Owning a home is everyone’s dream. It’s a life accomplishment at the top of everyone’s list. At the same time, purchasing your dream home requires you to keep your eyes wide open and your feet firmly on the ground. That’s where we can help. We’ve put together a handy set of steps to guide you to the house of your dreams. We will be there for you as you start your journey.
GUIDE TO BUYING:
- FINANCING PRE-APPROVAL
- LOOKING FOR YOUR NEW HOME
- MAKING AN OFFER
- UNDER CONTRACT STEPS:
- TITLE REVIEW AND HOA DISCLOSURE
- LOAN APPROVAL AND FINAL WALKTHROUGH
- CLOSING DAY!!!
Before you start looking for houses, it’s a good idea to get your finances in order. In fact, getting financing pre-approval may help you obtain your dream home. Pre-approval allows you to shop for the best loan package without pressure. Once pre-approved, you’ll feel the confidence that comes with the peace of mind of having major financial issues already resolved. Once you have applied for and been approved for a loan, you are like a cash buyer. Sellers may make concessions if they know that your financing is secured. This can make your offer more competitive.
Down Payment Requirements:
Most loans today require a down payment of between 3.5% and 5.0% depending on the type and terms of the loan. If you can put 20-25% down, you may be able to eliminate mortgage insurance.
You will be required to pay fees for loan processing and other closing costs. These fees must be paid in full at the final settlement, unless you can include them in your financing. Typically, total closing costs range between 2-5% of your mortgage loan.
Qualifying for the Mortgage:
Most lenders require that your monthly payment range between 25-28% of your gross monthly income. Your mortgage payment to the lender includes the following items:
- The Principle on the Loan.......(P)
- The Interest on the Loan..........(I)
- Property Taxes........................(T)
- Homeowner’s Insurance...(I)
Your total monthly PITI and all debts (from installments to revolving charge accounts) should range between 33-38% of your gross monthly income. These key factors determine your ability to secure a home loan: Credit Report, Assets, Income and Property Value.
Here’s an important piece of advice: Don’t make big purchases during your home buying process! Try to hold off on washers and dryers, auto purchases and other big ticket items.
With your loan pre-approved you are ready to go in search of your dream home.
LOOKING FOR YOUR NEW HOME
Develop a list of your requirements. Make sure you carry it with you when you start looking. Here are some key questions to ask yourself:
WHERE YOU LIKE TO LIVE? What’s the Neighborhood like? Think about the surrounding area. Real estate values should be a key component in your initial considerations.
SIZE: What size house would you most desire? How big is the lot you would want? Do you have the right amount of space both for now and as potential for future projects? Remember, owning a house is a serious investment. You and your home need to get to know each other, grow and change with time.
WHAT ABOUT THE STYLE OF THE HOUSE? Does it contain features you’ve always wanted? How old is it? Is it a style that you can live with? How’s the layout?
No house is ever going to be perfect. There will be compromises to make and costs to assess. How comfortable are you with balancing your costs and your ideal?
Make sure you discuss these questions with usl We are here and ready to listen and help.
Why not set up a viewing schedule? How often would you like to go out looking? Which days of the week and what time work best for you? Don’t forget to outline both your restrictions and your flexible options. We are always in communication with each other and know when a new listing that may fit your needs will be coming onto the market even before it hits the internet.
MAKING AN OFFER ON YOUR DREAM HOUSE
So now you know. With your feet firmly on the ground, you’ve walked through a few times and asked all the questions. You’ve gone forwards and backwards on your list. You see
yourself living there. It’s time to make an offer. We will walk you through the emotional and often stressful next steps.
Someone is selling this house. You want them to sign the offer you make. You must be ready to pay between 1% and 5%of the purchase amount. We call that an earnest money deposit. It’s how you establish your intention to purchase the property. If your dream house is in a competitive market, be ready for competitive offers! What this means is that the more competition there is for a home, the higher your offer should be. Check your numbers but be aware that sometimes the closing offer may need to exceed the asking price. We will help you at every step.
It is up to us to present the listing agent with a written offer. This offer will either be accepted, rejected or the seller will make a counter-offer. This is when we step in to help negotiate terms of the contract.
The step-by-step contract procedure for most single-family home purchases is standard. The purchase agreement used is a standard document approved by the Division of Real Estate.
The purchase agreement or contract constitutes your offer to buy and, once accepted by the seller, becomes a valid, legal contract. That’s why it is important for everyone to understand what is written on the contract offer.
As a side note, be aware that if your dream property was built in 1978 or earlier, it is required that the seller and buyer fully execute a Lead Based Paint Disclosure before an offer is accepted.
UNDER CONTRACT STEPS:
TITLE REVIEW AND HOA DOCUMENTS AND DISCLOSURE
You have decided to buy your home, made an offer and have checked with a real estate attorney. What happens between now and the time you legally own the home? This is the period of making sure you have all the facts, and the paperwork that makes the house into your home.
A title company may handle the following items:
Tax Check: What taxes are owed on the property? The Title Company contacts the various assessor-collectors.
Title Search: Copies of documents are gathered from various public records: deeds, deed of trust, various assessments and matters of probate, heirship, divorce and bankruptcy are addressed.
Examination: Verification of the legal owner and debt owed.
Title Insurance: Both you and your lender will want the security offered by title insurance. Why? While title agents search public records to determine who has owned any piece of property, these records may not reflect irregularities that are under the surface.
- an unauthorized seller forges the deed to the property
- an unknown, but rightful heir to the property shows up after the sale to claim ownership
- conflicts arise over a will from a deceased owner
- a land survey shows the boundaries of your property is incorrect. There are two types of Title Insurance:
- Coverage that protect the lender for the amount of the mortgage
- Coverage that protects the equity in the property
Title Insurance will safeguard you against any and all of these problems.
CCR (Covenants, Conditions & Restrictions) will be provided for your review if applicable.
Disclosure Documents: The seller will provide a Seller’s Property Disclosure, Square Footage Disclosure, Source of Water Disclosure and any other applicable disclosures for your review.
Now it’s time for the Home Inspection, a kind of test drive for the house that will become your home.
A home inspection benefits both buyer and seller. The Buyer has the right to inspect the property and submit a written Inspection Notice prior to the Inspection Objection Deadline. The homeowner should provide access to the basement, crawl space, attic, electric panel, sump pump, etc. Most inspections involve costs that require payment at the time of inspection and take between 3 and 5 hours.
Inspections can range from a Basic Home Inspection, a Sewer Line Inspection, an inspection from a Structural Engineer; they may include a Radon Test and a Well Test.
When purchasing new construction, the Buyer can also attend additional inspections with the builder such electrical, dry wall, etc.
As experts in both buying and selling we can walk you through this process to assure that you are satisfied with you purchase. Homes, like people, have flaws. We want to make sure you know about all of them before settling in.
Your loan officer is your silent partner in your dream home. That’s why the home appraisal is important. Here are some things to be aware of in this process:
- All appraisals will go through a 3rd party company and the appraisers are not allowed to speak to the lender.
- The appraiser will usually need to have access to power and running water.
- The appraiser may have conditions for the property. If the Buyer has an FHA or a VA loan, the appraiser request the replacement of broken window or the repair of peeling, or carbon monoxide alarms need to be installed. These additional items must to be discussed by the buyer and seller.
Please note that there will be an additional fee should the appraiser require another visit to the property for verification.
THE FINAL WALK THROUGH:
As your representatives we always schedule a final walk-through of the property. This is done to make sure that all repairs have been completed and your home is in the same condition it was when our team presented the offer. Then it’s time to make sure everything is in order for you to gain title to your new dream home.
WHAT IS A CLOSING?
The purchase agreement or contract you signed describes the property, states the purchase price and terms, sets forth the method of payment, and usually names the date and place where the closing or actual transfer of the property title and keys will occur.
During a Closing you and your team meet with several individuals, including the Seller, the Seller’s agent, a representative from the lending institution and a representative from the title company, in order to transfer the property title to you.
Your lender will require you to sign a document, usually a promissory note, as evidence that you are personally responsible for repaying the loan. You will also sign a mortgage or deed of trust
on the property as security to the lender for the loan. At Closing, you will be required to pay all fees and closing costs in the form of “guaranteed funds” such as a cashier’s check. You will, of course, be notified of the exact amount prior to the Closing.
WHAT IS AN ESCROW ACCOUNT?
An Escrow Account is a neutral depository held by your lender for funds that will be used to pay expenses incurred by the property, such as taxes, assessments, property insurance, or mortgage insurance premiums which fall due in the future. You will pay one-twelfth of the annual amount of these bills each month with your regular mortgage payment. When the bills fall due the lender pays them from the special account.
SOME FINAL STEPS:
Don’t forget to change your address. Missing your mail is inconvenient and can sometimes cause lapses in important payments of insurance, credit cards and other bills. At least a month in advance of your move, begin to notify individuals, companies and institutions that your address will be changing. Either call, or mail the change-of-address cards that you can get from your local post office.
INVOLVE THE WHOLE FAMILY IN YOUR MOVE
Remember, even if you only lived in your home for a few years, to a young child it is nearly their entire lifetime. Make sure to involve them by including them in packing, showing them pictures of their new rooms, and introducing them to their new neighborhood. Assure them they won’t forget their friends. Let them choose a new neighborhood restaurant. It may take a little time, so be patient.
WELCOME TO YOUR NEW HOME!