First-Time Homebuyer’s Guide
Choosing to buy a home is one of the biggest decisions you’ll make in your life. It’s a complex ordeal that requires a lot of planning, and instating the help of a knowledgeable REALTOR® to make the process run smoothly.
Hire a Real Estate Agent
Paperwork
They help with all disclosures & paperwork necessary in today’s heavily regulated environment.
Experience
They are well educated in and experienced with the entire sales process.
Negotiations
They act as a “buffer” in negotiations with all parties throughout the entire transaction.
Pricing
They help you understand today’s real estate values when setting the price of a listing or an offer to purchase.
Understanding of Current Market Conditions
They explain & structure offers in line with whichever Market Condition we are in whether it's a Seller's, Buyer's or Balanced Market.
Pre-Approval
- I can provide you with my contacts for my preferred Mortgage Brokers.
- Recommend obtaining a pre-approval letter.
- Required to provide documentation including a letter of employment, pay stubs and past 2-years tax returns; credit report is conducted.
- Bring to the Lender's attention any of your concerns about credit history, bankruptcies, etc. THIS WILL SAVE YOU TIME & MONEY!!
- Ask the lender about different loan programs that would best fit your needs (Mortgage with Improvement, etc.).
- Ask about down payment assistance if this is something you may be interested in.
- Ask about Monthly Mortgage Amount with a mortgage, taxes, mortgage insurance (if applicable), homeowners insurance and possible HOA fees.
Why Pre-Appr oval Should Be Your First Step
In many markets across the country, the number of buyers searching for their dream homes greatly exceeds the number of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show you are serious about buying your dream home is to get pre-approved for a mortgage before starting your search. Find a reputable Lender to help you get pre-approved!
It's highly recommended that you work with your Lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.
One of the many advantages of working with a local Real Estate Professional is that many have relationships with Lenders who will be able to help you with this process. Once you have selected a Lender, you will need to fill out their loan application and provide them with important information regarding your credit, debt, work history, down payment and residential history.
The '4 Cs' that help determine the amount you will be qualified to borrow:
1. Capacity: Your current and future ability to make your payments.
2. Capital or Cash Reserves: The money, savings, and investments you have that can be sold quickly for cash.
3. Collateral: The home, or type of home, that you would like to purchase.
4. Credit: Your history of paying bills and other debts on time.
Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.
The bottom line is many potential homebuyers overestimate the down payment and credit scores needed to qualify for a mortgage today. If you are ready and willing to buy, you may be surprised at your ability to do so.
The Search: Let's Discuss Your Wants / Needs
Now the fun part!!
-We can figure our how much you are comfortable spending: Ensure you make a list of your fixed bills such as credit card bills, student loans, car payments, your Netflix subscription and any other monthly bills that you'll have after purchasing a home. Instead of looking at the "mortgage amount" set yourself a monthly max budget so that you feel comfortable making the payment every month.
- We will discuss all the specifications you have in the home.
- Complete the perfect home questionnaire.
- We will work together to set you up to receive new listings from my MLS to be sent to your email with your personalized specifications (Note: Things like updated kitchens are not specified on MLS)
- We can also research For Sale By Owner properties & upcoming listings.
- Time to view potential properties!
Negotiating Your Terms With Confidence
Position of Strength
* Pre-approval on hand
* Type of financing
* Negotiating with Listing Agent
* Comparable sales to support offer
* Seller's purchase price per title records
Multiple Offer Strategy
* "Dear Seller" Letter
* Increased Money Deposit
* Closing Date
* Removing Finance Condition
* Removing Home Inspection Condition
Making an Offer
Once we've found the house you wish to purchase, you'll need to determine what offer you are willing to make on the home.
After all, you are the one making the payments!
* Sales Price
* Comparative Market Analysis (comps)
* Initial Deposit
* Financing Condition
* Inspection Condition
* Closing Date
* Personal Property
Inspections
If you are purchasing a resale or new build property, we highly recommend that you have a professional home inspector conduct a thorough inspection. You need an inspector that is exceedingly thorough and detailed so as to minimize surprises for you. However, the inspection is not meant to be used to lowball the seller post-price negotiations, as all homes have minor imperfections.
The inspection is intended to report on major damage or serious problems that require repair.
Your home cannot "pass or fail" an inspection. The inspector's job is to make you aware of repairs that are recommended or necessary.
THE INSPECTION WILL INCLUDE THE FOLLOWING
* Appliances
* Plumbing
* Electrical
* Air Conditioner
* Roof and Attic
* General Structure
The seller may be willing to negotiate completion of repairs or you may decide that the home will take too much work and money and rescind the offer during the inspection period.
Your inspection is a contingency to the Purchase and Sale Agreement and needs to be completed and repairs negotiated within the due diligence date on the Purchase
Agreement, usually a 7- 10 day period.
Estimated Costs
Standard Home Inspection Starting at $450
(Depending on size and age)
Asbestos Test $250
Air Quality Test $250
Mold Test $250
Radon Air Test $150
Well Water Testing $200
Septic Inspection $500
Septic Scope $100
**Not all items are not necessarily required. Speak to your realtor for more info.
Submit Loan To Lender
When you submit a loan to your lender, it's known as "going into underwriting".
The term "underwriting" refers to the process that leads to a final loan approval or denial. A loan's approval status is made by a professional underwriter which uses specialized software programs and number-crunching analysis.
Once an underwriter has reviewed all of a mortgage applicants information and documentation, a decision will be made on the loan's status. There are a few possible outcomes at this point.
Appraisal
An appraisal is an opinion of value from a Licensed Real Estate Appraiser who visits the home and inspects its size, condition, function, and quality.
First, an Appraiser comes out to the property and inspects the home. Next, the Appraiser researches similar homes in the area and compares recent sales to determine a fair market value.
The Appraiser then gives a final appraisal report which includes a final “opinion of value.”
A Real Estate Appraisal helps to establish a home's market value – the expected price it would fetch if offered in an open, competitive Real Estate Market. Appraisals can help buyers ensure that they don’t overpay for a home.
By law, mortgage companies cannot complete their own appraisals so many hire an Appraisal Management Company (AMC) to handle the work which, in turn, gives the work to a Licensed Professional Appraiser.
Receive Loan Approval
After a file has been fully underwritten and all of the conditions are satisfactorily met, a final underwriting approval will be issued.
This is known as a “Clear to Close”.
Clear to Close means that the documentation you provided to your Lender have met their approval, and that no additional paperwork is required.
When you're Clear to Close, your Lender is ready to fund your loan and will begin communicating with the closing agent to prepare your documentation for closing. It typically takes up to 5 business days.
Get Ready For Closing
Homeowners Insurance
* Highly competitive rates
* Impacts your monthly payment
Closing Attorney
* Quality management of process
* Manages all parties in transaction
* Leverage for getting problems solved
* Closing on time
* Protecting your interest
* Transferring ownership of property to you
The Final Details
* All documents to Lender in a timely manner
* Arrange movers
* Closing & settlement review
* Potential deal killers
* Transfer of utilities
* Moving into your new home
Closing Day!
You have gone through all the hoops to get to this day… CLOSING Day! Today is the day you go from home seeker to homeowner! But before you get those keys, there are a few things you should do ahead of time and keep in mind on closing day.
FINAL WALKTHROUGH
Have you done a final walkthrough? This is very important! Make sure you and your REALTOR® schedule a time prior to closing to walk through the home one last time. This will ensure that all of the seller’s belongings have been removed and all repairs (if any) have been completed. If you asked for appliances to stay, ensure that they are in place & working. Make sure all of the lights, heating/air and plumbing are working properly. You may have asked for and agreed to certain requirements,
such as draperies remaining or walls being painted a certain color. You will want to make sure these contingencies are completed prior to closing.
Who will be there?
* You, the buyer(s)
* Buyer's agent
* Closing attorney, the party representing the title company and responsible for ensuring the title is transferred to you
* Occasionally, your mortgage officer
What will you need?
* Bring valid government-issued photo ID and a second form of ID showing your name.
* Bring cashier's check for your cash to close ( your mortgage officer will tell you this amount at least 24 hours prior to closing. Your attorney may have you wire money. Avoid wire fraud and ensure you verify account number with attorney)
