ADULTING 101: Home Buying

A Step-by-Step Guide to Buying Your First Home

Educate Yourself:

Attend a home buyer education class or visit the New Hampshire Housing website (GoNewHampshireHousing.com)

  • Learn about the different programs offered to help various types of Homeowners.
    • Home buyer Tax Credit: For first time homeowners, this credit will help decrease the amount of Federal Income Taxes the buyer owns to help qualify for a mortgage. The Home buyer Tax Credit is a federal Mortgage Credit Certificate (MCC) program designed to provide you with a long-term tax benefit to help you afford home ownership. An MCC program allows you to claim a tax credit for a portion of the mortgage interest paid per year up to $2,000 for the life of the original mortgage, for as long as you live in the home.
    • Down Payment and Closing Costs Help: Cash assistance for up to 3% of your base loan amount to help with a down payment or closing cost fees.

Review your budget

  • Mortgage Calculators:
  • Good Exercise for Home buyers:
    • Save what you are currently paying for rent for up to 6 months. This will give the potential home buyer the idea of what expenses will be like with a mortgage.

Talk to a Mortgage Company

Look to get Pre-approved or Pre-qualified for a mortgage:

A mortgage pre-qualification can be useful as an estimate of how much you can afford to spend on your home, but a pre-approval is much more valuable because it means the lender has checked your credit and verified your documentation to approve a specific loan amount (usually for a particular period, such as 90 days). 

You will need to provide:

  1. Proof of income
  2. Proof of assets
  3. Your Credit (Allow the bank to run a credit report)
  4. Proof of Employment
  5. Your Driver’s License/ Social Security Number

If the home buyer does not get a pre-approved status, the bank will make suggestions to help you better qualify for a mortgage. 

Hire a Real Estate Agent

Choosing the right type of agent:

  • Full-time vs. Part-time Agents:
    • With part-time agents, experience and time dedication are the two things a home buyer should consider. Full-time agents are dedicated to their craft and have made it their livelihood. With Part-time agents, this is usually their side job and because of this are limited in their availability. As a home buyer, you would want quick communication with your agent and their dedication to getting you into a home.
  • Traditional Vs. Dual Agency:
    • Dual agency refers to a situation where the same real estate agent represents both the buyer and the seller in a real estate transaction. Isn’t really ideal because as a buyer’s agent, the real estate agent is attempting to purchase the home for the lowest price possible for their client. As a seller’s agent, the real estate agent is attempting to sell the home for the highest price possible. It is easy to see how dual agency could create conflicts and best to stick with a traditional agent.

Signing a “Brokerage Relationship Disclosure Form” Vs. a “Buyer Agency Agreement”

  • Brokerage Relationship Disclosure Form: By New Hampshire law, this form must be presented during your first meeting with a broker (in person or on the phone), so that you are clear about your relationship with the broker and about the confidentiality status of any information that you share. Upon a home buyer’s first meeting, you are considered a customer. As a customer, the licensee with whom you are working is not obligated to keep confidential the information that you might share with him or her. As a customer, you should not reveal any confidential information that could harm your bargaining position.
  • Buyer Agency Agreement: An agreement signed by a prospective buyer that authorizes a licensed brokerage firm, and usually a specific real estate agent at the brokerage firm, to represent the buyer in buying a home. Prospective buyers sign buyer’s agency agreements to confirm their commitment to working with a brokerage firm or an agent, and to negotiate possible compensation.

Having the right type of conversations with your real estate agent:

  • First question any Real Estate Agent will ask, “Are you Pre-approved for a mortgage?” This is why it is important to speak to a Lender first. Your agent can then locate homes in your pre-approved price range.
  • Identify features in a home or community that are most important for you. Some things to think about: 
    • Housing Tax based on Township, School Systems, Location and Proximity, Town Density.
    • Identifying the market we are in. Is it a Buyer or Seller’s Market. 
  • Laying down general expectations.
    • Needs Vs. Wants & Wishes
    • Move-in-ready Vs. Fixer-up Homes

Purchase your Home

Submitting an Offer:

Once the home buyer has decided on a residence they will have their real estate agent submit an offer letter to the selling agent. The home owner can accept, decline or even counter-offer at this point.

Submitting a Purchase and Sales Agreement:

Once the offered is agreed upon, the two parties will then execute a Purchase and Sales Agreement and submit this contract to the Mortgage Company and Title Agent.

At this point, the home buyer’s Real Estate Agent, Mortgage Company and Title Agent will all be coinciding to get the home buyer to closing. This is usually within 30 days of the Purchase and Sales Agreement.

Real Estate Agent will…

  • Schedule a home and pest inspection of the property. These inspections are non-refundable and range in cost from $200-$1,000.
  • Make arrangements for repairs per contract and if anything should arise during inspections.
  • Schedule a final reading of contacts between the buyer and seller. This may need to be re-negotiated based on what is found during inspections.
  • Make sure the buyers deposit is sent to the title company.
  • Arrange a final walk-through for the home buyer and accompany the home buyer at closing.

Mortgage Company will…

  • The loan application process will begin and include verification of the buyer’s income stability, credit and debits and confirming the property’s agreed upon value.
  • The property’s appraisal value will then be verified. The home buyer’s credit history, employment status and having sufficient funds to close on the house will then be confirmed.
  • Instruct the home buyer on obtaining homeowners insurance.

All the above information is then gathered and packaged for underwriting of the home buyer’s loan. The home buyer is then submitted for loan approval and the Mortgage Company will then send closing instructions and all final loan closing costs to the title agent.

Title Agent will… 

  • Receive Purchase and Sales Agreement and begin Title work.
  • Ensure tax information is ordered and the transaction team begins a file on the property.
  • Begin a title search on the property. This includes the history of the property, owners of record and liens of record (or legal claims) on the title.  A Title Examiner will then review the title work and will issue a commitment to title insurance for both the home buyer and seller.
  • The Title Processor works on pre-closing issues found during the title search and making sure they are handled prior to closing.
  • Legal and final documents on the property are received and all parties are advised of a closing time and location to meet at.
  • Closing and funding to the seller will occur with both parties present. Legal documents are then recorded and the title insurance policies are then issued.

The home buyer will then be given the keys to their new home!

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