Because your credit rating will affect how much money you can borrow, it is a good idea to get a copy of your credit report so that there will be no surprises when you apply for a loan.  A credit report shows your debts and your repayment history.  It is therefore believed to be a strong indicator of whether or not you are likely to repay your home mortgage in a timely manner.  You'll want to check if there are any errors on your report so you have time to resolve them before you apply for a mortgage.  There are three companies that provide credit reports, Equifax, Experian, and Trans Union.  Each one is independent from the others, and may provide different information on you.  They are all required by law to provide you with a free copy of your credit report once every 12 months so that you can check it for accuracy.  These companies have established a centralized website through which you can obtain these free reports, see AnnualCreditReport.com.

Additional Costs

When you have an idea of what a lender believes you can borrow, you'll still want to look at your budget yourself and decide what you think you can afford.  Mortgage calculators are available that will tell you what the monthly payment of a loan would be for a certain purchase price at a certain interest rate.  In addition to this, your monthly payment will normally also include 1/12 of your projected property taxes and 1/12 of the cost of your homeowner's insurance.  You will pay this extra amount each month as part of your mortgage payment, and it will be held in an escrow account by your lender so that they will be assured that your real estate taxes and house insurance will be paid on time every year.

You'll also want to consider if you have enough money for a downpayment, although there are certainly loan programs that don't require one.  You'll also need money for closing costs, which are the fees that are paid to the bank, title company, and government for mortgage fees and for the paperwork needed for a legal transfer of a property into your name.  You can estimate that your closing costs will be approximately 3% of the purchase price of the property.  Once you have an accepted offer, you'll also need to pay earnest money of about $1000 (see below).  And don't forget to consider any moving expenses and repairs you might want or need to make to the property after you move in.  Take this all into consideration when deciding how much of a monthly mortgage payment you are comfortable with.  Your lender and/or your realtor can also help you figure out what all these additional costs are likely to be.

Types of Loans

     WHEDA- A Wisconsin program for first time homeowners.

     USDA Rural Development Loans- Financing available for houses that meet certain criteria.

     VA Home Loans- Financing that is available to veterans.

Some buyers work with several realtors at once while they are searching for homes, but you might want to consider whether this is a good idea.  Realtors are usually paid by the Seller via a predetermined percentage of the selling price when a property closes.  They therefore provide all their services free of charge to the buyer, with the expectation that they will receive payment if and not until their buyer buys a home.  A single agent can often have as many as a hundred buyers for whom they are searching for properties, many of whom may also be working with other agents.  So before you decide if you want to work with multiple agents, consider who would work most diligently in finding a suitable property for you among the dozens of prospects with whom they are working.  Agents will be loyal to those buyers who are loyal to them, who are working with them exclusively, and who are serious about buying a property in the near future.  This is, after all, how agents earn their living.

To choose a realtor, ask friends and family for referrals to those whom they have worked well with in the past. Most realtors also now have their own websites, and you can take a look at them to get a feel for how the realtor works.  You can also attend open houses to meet some of the realtors in your area. 

Once you've found a realtor you'd like to work with, it is important to remain in contact with them about your property search, and let them know whether they are sending you listings that appeal to you.  If your agent hasn't heard from you in months, she may assume that you have decided not to buy or have bought a property through another agent, and she will stop searching for listings for you.

It is also important to understand that if you want to work with your chosen agent while making an offer, that that agent needs to be the person who provides you with information about the property and who takes you to see it. If you go on a showing with another agent, or if you request and receive detailed information from an agent about a property, you are considered that agent's client and you would need to make any offer on that property with that agent.  Other realtors, including any that you are already working with, are bound to abide by this rule.  So if you see a property you're interested in online or in the paper, just ask your agent about it.  She will be able to research the property and give you all its details.

You can do your own searching on public MLS sites, but the information available on them is limited.  Agents can access the MLS and see all the details about a property.  If you have a good working relationship with your agent, she should be sending you all the listings you need.  If you aren't getting the listings you want, you should discuss this with your agent so your search can be appropriately modified. 

The main criteria that are usually used to set up a property search include price range and location.  Hopefully, you have spoken with a lender (see above), and know what price range you are able to afford.  You can search up to a maximum amount.  If you are buying very high end property, you also might want to put in a minimum price so that you don't get listings that will not have as many amenities as you want.

Each county is also divided into townships, which can be useful in searching for rural homes or vacant land.  Properties that do not fall under the jurisdiction of a city or village are in townships.  A property's MLS listing will indicate which jurisdiction it is in.  A township is, theoretically, a division of land that is six miles square and divided into 36 square sections.  As an example, click to see a Dane County map that shows its township divisions.  Vacant land listings will show the property's township and section number, thus making it much more easily located in a Plat Book.  These books are the official maps of a county's townships and who owns which property within them.  If you are searching for vacant land to buy, you may want to invest in the purchase of your own plat book (click and see the County Land Parcel section for more information).  If not, your Realtor should have copies of plat books available to her.  Note also that the term township is often used interchangeably with town.

Other search criteria you may want to use include a minimum and/or maximum square footage, a minimum number of bedrooms or bathrooms, the size of the lot the house sits on or the acreage of vacant land, the age of the house (some people only want new construction others like older homes), the style of the house (some people like two stories, others want a ranch with a walk out basement, others want Victorian houses), or whether it has a fireplace or a pool. 

Youll need to strike a balance in the search you ask your realtor to run for you.  You don't want to be so specific that you limit your options, but you need to be specific enough that you aren't overwhelmed with too many choices.  Discuss what criteria you are interested in with your Realtor and indicate which criteria are the most important.  Work with your agent until your search is refined and you are getting the listings you want.

If you'd like to request that I set up a property search for you, see my Property Finder Form to let me know what search criteria you're interested in.  If you are still deciding on which communities you'd like to search, see my Community Information pages for details about what is in the area.
 

Showings

Your Realtor will arrange to show you any properties you'd like to see.  Try to be considerate of the Sellers and make your appointments at least a day in advance so that they have time to prepare.  Sellers with pets or small children may need to make arrangements for them to be elsewhere during the showing.  Normally, the Sellers will vacate the house so that you and your agent will feel more comfortable viewing it and can discuss it freely during the showing. 

The MLS data sheet that your agent can provide will give you most of the details you need about the property you're viewing.   There will usually also be a Real Estate Condition Report filled out by the seller indicating any defects in the property of which they are aware.  Through online sources, your agent can also often provide aerial views or other maps of the property. 

If you are visiting a lot of properties, you might want to use the MLS data sheets to keep written notes about what you like and dislike about each one.  It is also permissible to take photos or videos of the properties during the showing to help you remember what features went with which house.  You can also do a second showing on any house on which you are thinking of making on offer, so you can check it over once more before making your final decision.

- Purchase Price:  You can offer less than the asking price on a property if you think it is worth less, or you can offer more if you think it may be getting several good offers at once and you feel you need to be competitive.  If you want, your agent can provide you with a comparative market analysis that will give you an idea of what the current market value of the home is.  If it is a house you really want, then make your best offer.  You probably won't know if there are competing offers coming in at the same time as yours and you wouldn't want to lose your dream home for a few thousand dollars.

- Earnest Money:  Earnest money is money you pay to the seller within a few days of having an accepted offer in order to show that you are serious about purchasing the property.  It is given to the listing agent who holds the money in a trust account until the closing.  At that time, it is put toward the amount you owe on the house.  Should the offer fall through because you or the seller are not able to fulfill one of the offer contingencies (such as you weren't able to get a loan), the earnest money is returned to you.  If you back out of the offer for any reason not specified in the offer, however, you forfeit the earnest money and the seller keeps it.  The amount of earnest money you offer varies.  The average is $1000, but some people offer more or less.  Ask your agent for advice.  
 

- Items included:  This will specify all the items that are included in the sale.  Anything that is considered affixed to the house is automatically included, so consult with your realtor about what is considered affixed if you have any questions.  Other items can be included with the sale of the property if the Seller wants to offer them.  For example, many Sellers will include kitchen appliances because it is easier to leave them behind than move them.  The MLS data sheet on the property will indicate which items the Seller wants to include with the sale.  Note, however, that these items must be relisted in the offer in order to definitely be included.  If you don't want something that the seller is willing to leave behind, you can also indicate in the offer that you want to exclude items from the sale (maybe you have your own kitchen appliances that you want to use).  You also have the option of requesting that additional items be included beyond those that the Seller has already included.

- Date of closing:  You'll need to decide when you want to close on the property.  Typically, the closing date will be about two months in the future, so that you  have enough time to get your loan processed, which takes an average of 30 days.  You will walk away from the closing meeting with the keys to your new house in hand, so can move in anytime after that.  This closing date may need to be negotiated between the buyer's and seller's needs, as the seller may also have a certain date before which they cannot move into their new home.  Your realtor can handle this negotiation for you.  Note that most closings are scheduled on or near the last day of the month, as that saves money for the buyer.

- Financing Contingency:  This will outline the details of the mortgage you expect to get.  It will include a time by which you need to produce a loan commitment from your lender, which is usually within 30 days of the offer acceptance.  The loan commitment is a confirmation from the bank that they have verified all your information, checked your credit rating, processed all your paperwork, and will provide you with a mortgage.  The offer will also specify the type of loan you want, whether it be a conventional loan or one obtained through a specialized program, such as WHEDA or the VA (see above).  The financing contingency also specifies the maximum interest rate you are willing to pay, and whether you want a fixed or adjustable rate mortgage.  When you actually apply for your loan, you are not limited by what you indicate in this contingency.  You are free to get any type of loan you want, but this contingency protects you should you not be able to find a loan that fits your budget.

- Inspection Contingency:  Most buyers will include an inspection contingency in their offer so that they can have the property professionally inspected for any major defects before they agree to finalize the purchase. See below for more information on inspections.

- Real Estate Condition Report:  Properties that are not being sold "As-Is" will include a Real Estate Condition Report (RCR) that is filled out by the seller.  It indicates any known problems with the house of which the seller is aware.  Buyers sign the RCR indicating they have read it and it becomes a part of the offer.  Usually, if a seller discloses a major defect with the property, they have taken that into consideration in the listing price, and they will not be willing to negotiate further about lowering the purchase price or having the defect repaired after your offer is accepted.  Therefore, you should take these defects into consideration in your offering price.  Major defects that are previously unknown and are uncovered in the inspection, however, are negotiable (see below).

- Addendum S: Properties built before 1978 should also include an Addendum S.  In 1978 the use of lead based paint was banned because it is known to cause health problems.  In the Addendum S, the seller indicates if they have any knowledge of lead based paint in the home and the buyer indicates whether they want to have a lead based paint inspection.  The Addendum then becomes part of the offer.

When you start working with your realtor, you might want to ask her for a copy of a blank offer, so that you have time to read all the fine print before you actually sit down to write an offer.  Ask your agent to explain anything that you don't understand.  You can also have your attorney look over the paperwork if you want.

Your offer will specify how long the sellers have to respond to it.  Normally they are given a couple days. They have the option of accepting your offer as is, countering the offer, or rejecting it.  If they reject it, it means they found it unacceptable and are unwilling to negotiate further.  Normally, though, if there is something the Seller doesn't like in your offer, they will counter and offer you different terms.  The may ask for a higher selling price, or for a change in the closing date, for example.  You then also have the option of accepting, rejecting, or countering their counter by a certain deadline.  Your realtor will help guide you through this process if it occurs.

Inspectors are licensed, impartial third parties who can look at the property more objectively than you can yourself.  They will inspect the whole house, including the roof, the foundation, electrical and plumbing systems, and heating and air conditioning systems.  They will test every switch and outlet, and peer into attics and crawl spaces.  If you buy a rural home that has its own well and septic system, you'll also want to have them inspected and to have the well water tested for harmful bacteria.  Inspectors are not infallible, but they will provide you with more information about the state of your house than any simple visual inspection you can do yourself.  For the average few hundred dollars that an inspection costs, it can provide a buyer with a lot of peace of mind.

You should schedule your inspection right away after the offer has been accepted.  Refer to the deadline that is established in your accepted offer.  Usually it is within seven to ten days.  Offers can fall through because of the inspection, and therefore neither you nor the sellers want to wait a long time to get the results.  Contact your realtor with the time and date of your inspection, and she will arrange it with the sellers.

It is important that you attend your inspection.  Your realtor will also normally go with you.  It will last for approximately three hours, and during this time, the inspector can teach you a lot about the house.  For example, he should be able to show you where the house's main water shut off valve is and may be able to give you maintenance tips for your mechanical systems.

Most inspectors will provide you with a very detailed, sometimes overwhelming, written report of their findings.  When you receive the report it is important to remember that it is the inspectors job to point out everything that is not working properly, and it is important to remember that all houses need some maintenance or repair work.   What you'll want to focus on is anything that the inspector indicates is a major defect, which could include items such as a bad roof, a furnace that is not working, or old, dangerous electrical wiring.  These are the items that you may want to ask the seller to fix, or you may ask for a credit to cover the cost of the needed repairs.  The seller may then agree to make the repairs or to lower the purchase price.  It is also common for the seller and the buyer to split the cost of the needed repairs.  Talk with your realtor about the inspection and how you want to proceed.  She will draw up any needed paperwork and negotiate with the listing agent about your request.  If the seller refuses to repair any major defects, you then have the option of backing out on the purchase of the home.

For additional peace of mind, you might also want to consider a Home Owners Warranty (HOW).  A HOW covers the cost of repairs needed on the home within a year of your purchase of it.  If you'd like to have a HOW, you can request that the Sellers provide it as one of the contingencies of the offer.  If they refuse, you can also purchase one yourself (for around $400).  A deductible, usually $50 or $100, will apply to each claim that you might make against the HOW.  For this reason they are not useful for minor repairs, but are very useful if any major problems occur.  Be sure and read the details of any HOW you purchase, so you understand what it does and does not cover.

Applying

You'll want to start gathering documents and information in preparation for applying for your loan.  If you're not already preapproved, you'll want to formally apply for your loan as soon as possible after you've gotten an accepted offer.  Also let your realtor know who your lender is, so they can interface as needed.

Different paperwork will be required depending on the loan you want to apply for and on your personal situation.  Here is a list of what you may need:

- names, addresses, and phone numbers of your employers for the previous two years, with dates of employment
- two most recent pay stubs
- copy of last two year's W-2s and tax returns
- your bank statements for the last two months
- account details (account numbers, balances, and monthy payments) on any outstanding long term debt (credit cards, car loan, student loans, etc.)
- assest account statements for any investments (ie., retirement plans, stocks)
- previous addresses for the past two years (and contact information for landlords if you are renting)
- information on child support or alimony payments
- a copy of your accepted offer (or your realtor can fax this to your lender) and your realtor's contact information

Right before the closing, you will probably want to do a final walk through of the property.  Your realtor will accompany you.  During the walk through, you will check to make sure that the seller has left behind the agreed upon items (such as appliances) and removed all of their other possessions.  If there were agreed upon repairs that the Seller was supposed to complete prior to closing, you will make sure that they have been done.  Finally, you will just check to see that the property is in the same state as when you made your offer on it.  If there are any problems, they can then be addressed at the closing before the final papers are signed.

Many people will usually attend your closing, including the realtors, your lender, the sellers, and the closing officer.  Everyone will be seated around a large conference table.  The closing officer is an employee of the Title Company who will walk you through all the paperwork you will need to sign.  Closings usually last about an hour, during which you (and the sellers) will repeatedly sign documents.  Everyone else is there should there be a question that arises that they can explain.  You should remember to bring a photo ID, proof of your homeowners insurance, and a certified check for any amount you owe.  Have the check made out to yourself and you can sign it over to the Title Company during the closing. 

At the end of the closing, you will receive the keys to your new home and you can move in any time you want thereafter.  It will be time to celebrate!