Buying a home is a big decision and there is a lot to learn. This comprehensive guide provides the information, tools, and references you will need to help you find the home that is right for you. As you follow these 10-Steps, you will chart a personalized mape that will help you find, purchase and finance a home that meets your wants and needs.
You can navigate through this guide by scrolling down through the steps, or you can click on a step, read that section, and follow the back button to return to this list of steps.
Step 1: Are You Ready?
Having a plan is one of the keys to making the home-buying process easier. This step-by-step guide to the home buying process is designed to help you to create YOUR PLAN. Taking advantage free advise that you can get from Real Estate Professionals is the next most important thing you can do. The knowledge and experience of a REALTORS®, Lenders, Title Companies and a host of other professionals can be the essential key to your success.
Do You Know What You Want?
Whether you are a first-time home buyer or entering the marketplace as a repeat buyer, you need to ask why you want to buy. This almost always some type of lifestyle change. You will have or is requirements (needs) and you will a list of things you would like in terms of Las Cruces real estate that you do not have now (wants). Another factor that will affect how you proceed through the process is whether you have a purchasing timeframe constrant or not.
Whatever your answers, the more you know about the Las Cruces real estate marketplace, the more likely you are to effectively define your goals, and that will be a major step toward finding just the right home for you.
Do You Have The Money you will need to be a homeowner?
Home Buying and financing are closely intertwined. Financing, is the amount of money that you will borrow as a Home Loan or Mortgage. The amount you will need is the difference between the purchase price of your home plus all of the "closing costs" minus your down payment. The good news is that over the years new and innovative loan programs have evolved which require low down payments and the interest rates have fallen to very low levels so that you can borrow more money for your home with lower monthly mortgage payments.
But you can't finance it all. UP FRONT COSTS
There are 3- major Up Front Costs associated with the Home Buying Process that require some cash: The down payment, cash for closing costs and Settling-in costs.
Closing costs are the final costs associated with closing the loan plus the costs for pre-paid expenses like taxes, insurance, inspection, appraisal and other incidental charges. Settling in costs involve costs in moving and minor repairs to your new home, or you might want to purchase new appliances. Just remember these costs so you don't spend all your funds on the buying a home.
Be sure you have a budget that will support the ONGOING COSTS of buying a home.
Monthly mortgage payment. Mortgage lenders refer to payments of principal and interest as "P&I." Added on to that Mortgage Payment are the Taxes and insurance. So your monthly mortgage payment with its principal and accrued interest (P&I), and an extra amount for property taxes, homeowner's insurance and private mortgage insurance may make your Payment initially larger than your current rent. Over time rents rise and your payment will become relatively lower than renting. But you need to have a budget that allows for this initial payment. Also there are miscellaneous costs of homeownership. These include the fluctuating cost of utilities (gas, water and electricity) and maintenance costs.
See why being a homeowner is a wonderful thing. There are a whole host of great reasons to buy your first home. Home ownership is only for you if you are financially, ready, willing and able to buy a home. The information that you will need is covered in detail in the Finance Tab on the Navigation bar.
The National Association of REALTORS® (NAR) includes 1 million brokers and salespeople, individuals bound together with a strong Code of Ethics, extensive training opportunities and a wealth of community information.
Why have your own Realtor?
Buying and selling Las Cruces real estate is a complex matter. At first it might seem that by checking local picture books or online sites you could quickly find the right home at the right price.But a basic rule in Las Cruces real estate is that all properties are unique. No two properties -- even two identical models on the same street -- are precisely and exactly alike.
Homes differ and so do contract terms, financing options, inspection requirements and closing costs. Also, no two transactions are alike. In this maze of forms, financing, inspections, marketing, pricing and negotiating, it makes sense to work with professionals that you consider to be Experts, and who you can count on to be Trusted Advisors.
What should you expect when you work with a REALTOR®?
Once you select a REALTOR® you will want to establish a proper business relationship. You likely know that some REALTORS® represent sellers while others represent buyers. Each REALTOR® will explain the options available, and provide you with complete agency disclosures. You want to be sure that you have a Realtor the is representing YOU.
Once hired for the job, the REALTOR® will provide you with information detailing current market conditions, financing options and negotiating issues that might apply to a given situation. During ythe entire home buying process your REALTOR® should keep you updated and alert you to each step in the transaction process. Again a complete discussion will be found in our Selecting a Realtor Section.
The reason that selecting a REALTOR is Step 2 in the process is that buying a home is probably the single largest investment you will ever make. You need a trusted guide.
If you have gotten this far, and you are still seriously considering buying a home, then you should watch this 10 minute video to show you why selecting the right REALTOR at the right time will enable you to buy the most home for the least money.
Few people can buy a home for cash. According to the National Association of REALTORS® (NAR), nearly nine out of 10 buyers finance their purchase, which means that virtually all buyers -- especially first-time purchasers -- required a loan.
The real issue with Las Cruces real estate financing is not getting a loan (virtually anyone willing to pay lofty interest rates can find a mortgage). Instead, the idea is to get the loan that's right for you -- the mortgage with the lowest cost and best terms.
REALTORS® routinely suggest that consumers start the mortgage process well before bidding on a home. Many lenders (the sources of money) and programs, are available. As your Trusted Advisor, your REALTORS® is able to make recommendations based on the experiences they have had with lender on many previous transactions. By meeting with lenders -- either online or face to face -- and looking at loan options, you will find which programs best meet your needs and how much you can afford.
REALTORS® also recommend pre approvals for 2-other reasons: First knowing what you can afford allows you to limit your search to what is appropriate for you, and then once you find a home you can make an offer that does not include a financing contingency. That offer is much more likely to be accepted over one with a contingency. In addition if you are not Pre-Approved then your Offer to Purchase require you to apply for financing within a given time period. In many cases, seven to 10 days. By meeting with loan officers in advance and identifying mortgage programs, it won't be necessary to quickly find a lender, check credit, and rush into a financing decision that may not be the best option.
What exactly is Pre-Approval?
"Pre-approval" means you have met with a loan officer, your credit files have been reviewed and the loan officer believes you can readily qualify for a given loan amount with one or more specific mortgage programs. Based on this information, the lender will provide a pre approval letter, which shows your borrowing power. You can visit as many lenders as you like and get several pre-approvals, but keep in mind that each one carries with it a new credit check, which will show up on future credit reports.
Although not a final loan commitment, the pre approval letter can be shown to listing brokers when bidding on a home. It demonstrates your financial strength and shows that you have the ability to go through with a purchase. This information is important to owners since they do not want to accept an offer that is likely to fail because financing cannot be obtained.
How do you get pre-approval?
Real estate financing is available from numerous sources, such as banks and mortgage companies that have worked with local REALTORS®. Based on his or her experience, the REALTOR® may suggest one or more lenders with a history of offering competitive programs and delivering promised rates and terms.
The loan officer will carefully review your financial situation, including your credit report and other information. The lender will then suggest programs which most-closely meet your needs. For instance, a first-time buyer may qualify for state-backed mortgage programs with little money down and low interest rates, while a repeat purchaser (someone who has bought a home before) with more equity (money invested in the home) might want to get a 15-year loan and the lower overall interest costs it represents. Typically, first-time buyers opt for the traditional 30-year loan, with either a floating interest rate or a fixed rate of interest over the life of the loan.
Millions of new and existing homes are sold each year. There's no shortage of housing options, especially in this current Buyer's Market. There is actually an excess of homes available relative to the number of Buyers. The challenge becomes finding the property which best meets your needs.
The housing market is complicated because the stock of homes for sale is always in flux. If it were possible to have a complete list of every home for sale at this very moment in a given community, such a list would become obsolete within "seconds" as new homes become available and properties now for sale are put under contract. You will see that you have an opportunity to scan the Multiple Listing Service (MLS) to get an idea of what is available relative to what you are looking for. We actually encourage you to do this before and while you are working with your Realtor. We love the informed consumer.
Next to What Can You Afford, What are you looking for is the most important question?
A home is more than just a collection of bedrooms and bathrooms. Several properties -- each with four bedrooms, three baths, and the same price -- may well represent radically different designs, commuting distances, lot sizes, tax costs, interior dimensions, and exterior finishes.
Your wants and needs are very specific to you. So, it's important to have a comprehensive list the features and benefits you must have, and those that you would like to have in your home. You must consider such things as price, location, size, and amenities (especially extras such as a pool or extra-large kitchen) and design. Next, it's important to prioritize wants vs. needs, and what trade-offs will you make. Lastly, consider your needs in several years. If you'll need a larger home, maybe now is the time to buy a bigger house rather than moving or expanding in the future. If you expect your income to increase, perhaps you should consider a more expensive home financed with a loan program where monthly payments increase in the future.
A good Realtor working with an informed Buyer will reduce all this to writing on a wants and needs or "Home Hunter Worksheet."There is no question that this is the key to looking for, and finding, the best possible home for you.
LOOKING AT HOMES. Once you and your REALTOR have established your home buying criteria, these are entered into our customized computer database. Every evening, the computer searches all of the homes for sale in Las Cruces to find just the homes that match your specific criteria, including your price range. Your REALTOR will add to what the computer finds all of the homes that they know are coming on the market or whose prices will change to meet your criteria. Because this search is done in the evening, you will often get this information before other buyers and even other REALTORS. You will receive an E-mail list of those homes, including pictures, detailed descriptions, where possible virtual tours of those homes, and information about the homes that is available to the REALTOR that is not on your search of the "public" internet database. As you continue to receive home listings, you and your REALTOR will adjust your criteria as need.
Now you are in charge. The REALTOR should be available at your convenience to show you all homes you have decided thatyou want to see, and not those that the REALTOR has picked. As you see homes you like then the REALTOR may suggest other similar homes that they now know that you may be interested in. OUR NEXT STEP IS CHOOSING YOUR NEW HOME.
There's no doubt that choosing a home is a big decision and you want to do it right.
Is it THE house for you?
A house is shelter, but a home is far more. It's where you live, relax, entertain friends, raise families, and work. A home is where you spend much of your life, and so choosing THE house is an enormous decision.
How do you know if a house is THE one? Probably the best approach is to look at as many homes as possible. Because you will see many homes, some you will reject right away, but others you will like. It is best to keep a journal of pluses and minuses of the contenders, and ultimately compare it to your Home Hunter form with wants and needs and trade-offs. You should then narrow your choices to just a very few. You and your REALTOR® can then meet and go over the specific information and options available if you were to make an offer to purchase each of these finalists.
Before making a legally binding offer you want to be sure you can afford this home.
Remember Step 2. Now is the time you will be very happy that you have gone through the pre-approval process. You have a very good idea of how much you can borrow, what loan programs will most likely work best in your situation and how much home you can afford. Pre-approval is not a loan commitment. It is still necessary for lenders to check such items as appraisals and the latest credit reports. BUT, Pre-approval nonetheless provides a reasoned, careful analysis of what you can afford.
Real Estate Financing is a multi-step process. This discussion and Step in the Process could have been placed almost anywhere in the progression, but it obviously needs to occur. As a Website we have 3 different Navigation Buttons and Pages that cover Financing details.
Financing is complex only because of the multiple decisions that have to be made by both the buyer and the lender. Because financing is so important to the home buying process, a buyer should have as much information as possible regarding what steps it takes to end up with the right Home Mortgage. The buyer needs to know which one of the many types of Mortgage is best for them based on their personal financial situation, as well as the terms and costs, of each type of Mortgage.
The 3-links above will take you through the process in great detail and help you to make informed decisions.
The New Mexico Association of REALTORS®, working with legal counsel, have developed standardized forms that are appropriate for realty transactions in this state. Such documents include numerous sale conditions and places for the buyer to insert the terms underwhich they are making their offer to purchase a property. All Buyers and their Realtor should carefully review the contract to assure that it reflects the terms and conditions you want to offer.
While much attention is spent on offering prices, a proposal to buy includes both the price and terms. In some cases, terms can represent thousands of dollars in additional value for buyers -- or additional costs. Terms are extremely important and should be carefully reviewed.
How much?
You will sometimes hear that the amount of your offer should be some percentage below the asking price, or it should be some percentage below what you are really willing to pay so that you can negotiate. In practice, your offer depends on the basic laws of supply and demand. We are currently in a Buyer's Market so pressure is on the Seller. But, in fact you and your Realtor will know what the fair Market Value of a property is. This means you need to have a Realtor with very up to date knowledge about the "Market." This is way that you get the best home at the best possible price and terms - not by any crazy formulas.
How do you make an offer?
The process of making offers requires completion of the State approved Standardized Offer to Purchase. As we have said, that offer should be carefully reviewed to be sure that it accurately reflects the terms and conditions under which the Buyer is willing to purchase that property. It is legally binding once signed by both parties.
The REALTOR® will present that document to the owner and the owner's representative. When you selected your Realtor Representative, their reputation as a "Skilled Negotiator" should have been one of your criteria. This is first occassion that your Realtor will apply that skill. The owner, may accept the offer, reject it, or make a counter-offer. You want your Realtor to negotiate an acceptance.
Because counter-offers are common. Any change in a Buyer's offer by the seller is considered to be a "counter-offer." Until both parties sign the Offer and Counter-offer there is no contract of sale, and another Buyer can step in and the Seller can accept that offer. Therefore, the buyer should remain in close contact with the REALTOR® during the negotiation process so that any proposed changes can be quickly reviewed and dealth with. Many counter-offers can go back and forth until a "deal" is struck between the parties. Again, you depend heavily on the skilled negotiations of your Realtor to get you the home you want at the best possible price and terms.
Once both parties sign the offer and all the counter-offers you are "Under Contract."
Step 8. Contract to Closing - Transaction Management
Once your home is under contract. Your REALTOR will help to guide you through the portion of the home buying process is known as TRANSACTION MANAGEMENT. It refers to the fact that all of terms of the contract have to be fullfilled according to the schedule set forth in the contract. Any mistakes at this stage can result in default, or a closing that just doesn't happen.
The REALTOR is there to answer any questions about the process you may have, and to make sure that all the correct steps are taken, so you won't have any problems once you get to closing. The REALTOR will follow up with you the seller, and the lender to be sure all the parties arrive at closing, and with the right amount of money.
The following steps (8 and 9) involve, the ususual contingencies in the contract (other than dealing with the Lender) that the Transaction Manager must take care of: inspections, insurance, warranties, and the actual closing.
How many inspections should you have?
A number of inspections are common in residential Real Estate transactions. They include checks for termites, surveys to determine boundaries, appraisals to determine value for lenders, title reviews and structural inspections.
Structural inspections are particularly important. During these examinations, an inspector comes to the property to determine if there are material physical defects and whether expensive repairs and replacements are likely to be required in the next few years. Such inspections for a single-family home often require two or three hours, and buyers should attend. This is an opportunity to examine the property's mechanics and structure, ask questions and learn far more about the property than is possible with an informal walk-through.
Get Insurance
No one would drive a car without insurance, so it figures that no homeowner should be without insurance.The essential idea behind various forms of Las Cruces real estate insurance is to protect owners in the event of catastrophe. If something goes wrong, insurance can be the bargain of a lifetime.
What kind and how much insurance should you have?
There are various forms of insurance associated with home ownership, including these major types:
Title insurance: Purchased with a one-time fee at closing, title insurance protects owners in the event that title to the property is found to be invalid. Coverage includes "lenders" policies, which protect buyers up to the mortgage value of the property, and "owners" coverage, which protects owners up to the purchase price. In other words, "owners" coverage protects both the mortgage amount and the value of the down payment. In Las Cruces, typically the Sellers pay for the Owner's Title Policy and the Buyers pay for the Lenders Policy. More information details about Title Insurance is available at: http://homebuying.about.com/od/homeshopping/qt/TitleInsurance.htm
Homeowners' insurance: Homeowner's insurance provides fire, theft and liability coverage. Homeowners' policies are required by lenders and often cover a surprising number of items, including in some cases such property as wedding rings, furniture and home office equipment. The Insurance Information Institute provides this explanation of homeowner's insurance: http://www.iii.org/individuals/HomeownersandRentersInsurance
Flood insurance: Generally required in high-risk flood-prone areas, this insurance is issued by the federal government and provides as much as $250,000 in coverage for a single-family home plus $100,000 for contents. Local REALTORS® can explain which locations require such coverage. Flood insurance is provided by FEMA. Everything you need to know and FAQ’s can be found at: http://www.pueblo.gsa.gov/cic_text/housing/natl-flood/insurance.htm#require
Home warranties: With new homes, buyers want assurance that if something goes wrong after completion the builder will be there to make repairs. But what if the builder refuses to do the work or goes out of business?
Home warranties bought from third parties by home builders are generally designed to provide several forms of protection: workmanship for the first year, mechanical problems such as plumbing and wiring for the first two years, and structural defects for up to 10 years (2-10). Many homebuilders only provide a one-year warranty, but some do provide the 2-10 warrantee. You need to check.
Home warranties for existing homes are typically one-year service agreements purchased by sellers. In the event of a covered defect or breakdown, the warranty firm will step in and make the repair or cover its cost. If you are looking to better educate yourself before buying a home warranty policy, this Website provides home warranty insurance plan reviews, provider ratings, buyers guide and informative articles about homeowners warranty. http://www.homewarrantyreviews.com
Insurance policies and warranties have limitations and individual programs have different levels of coverage, deductibles and costs. For details, speak with REALTORS®, insurance brokers and home builders.
How do you get insurance?
The time to obtain insurance and warranty coverage is at closing, so speak with a REALTOR® or insurance broker prior to closing. Be sure to ask about limitations, costs, deductibles and "endorsements" (additional forms of coverage that may be available.
The closing process, which in different parts of the country is also known as "settlement" or "escrow," is increasingly computerized and automated. In many cases, buyers and sellers don't need to attend a specific event; signed paperwork can be sent to the closing agent via overnight delivery.
In practice, closings bring together a variety of parties who are part of the "transaction" process. For example, while the history of property ownership has been checked, it's possible that the records contain errors, unrecorded claims or flaws in the review itself, thus title insurance is necessary. At closing, transfer taxes must be paid (none in New Mexico), and other claims must also be settled (including closing costs, legal fees and adjustments). In most transactions, the closing agent also completes the paperwork needed to record the loan.
What to expect at Closing,
Settlement is a brief process where all of the necessary paperwork needed to complete the transaction is signed. Closing is typically held in an office setting, sometimes with both buyer and seller at the same table, sometimes with each party completing their papers separately.
Whatever the case, the result is that title to the property is transferred from seller to buyer. The buyer receives the keys and the seller receives payment for the home. From the amount credited to the seller, the closing agent subtracts money to pay off the existing mortgage and other transaction costs. Deeds, loan papers, and other documents are prepared, signed and filed with local property record offices.
One of the best parts of settlement is that buyers and sellers need to do very little.
Before closing, buyers typically have a final opportunity to walk through the property to assure that its condition has not materially changed since the sale agreement was signed.
At closing itself, all papers have been prepared by closing agents, title companies, lenders and lawyers. This paperwork reflects the sale agreement and allows all parties to the transaction to verify their interests. For instance, buyers get the title to the property, lenders have their loans recorded in the public records and state governments collect their transfer taxes.
You've done it. You've looked at properties, made an offer, obtained financing and gone to closing. The home is yours.
Is there any more to the home buying process?
There are several more steps you'll want to take.
Those papers you received at settlement are extremely valuable, so hold on to them! In the short-term they can help establish tax deductions for the year in which the property was purchased. In the future, such papers will be important for tax purposes when the property is sold, and in some cases, for calculating estate taxes.
Also at closing, determine the status of the utilities required by the home, items such as water, sewage, gas, electric and oil service. You want utility bills to be paid in full by owners as of closing and you also want services turned on and billing transferred to your name. Usually such transfers can be done without turning off utilities. Your REALTOR® can provide contact numbers and related information for all of these Essential Services.
About two weeks after closing, contact your local property records office and confirm that your deed has been officially recorded. Mistakes happen and it is always good to check. These records are public notices that show your interest in the property.
Moving in. It is generally understood that sellers will leave homes "broom clean" when moving out. This expression does not mean "vacuumed" or "spotless." Broom clean makes sense because it means the house is ready to be painted and cleaned.
For Security and for insurance purposes, many owners make a photo or video record of the home and their possessions for insurance purposes and then keep the records in a safety deposit box. Your insurance provider can recommend what to photograph and how to secure it.
You want to maintain fire, theft and liability insurance. As the value of your property increases such coverage should also rise. Again, speak with your insurance professional for details.
Lastly, enjoy your home. Owning Las Cruces real estate involves contracts, loans, and taxes, but ultimately what's most important is that home ownership is a wonderful accomplishment.
Evelyn Bruder's Real Estate Team provides you with the best Las Cruces Real Estate Information concerning Las Cruces Homes & Land, for sale or lease. We provide Real Estate service to Las Cruces, NM, and the surrounding communities of Southern New Mexico including Mesilla, Deming, Santa Teresa, and all of Dona Ana County. You can have access to the Las Cruces MLS (Las Cruces Multiple Listing Service) home listings by free access to the Public Information provided by the MLS via its IDX feed. Information is available to learn about home listings in Las Cruces. New Mexico Real Estate, and New Mexico homes. We provide information about Rentals, Land, and Homes for Sale or Homes for Rent.
