A guide to help you navigate the waters through the Rhode Island Home Buying Process.
Buying a home can be one of the most exciting experiences of your life. This can be true whether you’ve purchased several homes or you’re preparing to buy for the first time. With the right support system and the help of a trusted RE/MAX® professional, you can make the most informed decisions.
My guide breaks down the steps of buying a home so you can start the process feeling confident and prepared. From developing your budget to signing your name on the dotted line, you’ll find helpful tips right here. Plus, I am here to help every step of the way.
Define Your Goals
Before you start looking, consider why you want to buy a home. Are you tired of renting? Do you want to buy an investment property? Figuring out why you want to purchase a home will help you make important decisions down the road. Considering what you want and need out of your home will help you narrow down your home search as well. What neighborhood do you want to live in? How many bedrooms do you need? Knowing your preferences can help with filtering out homes that don’t fit your criteria.
Pick a RE/MAX Agent
Buying a home is one of the biggest investments you may ever make. Whether you’re buying your first home, relocating or just moving down the street — you want a trusted professional by your side. Working with a qualified RE/MAX agent can make this process easier, helping guide you through the home search, purchase agreements, inspections, closing matters and more. Having an agent who has your best interests at heart can ease some of your stress and can help make it go as smoothly as possible.
Determine Your Financial Standing
Knowing your budget up front helps you focus your search and can save you both time and stress. Talking to a mortgage professional can help you to determine your buying power. They can help you to find out how much you can afford, how much you should put towards a down payment, and can walk you through loan options and other costs or fees associated with purchasing a home. Consider asking your agent for a referral; they understand your needs and can help find a professional for your situation.
Make an Offer
Once you find a home you’re interested in, your agent can help negotiate a fair offer based on comparable homes in the area. If your offer is accepted, you’ll make a down payment and be officially under contract. During the due-diligence period between signing the purchase agreement and closing on your home, your agent can help you understand the conditions, provisions, and obligations of your contract. They can also help guide you through the appraisal and inspection processes.
Close on Your Home
This is the final step of your home buying journey. Closing is the official transfer of ownership from the seller to the buyer. At closing, you will sign your mortgage paperwork to solidify your purchase. From there, you officially become a homeowner and will be handed the keys to your new home so you can begin making memories.
A Step by Step Guide to Rhode Island Home Buying
Below is a step by step guide to help you through the home buying process unique to Rhode Island.
- Mortgage Pre-approval: Get pre-approved by a reputable mortgage lender. This is a free, no obligation process which gives you “buying power”. When we’re ready to make an offer on a property, a pre-approval letter from a mortgage lender is crucial. A seller will want to know that you can obtain a mortgage. Therefore, it is important to start this process first, even before looking at properties. You will know beforehand exactly what you're qualified to buy, what issues might need to be addressed, what items will be needed when applying for the loan, etc. Your Realtor can provide you with recommended mortgage lenders.
- Choose a Realtor: Choose a Realtor with whom you feel comfortable. Your Realtor can show you all the homes listed in the Multiple Listing Service (MLS). A Realtor will prioritize your needs when you exclusively work with her. Your Realtor should be able to send you automatic e-mail market updates so that you can also stay on top of and become familiar with the market. These updates can be scheduled to be sent as soon as a property hits the market so that you’ll know a property is available before buyers searching on Zillow!
- Property Search: Investigate homes in your price range. Rhode Island is unique in that appointments are scheduled with the listing agent and the listing agent is often present to show the property. This can be valuable because they have a lot of information on the home; however, it involves coordinating schedules. Lockboxes are used, but not often.
- Make an Offer: Well, you’ve found the right house (or close to it…sometimes compromises have to be made) and are ready to make the offer. This is often the most anxiety provoking step in the process; however, it needn’t be because we’ve done our homework. The first thing we do is to check the comparable home sales in the neighborhood to see if the house is priced fairly and to see how it compares to other similar properties that have sold. This CMA (comparable market analysis) tells us the price range of properties sold in the area and what the average time on the market for them has been. In many cases, there will not be enough comparable properties that have sold. I will find out the length of time this property has been on the market, if there have been any price reductions, if it’s a foreclosure or a short sale, and what the sellers’ motivation is. Unlike other areas of the country where subdivisions and masterplanned communities are prominent, many neighborhoods in Rhode Island are an eclectic mix of various types of housing. Homes in a particular neighborhood may vary in size, style, garage or no garage, driveway or no driveway, lot size, etc. This can make appraising a property difficult. When you are comfortable with what you are offering, we begin to fill in the blanks on the Rhode Island Association of REALTORS®–standard form Purchase and Sales Agreement. This form was developed by the attorneys on staff for the Rhode Island Association of REALTORS® and is revised from time to time as new laws are developed. This form is designed to be as fair as possible to both buyer and seller.
- Negotiation: Your Realtor will try to negotiate a meeting of the minds between you and the seller. Once all parties have come to an agreement on terms, a final purchase and sales agreement is completed and the initial escrow deposit is usually increased to 5% of the total purchase price. This is negotiable; however, and can be more or less depending on the terms outlined in the initial offer.
- From Contract to Close: At this time, after the purchase and sales agreement is accepted and signed by the Seller, you should apply for your mortgage and schedule a home inspection. I will provide names and numbers of competent inspectors. We have 10 business days in which to conduct a Home Inspection, negotiate repairs and/or credits and decide to proceed with the sale. We both attend because you will learn much about the mechanics of the home. Should you be out of the area, I will attend. You will have a report listing every detail of the home. If there is a septic system, you may want to have an open pit inspection to make sure it is functioning properly. The home inspection fee usually starts at $400. The open pit septic test usually runs around $200-300. Radon has been found in some homes in Rhode Island. A test for radon usually runs around $150. A house with a well should also have a water quality and flow test conducted. Pools and chimneys can be additional inspections. Since many homes in Rhode Island were built prior to 1977, they often contain lead paint. I will provide you with a pamphlet, “Protecting Your Family from Lead in Your Home” to help you decide if you’d like to test for lead. A lead paint test usually runs around $200-300.
- I've Reviewed my Home Inspection, Now What?: After the home inspection, you will then decide if you want to go forward with the purchase. If there are problems with the home, you may want these problems remedied, or you may want to negotiate a credit or price adjustment. If the owner is not willing to remedy the deficient conditions, you can still go forward with the home purchase, or you can look for another home to buy. The only money you will be out of if you don’t go forward is the money for the home inspections.
- Mortgage Process: This is also the time to be in touch with the lender to provide whatever is necessary for the final loan documents. It is very important to return documents to your lender As Soon As Possible. New government regulations have slowed down the mortgage approval process and any delay can result in a delayed closing. With regards to the new Truth in Lending/RESPA Integrated Disclosure (TRID) regulations, mortgage professionals have educated us to:
Remember the mortgage industry is highly regulatedThe mortgage company will order an appraisal of your home. Your attorney will order a title search to make sure there are no liens on the property. The underwriting process of your mortgage will begin. Most of this is done unbeknowest to you unless additional information is needed.
Be responsive to your lender’s requirements–the mortgage process is an assembly line–the file will not move to the next stage until all information is provided, even a simple document
Respond immediately to lender’s requests
Closing Dates should be at least 45 days out
Disclose everything to your mortgage broker
No new credit or increase in credit card balances at this time
No late payments
No job changes
No large deposits into bank accounts or deposits that cannot be documented
Pay attention to where the escrow deposit comes from-do not accept a third party check, and if it’s a cashier’s check make sure the source of funds can be verified
Any seller concessions must be a credit towards closing costs (no seller credit for repairs)
Notify lender if there will be a power of attorney or property held in trust
Notify lender of the condition of the house (peeling paint, rotted sills, moisture, roof, safety hazards)
Avoid closing on a Friday, last day of the month or Tuesday coming off a holiday weekend
- Homeowner's Insurance: Arrange for homeowner’s insurance. It is better to do this earlier rather than later. While purchasers used to be able to wait until the day before a closing to arrange for insurance, this is no longer the case. Some insurance companies will not insure on Aquidneck Island! The binder for your policy will need to be faxed to your lender and/or your attorney. The sooner the better!!
- All the Little Details: You will want to arrange for the utilities to be turned on once the seller has made arrangements for them to be turned off. This is usually done in the last week before the closing. Make sure all magazines, bills, family and friends have your new address as well. Anything related to school registration should also be done well in advance and can be done as soon as a Purchase and Sale Agreement has been executed.
- Closing Date: A date for the closing will be identified at the time the purchase and sale agreement is negotiated. This date will be targeted by the mortgage company and the attorney closing the loan. The closing typically takes place in the closing attorney's office. Arrangements can be made if you are not able to be present for the closing. The closing is usually 30-45 days from the time the purchase and sale agreement is signed.
- Final Walk Through: Immediately before the closing, we will arrange a “walk-through” of the property to make sure everything in the home is in tact and emptied and that any requested repairs have been completed.
- Closing!: The closing will almost always take place at the closing attorney’s office. Buyer and seller close at the attorney’s office together and keys are exchanged at the closing. If a Buyer is out of state or out of the country, a Power of Attorney must be present to sign the documents for the buyer. The attorney will then record the new deed at the town hall. Once on record, the transfer of property is official. The recordation may be that afternoon or the next morning. Buyers, Sellers, their agents and the lender will be given a settlement sheet showing the closing costs beforehand (federal regulations require this be provided to the buyer 3 days before a closing can occur), so there are no surprises, and the buyer will know exactly how much his cashier’s check or wire transfer should be for. Please take extreme caution when wiring funds, and be sure to speak directly to closing attorney's office for instructions. Your loan officer will have gone over the final closing costs involved with the closing, as well, prior to the closing. Other closing costs will consist of the attorney’s fee, recording of the deed, pre-paid interest (since mortgage payments are due on the first day of the month and properties can close any day of the month, the interest will be pro-rated and paid at this time), homeowners insurance and tax payment to the escrow account, a survey deletion fee (surveys are generally not conducted in RI), title insurance and tax, water and fuel pro-rations to the seller. At the closing, you will sign the deed, mortgage, promissory note and other loan documents. Make sure you bring a picture I.D., blank checks, and the certified funds that your attorney has instructed you to bring.
- Congratulations on your new home!!
Please recommend your Realtor to all your family and friends!!! Thank you.