STEPS ON BUYING A HOME:
When you do find your perfect home, you may need to act quickly. That's why it's a good idea to make sure you have all your financial arrangements in order beforehand.
Before you start shopping:
Set a budget (a mortgage broker can help with this)
Plan for a down payment
Get copies of your current credit report
Become an optimal credit candidate
Get preapproved for a mortgage
Getting Your Mortgage Application Started
Shop for different Lenders by comparing Lender service fees, loan origination fees and interest rates, complete an Application and then compare these fees.
Your lender is required to deliver your Loan Estimate to you on the third day after your loan application has been submitted. The lender is required to provide the Loan Estimate after receiving six pieces of information from the consumer: his name, Social Security number, and income; the property address; an estimate of the property value; and the amount of the mortgage loan the consumer wants.
Being pre-approved by a lender is the first step in starting your home buying process because it shows the seller that you are a committed buyer and financially capable of buying the property.
Keep in mind that pre-approval is different from pre-qualification. Pre-qualification is merely an estimate of what you may be able to afford. Pre-approval occurs when the lender has reviewed your credit and believes that you can finance a home up to a specific amount. However, neither pre-approval nor pre-qualification represents or implies a commitment on the part of a lender to actually fund a loan.
To get preapproved for a mortgage, you'll want to meet with a mortgage broker or lender, who will assess your credit and finances in order to determine whether you are financially able to purchase a home. Getting a preapproval letter gives you buying power when you're shopping around, since sellers prefer to contract with a buyer who has already qualified for a mortgage.
To get preapproved, your lender will request:
? A Credit Check
? Current bank statements
? Pay stubs
? Tax returns
? Other documentation
The Search Begins after you and I have received the Mortgage Pre-approval Letter
What if the Property is Distressed?
Sometimes, a home might hit the market at a bargain price due to previous financial problems. While you might be excited to "get a deal" on a property, there could be issues with the transaction and/or the property itself.
If a property is foreclosed, the ownership then transfers to the bank or lending company that financed the previous mortgage. In addition, the property is sold “As-is” meaning that the buyer accepts the property in its current condition. Also, in most cases the utilities will be turned off and will need to be turned on at the buyer’s expense for the property inspections during the inspection period.
Distressed properties can present a higher risk of title defects, so buying an owner's policy of title insurance at the time of purchase is important.
Understanding the Asking Price
Many factors influence the price that a seller expects to get for their home. While only you can decide how much you feel comfortable offering for a property, we can gather critical information for you regarding the factors that impact how much you should consider paying for the home. These factors include:
? How long the home has been on the market
? If the price has been reduced
? The prices for other comparable homes in the area
? If there are multiple offers
? Other items that might be included in the sale - furniture, hot tub, etc.
? The "list to sale price ratio," an indication of how competitive the market is for homes in this area.
? Why the seller is selling
When you are ready to make an offer, I will draw up a contract with the applicable information. I will then present this offer to the sellers or sellers' real estate agent. The sellers may accept, decline or counter the offer.
The offer contract includes:
? Sale price/offered price
? Amount of down payment
? Street address and a description of the surrounding land
? Sale terms (cash purchase, mortgage financing, etc.)
? The date the property will change hands
? Who pays for the title insurance (Usually the Seller Pays)
? Amount of Earnest Money (1% of the Sales Price)
? One-year Home Warranty Amount. (Paid by the Seller)
? Who pays for the HOA Transfer Fee
? Deed details
? State-specific required clauses
? Number of days for your Option Period (Usually 10 Days for $150.00)
? Offer timetable and expiration date
? Contingency plans that will come into effect as the result of a canceled/defaulted sale
? Mortgage Pre-Approval letter
After a deal is accepted, everything that has been contractually agreed upon gets set in motion. The time between the offer acceptance and the closing of the transaction is known as "escrow." You will need to deposit money into an escrow account. (Usually 1% of the Sales Price payable to the Title Company).
Negotiating the Offer and the Contract
You may make your offer subject to certain terms or contingencies, including securing of financing or perhaps the sale of your current home. You may also make the contract subject to various inspections by both you and professional inspectors. Most contracts include some standard provisions, such as property taxes, insurance costs and special assessments, which will be prorated between buyer and seller. Others outline what happens if the property is damaged before closing, or either party fails to go through with the sale. I will review with you every aspect of your offer. Together, we will plan a strategy for getting the most advantageous terms for you - the buyer - at the price you are willing to pay for the property.
What to do After the Contract Has been Accepted by the Sellers
After the Sellers sign the Contract, this is now an Executed Contract and the Option Period (Calendar Days) begins the day the Sellers sign this Contract. The Earnest Money & Option Money checks need to be given to me the same day so I can deliver these checks to the appropriate parties. Please note if the property is a foreclosure, you will have a 7 to 10 day inspection period.
Financing Your New Home
The financing process can take anywhere from 25 to 35 days, but typically runs 30 days. I'll be involved throughout the process to help it run smoothly. The basic timeline for what will happen along the way is as follows:
? The lender orders an appraisal of the property, a credit report, and begins verifying your employment and assets
? The lender evaluates the application and your supporting documents, approves the loan, and issues a letter of commitment
? You sign the closing loan documents and the loan is funded
? The lender sends their funds to escrow
? All appropriate documents are recorded at the County Recorder's Office, the seller is paid, and the title to the home is yours
Inspections during the Option Period
Real estate contracts often contain contingency clauses that allow buyers to inspect the property.
