closing statement review - This tells you how much your closing cost are
(roughly between $2000-$5000). Be prepared to get this last minute, as it
usually isn't complete unitl a few hours prior to the closing. You can ask your
attorney for a good faith estimate (GFE), so you have some idea what your up
against.
11. CLOSING - sign paperwork and record fund loan
a. You will receive the keys at this time and the home is now
yours to do as you please with it!
