SterlingResidential.com | Buying & Selling Residential Properties in Texas | Houses for Rent Houston Area | Humble Atascocita Kingwood & Spring Texas Realtors | Sterling Residential®, Realtors® | Real Estate Broker: The Home Buying Process

The dream of homeownership is a reality for millions of Americans and, last year, the percentage of Americans that owned their own homes increased to a record 70%. Low interest rates, low inflation, and a growing economy combined to make the U.S. housing market a solid investment. While the Houston market has not experienced the high growth of some regions, the moderate home value appreciation makes it one of the most affordable places to live.

Along with record growth in homeownership, there have been other important home buying developments. More home buyers than ever are beginning their home searches on the Internet, locating information, lenders, Realtors®, and homes. The number of Internet home buyers has increased dramatically in recent years and soon more than 80% of home buyers will start their home search on the Internet.

When home buyers start thinking about purchasing, they often ask how long the process takes. The short answer is 30 to 45 days from the time you negotiate a purchase contract, but many factors influence the process including the home search, negotiations, financing, inspections, repairs, and title reporting.

Understanding Your Credit

Your credit is an essential component to the home buying process, and having good credit lowers the cost of financing your new home. Your consumer history and how you have handled your credit is summarized and scored by computer with a number that compares your payment habits with millions of consumers. This information is gathered and reported by the three major credit reporting agencies; Experian, Equifax, and Transunion.

When you apply for a loan, the lender will request your credit report from the credit reporting agencies, so it’s important to know and understand what is contained in a credit report. Order a copy from one of the credit agencies if you haven’t done so. More information about credit is available in the Fannie Mae Foundation publication, “Knowing and Understanding Your Credit,” and you can request a free copy from the Fannie Mae Foundation.

Financing Your Home

Many buyers start looking for a home right away, but knowing how much house you can afford is the best place to start. A lender will provide you with valuable information about your purchasing power. Pre-qualified buyers know their purchasing power based upon financial and credit information they provide the lender. Pre-approved buyers take the additional step of providing detailed application information that is verified by the lender. In return, pre-approved home buyers receive a pre-approval letter subject to lender conditions.

Before selecting a lender, be sure to shop around. Speak to more than one lender and determine who has competitive rates and fees, has the best loan programs for your individual needs, and is responsive to your questions. You may want to contact a direct lender like a savings and loan, a commercial bank, or a mortgage banker. Indirect lenders, or mortgage brokers, have access to a wide variety of loan programs with varying rates, fees, and down-payment requirements.

Your lender will guide you through the application process, describe available loan programs, and provide you an estimate of your down payment, prepayments, and closing costs based on your qualifications. During the contract period, the lender will complete the underwriting and final approval of the mortgage including ordering an appraisal and survey if they require one. Once the loan is approved, the lender transmits the closing instructions and loan documents to the title company. The loan is funded after the papers have been signed and returned to the lender during closing.

Working With Buyer Agents

Why use a Realtor®? If you’re not working with a Realtor® at this point, it’s important to consider doing so early in the process. Buying your home is one of the most important purchases you will ever make, and having a knowledgeable professional on your side makes good economic sense.

Realtors® are required by law to provide you with information about brokerage services and to explain agency relationships With market and transaction experience, Realtors® guide their clients through the home purchase process, keeping the purchase transaction moving towards a smooth closing by coordinating the process and managing contract deadlines.

Finding Your Home

Prioritize those things about your new home that are most important and discuss them with your Realtor®. Finding your home may take a few days or weeks, depending on the market conditions and your familiarity with the area. If you are new to the city, or an area of town, your Realtor® can provide answers to your relocation questions.

In today’s market, most buyers start by looking on the internet where you can find and compare homes and neighborhoods in the Houston metropolitan area. Sterling Residential.Com is linked to the largest Multiple Listing Service (MLS) system in the nation, and you can start your home search right here.

When you have narrowed your choices, your Realtor® will make appointments to show you the best home selections. Consider planning your tour so that you don’t see too many homes at one time, and you’ll remember the essential details of each property.

Negotiating the Deal

In Texas, all real estate sales must be in writing to be valid. Your Realtor® uses forms promulgated by the Texas Real Estate Commission (TREC). These forms have been drawn, revised, and crafted through decades of real estate practice to protect the interests of the principals to the sale; the buyer and the seller. Your Realtor® is not an attorney, however, and legal questions you have about the contracts should be addressed by a lawyer of your choosing.

Negotiations start with a written offer submitted to the owner, who makes a decision to accept, negotiate, or decline. When the negotiations are complete, the terms of purchase are set down in writing, and the contract is signed and dated by the parties. Once acceptance of the final offer, or counter offer, is communicated to the other party, the contract becomes a legally binding purchase contract.

Getting From Contract to Closing

The signed and dated contract is delivered to the title company, along with the buyer’s earnest money check. In Texas, if an option period is indicated, the option fee payment is delivered to the seller. The option fee gives the buyer the right to terminate the contract within a stated number of days.

Take advantage of the option period. Schedule property inspections and begin shopping for insurance. Timing is critical, and it’s important to coordinate the inspections within the option period so that the buyer has the time evaluate the inspection report before the option to terminate expires.

Unless the time is extended, the title company performs a title search and issues a title commitment within 15 days of the contract date. Issues related to the title are reported to all parties, and it’s important to review the report for any outstanding issues that could delay or prevent closing.

During the contract period, the lender completes the credit approval and underwriting process. With a satisfactory appraisal and survey, the underwriter grants final loan approval. With the contract terms and conditions met, it’s time to proceed to closing.

Closing the Home Purchase

With the lender and title requirements fulfilled, the closing instructions and loan documents are transmitted to the title company, and the closing documents and HUD-1 settlement statement are prepared.

At the appointed time, the buyer and seller gather at the title company to complete the review and signing of the loan and closing documents. Once the documents are signed, the transaction is funded and monies are distributed to the parties. Possession of the home is transferred according to the terms of the contract. Then it’s time to move into your new home.

It should be noted that every deal is unique. No article is able to capture all the variables and circumstances that the buyer or seller will face during the purchase or sale of their home. If you have specific questions about the process, you should consult with a professional. Real estate brokers are not attorneys, and legal questions should be directed to the attorney of your choosing.