Buying a home in Albany can feel like an intimidating process. People often aren’t sure where to start, who they should contact, and what the first steps are to proceed. Purchasing a home is arguably one of the most significant commitments that anyone will make, so it’s imperative to do it right so that you’re pleased with the outcome.
There is a general process that you can follow, which will make the entire transaction much smoother, more pleasant, and more likely to end up with a home that you will love for years. From the date you first start looking for housing to the time you move in, the transaction can take at least a month or two to finalize. Therefore, the smoother and less stressful you can make it, the better off you will be, and the more likely you’ll land a home that you will love.
If you have never purchased a home before or if you’re looking to move to the area, here are the ten steps that you should follow to ensure you land the home of your dreams!
Before Buying A Home In Albany, Seek Pre-Approval
The first step in the process is to get a pre-approval letter from a financial institution. Pre-approvals are evidence that the bank would be willing to lend you a certain sum of money for a mortgage, assuming that the conditions that you applied with still hold.
The concept of a pre-approval is more natural to explain via an example. Let’s suppose you’re looking at buying a home in Albany, so you contact your bank (let’s call them, Bank A) to see if they would do a pre-approval letter for you. Their application form will ask you for your income, the type of home at which you’re looking (condo, detached house, etc.), and they’ll ask you to list all your expenses. The bank will then run your credit to check your credit score.
If they approve your application, they will issue you a letter with three critical components on it. First, it will have the amount of money for which they would be willing to give you a mortgage (this is your budget when searching for a home). Second, it will lock in your interest rate for some duration – typically for 90 days – so you have time to find the perfect home. Third, it will usually include some legalese that says that once you find the right home, they will do a more thorough verification of your income and expenses before giving you the mortgage.
Therefore, the pre-approval is effectively a promise that, if you were truthful on the application, the bank would lend you up to that amount of money at the interest rate you locked in.
Do Not Put Excessive Purchases On The Credit Cards
Since the bank agreed to lend you a specific amount of money with the expenses you have, the next “step” is to try and keep your costs reasonably static. A large purchase (like buying a car) could render the pre-approval letter void because it would completely throw off the bank’s calculations.
Paying down debt is okay, but adding to your debt could mean that the bank won’t issue you a mortgage when you need it!
Contact A Real Estate Agent To Tell Them You Want To Buy A Home In Albany
The next step in the process is to get in touch with a real estate agent. Ideally, you would have some criteria in mind of what you want in your new home. For example, you might have a young family, so you want a place with good schools. Or you might be a young, single, professional that wants quality nightlife nearby.
Give your real estate agent your pre-approval letter (or, if you haven’t done a pre-approval, your agent can usually suggest financial institutions that they partner with that can get this letter for you). This way, your agent will be able to find homes within your price range.
If you want to start looking at properties online in addition to having your agent search for you, then now is the time to do that. Look for available properties, though. Ones that are pending are probably not ones that you will be able to get – this state means that someone else has already put in an offer for the house!
Ideally, after a few days, you and your agent should have a list of properties that are within your budget and are ones that you think you would want!
Look At Some Houses!
This step is the fun one! Here, you and your agent are going to look at the available properties. Some homes will have open houses, while others will have the key in a lockbox, and your agent will be able to open the box with a code. Either way, you’re going to be seeing a lot of houses.
According to the National Association of Realtors, the average person looking at buying a home in Albany looks at ten homes before making an offer. You may not need that many, but you should look at a few first to get a feel for what you do and don’t want in a place. Especially if you’re a first-time homebuyer, then you need to see a few properties to ensure that you are making an offer on the right one.
Most of the time, you’ll look at open houses on weekends, although some people like to check properties after work as well. How many homes you see and how fast you see them all depends on how quickly you need to move into your new place.
Put In An Offer To Buy A Home In Albany
When you see a home that your family likes, and you can envision everyone being happy there, the next step is to put in an offer to buy a home in Albany. To do this, you need to tell your real estate agent that you want to make an offer. They’ll walk you through the process, but, for the most part, it involves signing some forms.
You’ll also need an earnest money deposit. Sellers see this money as evidence that you will act in good faith throughout the transaction. The amount is typically 1-10% of the sales price, although it’s entirely up to you how much you want to put down.
The offer you put in will have multiple contingencies, which are reasons you can legally break the contract. If the deal falls through because it failed one of these contingencies, you will get your earnest money back. If you break the contract for any other reason, you will lose those funds.
Usually, there are three contingencies put into an offer:
- It must appraise for at least the offer amount. The bank will only lend up to the amount an appraiser estimates the home is worth, so if the appraisal is lower than what you offered, this avoids you being on the hook for buying the house or condo at an inflated value.
- It must pass the home inspection. If inspectors find any flaws with the property, this contingency lets you back out of the deal, penalty-free.
- You must be able to secure financing (assuming you’re not paying cash). If for whatever reason, you’re unable to obtain a loan after trying in good faith to get one, then you can break the contract.
The contingencies are in place to protect you, the buyer. They prevent you from having to lose money going through with a bad deal. As the deal progresses, you will waive each contingency to let the contract go through.
Notify The Bank And Get An Appraisal
Assuming the buyer accepts your offer (congratulations!), you will need to notify the bank that you are under contract. At this point, you will be doing much of the communicating back and forth with your bank, and your agent will take more of an observer role, ensuring the process goes through and providing guidance as necessary.
Now that you’re formally applying for a mortgage (and not just a pre-approval like before), the bank will order an appraisal. You don’t have to do anything in this step. A licensed appraiser will go out to your property, take some photos, and look at comparable ones in the neighborhood. Using those other homes, the appraiser will estimate how much the home is worth.
If the home appraises for at least what you offered, everything is perfect! That will waive the contingency. If, however, the home appraises for less, then you have two options. You can back out of the deal entirely and request your earnest money back. Alternatively, you can make up the difference with the bank. For example, if you put in an offer for $200k and the bank valued the property at $180k, you could put the extra $20,000 as down payment and let the loan go through.
Order A Home Inspection
The next contingency for buying a home in Albany is the home inspection. Typically, you will be responsible for paying for this, and you’ll be able to choose any licensed company you want.
A home inspector will come out and do a thorough inspection of the property. They’ll make a note of every single problem that they can find, where the water is, where the electricity comes in, and so on. At the end of the inspection, they’ll prepare a report for you detailing everything that they found.
Assuming this report isn’t perfect (and they invariably always find some problems), you have three options. You can back out of the deal entirely. You can ask for a credit to offset some of the repairs. For example, you might ask the seller to take $5,000 of the sale price because the fireplace doesn’t work, and you’ll have to repair that. The buyer doesn’t have to accept your offer, however. Or, you can proceed with the deal as you initially negotiated.
Of course, your agent will be able to see the report and recommend a course of action. Often, it’s an excellent opportunity to ask for a little credit off of the selling price!
Finalize The Loan
Assuming the home appraises and you’re satisfied with the inspection, you’ll be working to finalize the loan. This process involves working with a loan officer at your financial institution. They will request documentation from you like your W-2s, your income, and where you’re getting your down payment.
Although there’s a lot of paperwork involved, the process itself tends to be relatively straightforward.
Once the bank has finalized the loan, you’ll have to attend the closing. This process takes about an hour and involves you signing all the documents agreeing to the mortgage in person. After this, you will legally have the loan and will have the financial obligation to pay it back.
Wire The Rest Of The Down Payment Money
You’ll have wire instructions that will tell you how to put the rest of the down payment money into escrow. This money will have to arrive into the account a day or so before the contract closes.
You’ve Completed Everything Needed To Buy A Home In Albany
After you wire the rest of the down payment money, everything is in place! You have the mortgage, and the home has appraised. You’re happy with its condition as per the home inspection. All the money is in escrow.
All the pieces are in place for the deal to go through. The contract will go to the county for recording. Once the county records the agreement, the property is yours, and you can move in at any time! Your real estate agent will meet you with the keys and hand them to you.
Congratulations, you’re now a homeowner!
If you’re looking at buying a home in Albany, let me know. I will be happy to work with you to find the perfect property! I have worked with many satisfied clients to find them their dream homes. Whether you have a family and want a home with fantastic schools or you’re a young professional who wants a condo, I’ll be happy to find you the perfect property!