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Step by Step to Home buying

Step 1, Get Your Finances in Order

Check your credit report before you apply for a mortgage, because the reports play an important role in the mortgage approval process and in determining the interest rate and other loan terms that a lender offers you. If you haven't looked at your credit reports, you might be surprised at their contents, because errors are common.

Step 2, Get Pre-Approved for a Mortgage

Do you know how much house you can afford? Probably not, unless you've talked with a lender. Online mortgage calculators are a good place to start, but as you get closer to being ready to buy, there is no substitute for a written mortgage pre-approval. Compare rates and options from banks, mortgage brokers and other sources. You will now have a price range which you are comfortable with.

Step 3, Determine Your Wants and Needs

Buying a home isn't as difficult as you might think, even if you're short on funds, but the process will go a lot smoother if you get familiar with your real estate market and narrow down your wants and needs before you start looking at houses. Make a basic wish list to give to your Realtor.

Step 4, Choose a Realtor to work with.

This service is free to the buyer as the seller usually pays the commission to the selling (cooperating) agency. However be prepared to sign a buyer's agency agreement as the Realtor is obligated to do this by law. Once signed, use your realtor as your right hand and when you see a listing call your realtor not the listing agent for information and always keep your realtor informed of open houses etc that you would like to go an see. If you have access to the internet, the realtor can set up an automatic mailing of all the latest listings which match your criteria.

Step 5, Learn about the neighborhood.

Often times the house you find may be in a neighborhood that you're not familiar with, which is ok. It just means that you'll have to do a little more research. If you find a house that you like, ask for a list of the neighborhood properties that sold in the last year. How does your home rank? Is it at the top of the price range? If so, it might be hard to resell. Is it average or on the low end? If so, great - as the other home prices go up in value, they will pull your home's value up as well.

Check out the schools - are they sought after? A good school district means your neighborhood will always be valued by families which is a great reassurance to purchase, not to mention the value-add if you have school-age children.

Next, contact the police station and obtain crime statistics if you can. Are they acceptable to you? Check out the location of the shopping, schools, police, fire & ambulance stations. These are all things that might affect your property value or quality of your life.

Step 6, Have reasonable expectations.

There is a lot of money at stake. No house is perfect. Understanding and remembering these two statements will help diffuse the negotiation stage, the inspection stage and the closing stage.

Emotions are high for both buyers and sellers. - The seller may have loving memories and years of sweat equity in the house. Maybe they are being relocated and don't want to go. Understanding their motivations for selling will help you appreciate their situation and predicament during these emotional times.

There is a lot of money at stake for all the parties involved (and that includes the realtors) - Just remember that market value (the value of a home) is the price that a willing buyer and a willing seller can agree to. If you can not agree on a price, ask yourself: Is there something you missed? Are there comparables that support the price that they want? Are there motivations that might factor into the price they are demanding? In the end, does it matter? What is the house worth to you today and what do you think you can reasonably sell it for based on the amount of time you plan to spend in it? Think about the answers to those questions before you make your move.

Step 7, Making the Offer

Once you have narrowed down the house, your realtor will show you what similar properties have sold for recently so that you are always kept informed of the ever changing market. Your realtor can explain the agreement of purchase and sale but if you have further questions, you may want to have a consultation with lawyer. Find a lawyer who is willing to take the time to answer your questions and who specializes in real estate law. Offers are commonly made conditional on mortgage approval  and home inspection for a period of time.

Step 8, Home Inspections and Other Tests

No house is perfect - Its usually good to get an inspection. It might be a few hundred dollars, but it's worth it. Your realtor or friends & family can usually refer a Certified Home Inspector who will spend some hours checking all the systems of the house and identifying if there are any structural problems or issues. It's the inspector's job to find any problems with the house that could cost you thousands to repair down the road. Some inspectors have a tendency to over play the importance of their role and the items that they find. Get objective opinions that you trust before making a decision on an inspection report. Likewise, if an inspector says a foundation is cracked but its nothing to worry about - get a second opinion. Ask a handyman for an idea of how much repairs will cost and how complicated they are. If there is a well or woodburning fireplace, you may want to have experts cover inspections of these.

Step 9, Avoiding and Correcting Last Minute Problems

As your closing date nears, everyone involved in your real estate transaction should check its progress on a daily basis, because staying on top of things means you'll know immediately if there's a problem that must be dealt with. 

Step 10, Call Movers .

Compare prices and get referrals from friends. Get packing.

Step 11, Week of closing.

Make sure you have all your paperwork in order with both your Lawyer and your Mortgage Lender.

Step 12, Day of Closing.

Wait to hear from your Lawyer that everything has closed and pick up key!