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The Buying Process
Although there are many good reasons for you to buy a home, wealth building ranks among the top of the list. We call home ownership the best “accidental investment” most people ever make. But I believe when it is done right, home ownership 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, and among these, equity buildup, value appreciation and tax benefits stand out.
Base your decision to buy on facts, not fears.
Buying a home doesn’t have to be complicated – there are many professionals who will help you along the way.
Hire an 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 whose actions and decisions have to be orchestrated in order to perform in harmony and get a home sale closed. It is Todd's responsibility to expertly coordinate all the professionals involved in your home purchase and to act as the advocate for you and your interests throughout.
Seven main roles of your real estate agent
A Buyer’s Real Estate Agent:
Whether it’s your first home or you’ve purchased many, working with a knowledgeable real estate agent like Todd will help you make your best purchase. And best of all, there is no cost to you.
Determine your basic needs. How many bedrooms and bathrooms do you need now? Do you expect your family to grow? What kind of neighborhood do you want? Are schools important? How long do you think you’ll live in this house? You may want to make a prioritized list, then call Todd for a friendly discussion.
Determine your budget. The best way to determine a price you are comfortable with is to speak to a reputable lender. All lenders will ask you questions about your income, savings and debt to determine your maximum loan amount. Good lenders will ask what payments you would be comfortable with and provide you with a price range that best suits your financial situation and comfort level. Ask Todd for a list of good lenders, then get pre-approved for a mortgage. When it comes time to make an offer, sellers are likely to negotiate more when they feel confident you have the financial ability to purchase the home.
Comparison shop online. Once you know the type of home you’re looking for and have a comfortable price range, it’s time to see what’s available. You can search ALL available homes for sale right here. Be sure to create an account to keep track of listings you might like to visit in person. If you have a specific requirement that isn’t searchable, please visit the Find It For Me page.
Start shopping in person! This is the fun part. You and Todd will visit homes together and there’s really no better way to understand what to expect for your investment. You’ll quickly discover which homes are competitive in the market and which aren’t. You’ll also likely discover that it’s tough to find the “perfect” home and your top priorities will become clear. Once you have identified some possibilities, Todd will discuss the merits and drawbacks of each property as it relates to your lifestyle, your investment and future resale potential. He will never try to “sell” you a home, only help you make an informed decision.
Make an offer. After searching online and viewing a number of homes in person, most buyers just know when they’ve found the right home. It’s time to make an offer. Some advice – don’t delay. Good homes sell quickly and you’re not the only one looking. You and Todd will compare the home’s location, size, features, time on the market and pricing history to other homes on the market, as well as to similar homes that have recently sold. Together you’ll formulate your strategy to get the best price and terms for the home. It will be advantageous to have your pre-approval at this point to present with your offer.
The three basic components of an offer are price, terms and contingencies. Terms fall under these basic categories in a real estate offer:
The financing and inspection contingencies are there to protect you. There will be negotiation, usually limited to price, closing and possession, closing costs and included items like appliances and window treatments. Generally, you’ll submit a deposit with your offer of about 1% of the offered price that will become part of your down payment. With a little compromise and good faith, you have a deal!
Apply for a mortgage. If you didn’t make your loan application during the pre-approval process, now is the time to submit the documents your lender requests to obtain a formal approval.
Home Owner’s Insurance – Get a commitment for coverage. A home owner’s insurance policy protects you in two ways:
Home inspection. You’ll have 10-14 days to have the home inspected at your cost, generally between $350 and $600, depending on the size of the home. It’s money well spent. You are encouraged to attend the inspection which is a great way to learn about the home and understand the scope of any defects. You and Todd will review the detailed inspection report with photos and decide which, if any, defects you should ask the seller to fix. The requests will vary based on what is typical for similar homes and there’s often some more negotiation about repairs.
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 home owner’s insurance and property inspections are so important.
The property inspection should expose the secret issues a home might hide so you know exactly what you’re getting into before you sign your closing papers.
If a troubling issue 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
Closing. Once the repair requests have been agreed to and your loan has been approved, it’s time to close the transaction. You just have a few pre-closing responsibilities:
On closing day, you and the seller will close together in the same room at a mutually agreed upon time; the process generally takes about an hour. You’ll bring your down payment in the form of a certified check or a wire if the amount is $10,000.00 or more. The seller will sign the deed and turn over keys at that time, or another mutually agreed upon time. You will sign documents that do the following:
As long as you have clear expectations and follow directions, closing should be a momentous conclusion to your home-searching process and commencement of your home-owning experience. Congratulations, you’re a home owner! Celebrate!
Protect your investment. 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 you close on your house, you agent can still help you:
Attention to your home’s maintenance needs is essential to protecting the long-term value of your investment.
Home maintenance falls into two categories:
A Closer Look At Funding Your Home Purchase
Cash is always acceptable! But, those of us who don’t have hundreds of thousands of dollars available for a home purchase will need a home loan, also known as a mortgage. Don’t worry, that’s most of us. In fact, with interest rates so low there are people who could pay cash who choose to get a mortgage because they feel their money is better invested elsewhere.
Choose a mortgage specialist: As previously mentioned, it’s very important to work with a good lender – a lender who will help you determine a payment you are comfortable with, not simply your maximum loan amount. You’ll work very closely with your lender so don’t choose solely on interest rate. They change daily and you’ll drive yourself crazy trying to second-guess yourself. Choose a lender who communicates well and will get the loan closed on time. Ask Todd for recommendations.
Loan Application and Pre-qualification or Pre-approval
Why pre-qualify? I highly recommend buyers get pre-qualified before beginning their home search. Knowing exactly how much you can comfortably spend on a home reduces the potential frustration of looking at homes beyond your means and it makes your negotiating position stronger.
Application and Interview You will provide pertinent documentation including verification of employment. A credit report will be requested as well.
Acceptance of Offer Once your offer is accepted, you will need to send the lender your accepted purchase agreement.
Appraisal The appraisal is typically ordered after the home inspection has been done and the results are satisfactory. When the lender receives the appraisal, it is reviewed and then provided to the borrower. If the appraisal comes in less then the sales price or expected value of the home, there may issues as the lender will based the loan to values on the lower of the sales price or appraised value.
Underwriting Once processing has a complete loan application with supporting documents, they will submit the loan to underwriting. Underwriters will review the application, supporting documentation and lender guidelines. They will then either issue a “conditional approval or possibly deny or suspend the file. Assuming the loan is approved, there may be conditions to the approval that need to be resolved before they can issue a “clear to close” Examples include a written explanation of employment history, missing pages of a statement, the source of a large deposit and providing updated paystubs.
Loan approval Once the loan is approved, you will be notified and the loan documents will be completed by the lender and sent to the title company.
Funding & Closing On the day of the closing, the funds are transferred by wire. You will attend the closing at the title company for final signatures.