1. Determine how much to spend. Discover a clear sense of your financial self or selves - Where is your cash and what is required to tap it for a downypayment for a home purchase? - Most buyers will need to secure a loan (a mortgage) to purchase. Get a loan preapproval letter from a bank or mortgage lender or mortgage broker. - Determine your price range. Essential first step. Look to buy A) what you can afford B) and are willing to spend
What are the costs of ownership? Loan - monthly payment x 12. PLEASE NOTE THAT THERE ARE ALSO COSTS ASSOCIATED WITH OBTAINING A LOAN. REVIEW WITH YOUR LENDER. If you are making a downpayment of less than 20%, be sure to review with your lender the additional cost of private mortgage insurance (PMI).
Title insurance (optional but usually purchased. Title insurance is a one-time premium paid at closing and is calculated based on the purchase price of your home. Richard Vetstein reports, "The cost today for a standard coverage policy $3.65 per $1,000 in home value. Enhanced coverage policies run about $4.00 per $1,000, and provide better coverages (i.e., for boundary disputes) and inflationary protection. Thus, a $500,000 home would cost a one time premium (standard) of $1,825."
Property taxes - Taxes for Cambridge and Somerville properties change from year to year. See my blog posts on property taxes.
Insurance - Homeowner's insurance. Typically, an annual premium.
Condo fee - monthly payment x 12. If not a condo, no condo fee!
Maintenance - utilities, upkeep, etc.
2. Decide when to move. Lease agreement in place? Give proper notice to your landlord.
If you buy something today (that is, put a property under accepted offer), typical closing date - the date you take ownership - is usually six weeks out. Four weeks is fast. Eight weeks is slow.
Allow yourself time to search.
Remember, too, that the market is seasonal: 1. Spring market is January to June, with March and April and May being the peak months. 2. Fall market is after Labor Day (early September) through mid-November. 3. Summer market is June through August. 4. Winter market is mid-November through early January.
3. Decide where to live. Get the focus on one or more areas and prioritize the list. Establish a relationship with a real estate agent in your primary search area to be your buyer's agent. Your real estate agent in your primary search area will refer you to a good agent or agents in secondary location(s). Real estate is a referral-based business. Have your primary real estate agent connect you with other agents.
Your real estate agent in your primary search area is the most important person in your real estate search. Your real estate agent is like the coach and you are like the quarterback.
You benefit by having a real estate agent: - Free (Buyer's agent paid through transaction by listing agent or seller) - Experienced (Buyer's agent will have seen hundreds of properties) - Knowledgeable (Buyer's agent learns something new in every transaction)
The average buyer goes through four to five experiences of buying and selling in their lives. A top agent goes through four to five experiences of buying and selling every month or two.
4. Search for home sweet home. So, now you know how much you want to spend. If you will be needing a loan, you have a pre-approval letter for a loan. You have determined the area you wish to live and established a relationship with a real estate agent as your buyer's agent. Meet with your agent to focus your search and discuss specific requirements and wish list.
Sign up on your agent's website for daily updates on properties in your price range. Communicate on a regular basis with your agent regarding properties of interest.
Seek to see properties
2. on weekend open house circuit
3. on a tour
4. by appointment
Learn from what you see - refine your search with your real estate agent. Consider resale value. Pay attention to you real estate agent and what he has to say. If a property comes into focus as a contender, your real estate agent can complete a market analysis of value. Is the price low? On the mark? High?
5. Make an offer and proceed to closing. When you are ready to make an offer, your agent will guide you through this process.
If your offer is accepted, you likely will a) have a home inspection. Your buyer's real estate agent can recommend inspectors. Typical cost is around $700. b) retain a real estate attorney. Your real estate agent can recommend attorneys. Typical cost is around $1,000. Your real estate attorney will review title insurance with you.
If the deal is still on after the home inspection, the buyer's attorney gets busy in concert with seller's attorney in working out the purchase and sale agreement - the p & s - which takes the place of the signed, accepted offer.
Typically, at the time the P&S is executed the buyer has decided which lender to work with and completes all the forms for the loan.
Typically, a month after the purchase and sale is signed, the mortgage commitment from the lender is due.
Finally, the closing! You own it!
I help buyers buy and sellers sell in Cambridge and Somerville, MA. Here to help you. Let's talk.
Call me at 617-733-8937 or email me.
See answers to common real estate questions at AskCharlesCherney.com
Check out the Cambridge Somerville Buy Sell Report at CharlesCherneyBuySellReport.com