Buying Process

Let me share a few thought before we get into the details of the process.

What you can expect from us:

• Empower you with information to help YOU make a well informed decision
• Walk you through the Home-Buying process step by step
• Be available on your schedule
• Research homes that meet your requirements
• Facilitate showings on properties you are interested in
• Bring a wealth of knowledge about your search area specifics

Some Buyer Tips:

• Location, Location, Location. They stopped making land a long time ago
• The quality of a school district may not matter to you now, BUT when it comes time to sell - it will
• A roof which balances the style of a home and is properly maintained adds to the home's appeal and its resale value
• Wood floors suggest warmth, quality and good taste and are an asset when it comes time to sell a house
• Expect lower maintenance costs with a brand-new home
• Get buyer representation! The seller generally always has a broker/agent for representation. You should too

Extra Stuff for First-Time Buyers

If you are first-time buyer and have decided to purchase, you may in fact feel overwhelmed. There are numerous questions that can arise about the home buying process, whether you can afford a home, how to go about finding a qualified real estate professional, financing, and others. No question about it...it is a complex undertaking.

To help you get started, the following web sites offer good advice for first-time buyers seeking answers and information:

U.S. Dept. of Housing and Urban Development: Buying A Home

https://portal.hud.gov/hudportal/HUD?src=/topics/buying_a_home

Kiplinger: Buying Your First Home

http://www.kiplinger.com/article/real-estate/T010-C006-S001-financial-steps-to-take-before-buying-a-first-home.html

http://www.kiplinger.com/article/real-estate/T010-C006-S001-the-5-big-steps-to-buying-your-first-home.html

Your Home Buying Experience in 8 Steps

1. Decide to buy.

There are many good reasons for you to invest in real estate; turning a house into a home and wealth building would rank among the top of the list. We can call homeownership the best “accidental investment” people will ever make. When it is done right, homeownership becomes an “intentional investment” that lays the foundation for a life of financial security and personal choice. There are solid financial reasons to support your decision to buy a home; equity buildup, value appreciation, and tax benefits stand out.

Base your decision to buy on facts, not fears.

1. If you are paying rent, you very likely can afford to buy.
2. There is never a wrong time to buy the right home.
3. The lack of a substantial down payment doesn't prevent you from making your first home purchase.
4. A less-than-perfect credit score won't stop you from buying a home.
5. The best way to get closer to buying your ultimate dream home is to buy your first home now.
6. Buying a home doesn't have to be complicated - there are many professionals who will help you along the way.

2. Hire your agent.

The typical real estate transaction involves at least two dozen separate individuals. Insurance assessors, mortgage brokers and underwriters, inspectors, appraisers, escrow officers, buyer's agents, seller's agents, bankers, title researchers, and a number of other individuals working in harmony to orchestrate your home purchase. And out front leading the band, it is your real estate agent expertly coordinating with the other professionals involved in your home purchase culminating in a speedy and smooth closing.

Seven main roles of your Buyer's Real Estate Agent:

1. Educates and informs you about your current market.
2. Analyzes the wants and needs of your desired home.
3. Matches you with homes that fit your criteria.
4. Coordinates with other real estate industry professionals.
5. Always negotiates on your behalf.
6. Quality controls all paperwork and deadlines.
7. Solves any problems that may arise during your transaction.

Finding a solid professional agent means getting beyond the pretty picture. Asking direct and insightful questions can help clear the water. Use these questions as a guide when searching for your Realtor®.

1. Why did you become a real estate agent?
2. Why should I work with you?
3. What do you do better than other real estate agents?
4. What process will you use to help me find the right home for my particular wants and needs?
5. What are the most common things that go wrong in a transaction and how would you handle them?
6. What are some mistakes that you think people make when buying their first home?
7. What other professionals do you suggest we work with and what are their credentials?
8. Can you provide me with references or testimonials from past clients?

3. Secure financing.

While you may find the thought of homeownership thrilling, the thought of taking on a mortgage may be downright chilling. Many first-time buyers start out confused about the process or nervous about making such a large financial commitment. From start to finish, you will follow a six-step, easy-to-understand process to securing the financing for your first home.

Six steps to Financing a Home:

1. Choose a mortgage specialist.
2. Make a loan application and get pre-approved for maximum financing.
3. Determine your monthly budget. Compare maximum financing versus what you are willing to pay.
4. Choose a home, this will help develop your sale/offer price.
5. Submit to the lender an accepted purchase offer contract and other documentation.
6. Get an appraisal and title commitment.
7. Obtain funding at closing.

4. Find your home.

You may think that shopping for homes starts with jumping in the car and driving all over town. And it's true that hopping in the car to go look is probably the most exciting part of the home-buying process. However, driving around is fun for only so long-if weeks go by without finding what you're looking for, the fun can fade pretty fast. That's why we say that looking for your home begins with carefully assessing your values, wants, and needs, both short-term and long-term.

Questions to ask yourself:

1. What do I want my home close to?
2. How much space do I really need and why?
3. Which is more critical: location or size?
4. Would I be interested in a fixer-upper?
5. How important is home value appreciation?
6. Is neighborhood stability a priority?
7. Would I be interested in a condo or townhome?
8. Would I be interested in new home construction?
9. What features and amenities do I want and which do I really need?

5. Make an offer.

When searching for your dream home, you were just that-a dreamer. Now that you're writing an offer, you need to be a business person. You need to approach this process with a cool head and a realistic perspective of your market. The three basic components of an offer are price, terms, and contingencies.

Price - The right price to offer will fairly reflect the market value of the home you want to buy. Your agent's market research will help guide this decision.

Terms – These are the other financial and timing factors that will be included in the offer and fall under six basic categories in a real estate offer:

1. Schedule - A schedule of events that has to happen before closing.
2. Conveyances - The items that stay with the house when the sellers leave.
3. Commission - The real estate commission or fee, for both the agent who works with the seller and the agents who works with the buyer.
4. Closing costs - It's standard for buyers to pay their closing costs, but if you want to roll the costs into the loan, you need to write that into the contract.
5. Home warranty - This covers repairs or replacement of appliances and major systems. You may ask the seller to pay for this.
6. Earnest money - This protects the sellers from the possibility of your unexpectedly pulling of the deal and makes a statement about the seriousness of your offer.

Contingency – These are legal contractual obligations that is built into the purchase contract, which puts specific requirements and/or imposes specific timeframes within which each party (Seller and Buyer) is to perform. If the contingencies are not met, either party can legally cancel the transaction.

6. Perform due diligence.

Unlike most major purchases, once you buy a home, you can't return it if something breaks or doesn't quite work like it's supposed to. That's why homeowner's insurance and property inspections are so important.

A homeowner's insurance policy protects you in two ways:

1. Against loss or damage to the property itself
2. Liability in case someone sustains an injury while on your property

The property inspection should expose any secret issues a home might hide so you will know exactly what you're getting into before you sign your closing papers.

• Your major concern is structural damage
• Don't sweat the small stuff. Things that are easily fixed can be overlooked
• If a big problem shows up in your inspection report, you should bring in a specialist
• If the worst-case scenario turns out to be true, you might want to walk away from the purchase

7. Prepare for closing.

The final stage of the home buying process is the lender's confirmation of the home's worth and legal status, and your continued credit-worthiness. This entails a survey, appraisal, title search, and a final check of your credit and finance. Your agent will keep you posted on how each is progressing.

You just have a few pre-closing responsibilities:

1. Stay in control of your finances.
2. Return all phone calls and paperwork promptly.
3. Communicate with your agent at least once a week.
4. Several days before closing, confirm with your agent that all your documentation is in place and in order.
5. Obtain certified funds for closing.
6. Conduct a final walk-through.

On closing day, with the guidance of a settlement agent and your agent, you'll sign documents that do the following:

1. Finalize your mortgage.
2. Pay the seller.
3. Pay your closing costs.
4. Transfer the title from the seller to you.
5. Make arrangements to legally record the transaction as a public record.

As long as you have clear expectations and follow directions, closing should be a momentous conclusion to your home-searching/buying process.

8. Keep in touch.

Throughout the course of your home-buying experience, you've probably spent a lot of time with your real estate agent and you've gotten to know each other fairly well. There's no reason to throw all that trust and rapport out the window just because the deal has closed. In fact, your agent wants you to keep in touch.

Even after your home purchase is final, you can refer to your real estate as a great resource to:

1. Remind you what extra paperwork you are going to need when you file your first tax return as a homeowner.
2. Find a reliable contractor/handymen to help with home maintenance, a remodeling project or related questions.
3. Help your friends and other associates find a home.
4. Keep track of your home's current market value.

Deciding how much house you can afford

Your lender decides what you can borrow but you decide what you can afford. Most lenders should provide you with your maximum buying potential. This would be the most you can qualify for on “paper”. Your monthly budget may indicate you can afford more or less. If your personal budget says more then you may need to find a co-signor; usually mom or dad in the case of a home. It all has to do with ratios which we will get into below.

Lenders are careful, but they make qualification decisions based on averages and formulas. They won't understand the nuances of your lifestyle and spending patterns quite as well as you do. So, leave a little room for the unexpected - for all the new opportunities your home will give you to spend money, from furnishings, to landscaping, to repairs.

Historically, banks used a ratio called 28/36 to decide how much a homebuyer could borrow. An approved housing payment couldn't be more than 28 percent of the buyer's gross monthly income, and his or her total debt load, including car payments, student loans, and credit card payments, couldn't be more than 36 percent. As home prices have risen, some lenders have responded by stretching these ratios to as high as 50 percent. No matter how expensive your market though, we urge you to think carefully before stretching your budget quite so much.

Deciding how much you can afford should involve some careful attention to how your financial profile will change in the upcoming years. In the long run, your own peace of mind and security will matter most.

Creating your home wish list

Before the home search begins, your real estate agent will want to know as much as possible about the features and amenities you desire. To help your agent better serve you, analyze what you want and what you need in a home's features and amenities.

Features:

• Age: Do you prefer historic properties, or newer ones?
• Style: Do you have a special preference for ranches, bungalows, or another style of construction?
• Bedrooms: How many?
• Bathrooms: How many? Are they updated?
• Living and Dining Areas: A traditional, formal layout, or a more open, contemporary plan?
• Stories: How many?
• Square feet: How much space?
• Ceilings: How high?
• Kitchen: How big? Recently updated? Open to other living areas?
• Storage: Big closets, a shed, an extra-large garage?
• Parking: A garage or carport? Room for how many cars?
• Extras: Attic or basement?

Amenities:

Location, location, location

Where you buy not only affects the home's current and future value, but it also affects your lifestyle. Your agent will be able to conduct a more targeted home search if you outline your preferences in neighborhoods and nearby amenities. Here's a checklist of items you should consider and communicate to your chosen real estate agent.

A Few Words on New Home Construction

Whether to buy an existing home or have one built is yet another decision to make during the home-buying process. If you decide to go with new construction, a real estate agent can be a powerful advocate in your corner as you negotiate upgrades, a move-in date and other terms with the home builder. Below are some basic pointers to prepare you for the journey ahead.

Shopping for a large production or custom home builder can be a daunting task. Start by defining what architectural styles appeal to you and then seek out the builders in your area who offer those styles. Due diligence is essential. Ask friends for referrals to get firsthand accounts; verify the builder's state license status, if applicable; and check whether they're certified by the National Association of Home Builders. http://www.nahb.org

A builder representative's ultimate goal is to sell you a home. His or her role is to provide a wide range of information to help you in your decision-making, from building restrictions, roads and easements to inspections, warranties, rebates and upgrades. A real estate agent knowledgeable in new-home construction will be able to help you wade through all the data and point out the downsides and upsides of each line item. Your agent also can look out for your interests in reviewing the builder's contract, which often contains more legal jargon than consumer-friendly language.

Market conditions greatly dictate a builder's incentive to make a deal you cannot refuse. When a builder has inventory on his hands, his carrying costs start adding up. When this happens, a builder might be more amenable to strike a favorable deal, whether it's throwing in upgrades or taking a bit off the asking price. A real estate agent can help you know when market conditions are right for these benefits. Also, watch for builder close-out sales. Builders promote these special events when a new subdivision is near completion but empty inventory still remains.

While there are always exceptions, most builders require a deposit when a purchase agreement is signed. They also require that the buyer pay for any upgrades prior to closing. If you back out prior to closing, unless the agreement states otherwise, you will lose that money. Make sure you understand every detail in the builder's contract before signing it.

How can a real estate agent help me?

Seven main roles of “A Buyer's Real Estate Agent”:

1. Educates and informs you about your current market.
2. Analyzes the wants and needs of your desired home.
3. Matches you with homes that fit your criteria.
4. Coordinates with other real estate industry professionals.
5. Negotiates on your behalf, always.
6. Quality controls all paperwork and deadlines.
7. Solves any problems that may arise during your transaction.

Eight important questions to ask your agent

Finding a solid professional agent means getting beyond the pretty picture and asking direct and insightful questions.

Use these questions as a guide when searching for your Realtor®.

1. Why did you become a real estate agent?
2. Why should I work with you?
3. What do you do better than other real estate agents?
4. What process will you use to help me find the right home for my particular wants and needs?
5. What are the most common things that go wrong in a transaction and how would you handle them?
6. What are some mistakes that you think people make when buying their first home?
7. What other professionals do you suggest we work with and what are their credentials?
8. Can you provide me with references or testimonials from past clients?