2. Obtain Financial Pre-Approval

One of the biggest mistakes a home buyer can make is not getting pre-qualified or pre-approved for a loan. A pre-qualified loan means a lender takes information from you and has run an infile credit report. Based on your information and the credit report, they can issue you a pre-qualification letter. A pre-approved loan is one in which you and the lender have gone through all of the documentation, and a full credit report is ordered. You benefit by having your loan pre-approved in several ways:

• You eliminate any surprises about your ability to borrow by providing the lender with the information up front. If there are questions about income, credit, or down payment, you can address them and resolve them without the last minute panic that can occur if you have not been pre-approved. Many times, credit reports are showing wrong information.
  
  
• You are negotiating with the seller from a much stronger position. It shows the seller that you not only can afford the home, but also there will be no surprises in your loan process later. This can also be helpful if you find yourself in a situation where there are multiple buyers bidding on the same property. The seller will be most apt to pick the buyer who has confirmation that the loan will go through. One of the seller's biggest concerns is that a buyer will not qualify for the loan to buy their home and it will create the necessity to re-market the home and disrupt the plans the seller has made. Since this is one of the main reasons real estate transactions fall through, the sellers concerns are warranted.

Pre-Qualification can be done by phone, e-mail, or fax, and there is no obligation or cost to you.

3. Select and View Properties

Once you have obtained pre-approval and have determined your affordable price range, you can begin to select and view available homes and new construction models. Having a set of guidelines based on requirement is essential to making decisions based on facts and not just emotions.

It is recommended that you keep notes and photos of houses you have seen. If you write down the unique features, as well as the pros and cons of each home you are considering, you will not have to rely strictly on memory.

Some important questions to ask when viewing a home include:

• how long the property has been for sale
• whether or not the price of the property has been reduced during the listing period
• whether there have been other offers to purchase

The answers to these questions help determine how motivated the seller is and give you added leverage in negotiations, should you decide to make an offer.

4. Offer to Purchase

When you have identified a home that meets your needs, it is time to make an offer and negotiate. Your rights and obligations will be detailed in the Contract to Purchase Agreement.

In addition to the offer, you will need to put up an earnest money deposit as a sign of Good Faith that you are seriously interested in buying the home. That deposit becomes a part of the purchase price and will be held in a trust account and credited back to you at closing toward your closing costs or down payment. The amount of earnest money varies. However, it is normally 1 - 2% of the sales price of the home.

Your offer will then be presented to the seller with your pre-approval letter attached to ensure the seller you are a qualified buyer. The seller will either accept, reject, or counter the Contract to Purchase. Once a contract or counterproposal has been agreed upon, you will proceed with the property inspection and secure your mortgage as well. If your offer was rejected, or you were unable to come to a final agreement, your earnest money check will be returned to you.

5. Inspect the Property

The Contract to Purchase will have a written provision that your contract is to be contingent upon a satisfactory home inspection report. The seller is required to provide you with a Property Disclosure, which states what is included, what is not included, what is working, and what is not working in the home.

The Contract to Purchase will include an objection date by which this must be done. Any items that you may request the seller to repair or replace must be submitted in writing. The seller has a resolution deadline to respond to your request. At that time, if you and the seller do not agree on the inspection objections, you have the right to terminate the Contract to Purchase.

6. Title Insurance and Approval

It is the seller's responsibility to provide you with Title Insurance. The title search is done by a Title Company, and a title commitment will be provided to you before the title deadline in the Contract to Purchase. If there are any judgments, liens, or recorded easements, they will show up on the title commitment. It is the seller's responsibility to take care of any problems with the title company and assure you clear title.

Your lender will assign an appraiser to go out and appraise the property. The cost of the appraisal will either be paid by you up front when you apply for your pre-approval, or at closing. The property must appraise for the purchase price or above. If it does not, you have a few of choices.

1. terminate the Contract to Purchase
2. ask the seller to adjust the sales price
3. pay the difference in cash and continue with the contract.

9. Closing

The Closing is the process by which the title to your new home will be transferred to you, homeowners' insurance will be verified, the terms of the mortgage will be finalized, and the keys to the new house will be given to you. In the state of Tennessee, the property belongs to the buyer as of the day of closing and Delivery of the Deed. Unless otherwise stated in the Contract to Purchase, the seller must be completely out of the property by the time and date of the closing.