Mortgage Tools
Buying a Home
Purchasing a home can be stressful, but as long as you are prepared with a basic understanding of the steps you should follow, buying your new home can be exciting and enjoyable for you and your family.
To break it down, the home buying process usually follows these five general stages:
- Placing an offer to purchase
- Home inspection and property appraisal
- Negotiating the closing date and purchase price
- Finalizing your mortgage and closing the sale
Making an Offer to Purchase
Before looking for a home, it is advisable to obtain pre-approval from your mortgage broker, which will give you a good idea of what you can afford. Once you have found your ideal home, the next step is to place an offer to purchase, which is a document detailing the terms of the offer that you will submit to the seller. It is advisable to enlist the assistance of a real estate agent to help you write it and a lawyer to look over it, as the offer to purchase is a legally binding contract. When preparing your offer, remember to include pertinent information like:
- Your name, the seller's name, and the home's address
- Your offered purchase price and expected closing date
- The amount of your deposit
- Items in the home that you expect to be included in the sale
- Additional conditions you are requesting such as a home inspection, land survey, or property appraisal
Once you place your offer, the seller can accept or reject it, or make a counteroffer.
The Home Inspection and Property Appraisal
The purpose of the home inspection is to assess the condition of the home and to reveal any problems that need addressing, or repairs that require attention. You can decide how the inspection results will affect the amount you are willing to pay for the home.
Similarly, the property appraisal will help you determine whether the offer you made on the home was appropriate, because the appraisal will tell you how much the home is actually worth.
Negotiating the Sale Price
Once you make an offer on a home, the seller can make a counteroffer, whereby he or she can ask for:
- More money than you offered
- Different terms
- A different closing date
During this time, you can use the information revealed in the appraisal and home inspection to negotiate the price you want. Once the conditions of the offer have been fulfilled and the price negotiated, the offer becomes finalized.
At this stage, you will also be confirming your mortgage with your chosen lender or mortgage agent. You will have to choose a mortgage product and amortization period, and find the best interest rate. Once the mortgage has been finalized and your offer to purchase accepted, the house will become yours when the closing date arrives, and you take possession of your new home.
