After answering the questions Should I Own? and Can I Own? in October and November, respectively, it is now time for the moment we’ve all been waiting for: How Do I Own? [Note: If you missed either of the first two parts of this series, you can find them at www.performink.com, under Home Ownership.] This article will give you an overview of the entire home buying process. Future installments of this series will offer an in-depth look at each individual step.

Once you decide you would like to buy a home, there are five major steps in the process: qualify for a mortgage, find a property, negotiate a sales contract, have the unit inspected, and close on the property.

Qualify for a Mortgage

As we discussed in last month’s article, before you begin looking for your new home, you should meet with a mortgage consultant and get pre-approved for a mortgage. The last thing you want to do is fall in love with a place, then find out you can’t afford it. To get pre-approved, the mortgage consultant will take a look at all aspects of your income, credit and assets, and determine your buying power. You will receive a pre-approval letter from your consultant, and you are off and running.

Find a Property

Now that you have a clear idea of what you can afford, it’s time for the fun part (at least, I think it’s the fun part)—finding a home! Yes, it will be nerve-wracking. Yes, it’s the biggest financial decision of your life to this point. But it will be fun. I promise.

Some people like to look for homes on their own, and deal with properties that are “for sale by owner.” However, whether you are a first-time homebuyer or an old pro, I strongly recommend that you work with a realtor. Why? There are a number of reasons. A realtor has extensive resources and in-depth knowledge of the various neighborhoods of this fine city to assist you in your search. You might think you’re getting a great deal buying a condo for $140K until your realtor informs you that the same place is selling across the street for $120K. Or that the “L” will be barreling right past your bedroom window every 15 minutes.

A realtor will guide you through the home buying process and make sure everything flows together smoothly. He or she will help you negotiate the sales contract, handling everything from sales price and mortgage contingency to seller’s concessions. The latter can be anything from covering your closing costs to letting you keep the green leather couch in the living room.

Finally, a realtor is free. And by free I mean that it does not cost you anything to work with a realtor. If you don’t find a place you like or you decide to go back to school or move in with your parents, you don’t owe your realtor a penny. The realtor receives a commission from the sale, which is paid by the seller.

So how do you find a good realtor? One click on Google and you’ll find several hundred thousand of them, but my advice: ask around. Who did your friend use? Who did your parents use? I have several outstanding realtors I can refer you to as well. On that note (and we’ll talk more about working with your realtor in future articles), I recommend you meet with two or three realtors before deciding on one. Just because the realtor is your aunt’s best friend does not necessarily mean that the two of you will hit it off. You and your realtor have to be on the same page. You have to be able to communicate with him or her easily, and you have to be confident that your realtor has a crystal clear idea of exactly what you want and what you are willing to spend for it.

Negotiate a Sales Contract

So you’ve found a place, you love it, you can’t wait to move in. Now it’s time to put all that aside and negotiate with the seller. As mentioned earlier, your realtor will help you tremendously here. You will be settling on issues such as sales price, who’s paying for closing costs and tax escrows, and what furniture is staying. We will discuss this topic in more detail in future articles.

Once you have a signed sales contract, it is time to bring in your real estate attorney to ensure that the closing process goes smoothly. It is also time for your mortgage consultant to re-enter the fray and secure that mortgage you were pre-approved for not too long ago.

Have the Property Inspected

This step is pretty straightforward, but is critical. In general, you will have five days from the signing of the sales contract to have the property inspected, so it is imperative that you handle this task immediately. If a major defect is uncovered, it will need to be negotiated between the two of you and your realtors. Hopefully, everything will go smoothly and at the end, the inspector will give you an extensive report and a “punch list,” which will itemize any minor repairs that need to be addressed, either by you or the seller.

Closing

Head to the title company and sign lots of papers. Ok, it’s more complicated than that, but the point is that at this stage, it’s up to your attorney, realtor and mortgage consultant to make sure everything is as it should be. You will need to bring along a photo ID and a certified check or money order for your down payment and closing costs (if there are any, but that’s a topic for a future article in this series). The seller hands you the keys, you shake hands and move into your new home.

There you have it! I hope you enjoyed this brief overview of the adventure that is buying a home. Next month, we’ll dig a bit deeper into some of the above topics. In the meantime, if you have any questions, even if you already are a homeowner, feel free to call or e-mail me anytime. I am also happy to recommend an outstanding realtor, inspector, and/or real estate attorney to you. As always, please send me any comments or suggestions about this article, and let me know if there are topics you would like to see discussed.

Mike McNamara has been a working actor in Chicago for the past six years, in theatre, commercials, television and film. Mike is also a mortgage consultant and loan originator with West America Mortgage Company. He can be reached anytime at 773/398-0021 or McNamara310@aol.com. Special thanks to Jim Morley, assistant vice-president of West America Mortgage Company (and Chicago theatre actor) for contributing to this article.

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