Buying a house is the American dream. Some people want to own a home to live in. Others buy to rent as an investment. Regardless of your reason, learning how to buy a house can make the process a great experience.
The first step in buying a house is understanding home financing in Idaho. You need to know what you can afford. Shopping for homes before you know how much you can spend may be fun at first, but often leads to disappointment. Untold numbers of home-seekers have found the perfect home only to find it is out of their price range. You can avoid this problem by talking to a mortgage lender.
Mortgage lenders help people like you determine what they can spend on a home. They collect your financial information, analyze it, and determine what you can spend. Finding a good loan officer is important. Experienced lenders know about first-time home-buyer programs and down payment assistance programs. They can also sort through hundreds of loan products to find the one that is right for you. This is not an easy task. Many home buyers try to do this on their own. Some are lucky, but most people wind up spending more than they should. Your loan officer will become your best friend during the process. If you don't know who to call consider talking to your real estate agent first. We have strong relationships with some of the best lenders in Idaho Falls, Rigby, and Rexburg.
Experienced real estate agents know how to buy a house. It is what they do everyday. A good Realtor knows the market, how to negotiate price, and how to manage contracts. Once you have an accepted offer, they will manage hundreds of tasks that will get you to the closing table. They are with you from beginning to end.
Your agent helps you sort through all available homes, set up showings, and write up offers. When you have an accepted offer, they will order your title work and schedule a home inspection. They work with title officers and the home inspector to protect you. Finally, your agent will sit with you at closing to make sure everything goes as planned. After closing, your agent will stay in contact with title. They will confirm that title to your home gets recorded with the county. Once recorded, the agent will give you the keys and you will be able to take possession.
Thee are many tasks to perform during a transaction. Many of the tasks come with financial repercussions if they are not completed. An experienced agent can reduce your exposure to risk.
In East Idaho, most of the companies that perform Escrow services also provide Title work. This can cause some confusion.
Escrow companies are a third party. They have no financial interest in the transaction other than their fees. The buyer and seller submit documents and funds to escrow. These are then held in trust. Once submitted, the escrow company controls them. Only the escrow company can release them. When you submit your earnest money, that money goes into the trust account. If you write a check for 20 percent of the sale, that money goes into the trust. When your mortgage lender funds your loan, the money goes into the trust account.
Title Companies research the chain of ownership of a property and issue insurance. Title officers look for all recorded documents related to a property. These documents include things like legal description, encumbrances, past owners, and mechanics liens. The title company has a goal. They want know with a high degree of certainty that title to a property is "clean". They want to make sure nobody is going to come after a sale and claim that they have an interest in the property.
If a title officer finds something wrong, they referre to it as a "cloud on title". They will not issue their insurance policy until all clouds on title get resolved. It is in their best interest to make sure title is clean. If someone makes a valid claim after the sale, the policy must pay the claim. This can be a costly mistake for the insurance company.
Home owners insurance protects your home against injury to others and damages. For example, homeowners insurance will pay to fix the damage done by a broken water heater. It will not pay for a new water heater. Home owners insurance will protect you against lawsuits for injury on your stairs.
If you buy a house and have a loan on it, the mortgage company requires that you have home owners insurance. They do this because they want to protect their financial interest in the property. If you do not have a loan on your home, you do not have to buy a home owners policy to close on the house. The risk you take is your own financial interest in the property.
The bottom line is you must have home owners insurance to buy a house if there is a loan on it.
Buying a home can be a fun experience. It is empowering when you walk through the door of your home and know that you are the owner. There are many more details related to buying a house, but you should have a good picture of the basic process now. The right people can help you make it happen while protecting your financial status.