I’m thinking about buying, what should I do first?

Almost all buyers start by looking at homes for sale on the internet. But before you start looking at houses there is a very important first step you must take- the mortgage pre-approval! The pre-approval determines how much you can afford to spend on a home and is a necessary step because looking at homes outside of your price range will ultimately make the home buying process more difficult and disappointing. The pre-approval typically consists of an online application or phone conversation where you answer questions about your debt, income, work history, and other financial details. The lender will check your credit and ask for some documents (w-2, pay stubs, bank statements, etc). The lender will then combine all this information together and determine whether or not you qualify for a loan. If you do qualify, they will give you a maximum amount you can spend. Once you know you’ve been approved and you know what you can afford then it’s time to start looking for houses!

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Also, please note that online mortgage calculators are NOT accurate and often leave out important elements like taxes and insurance that are a part of your monthly payment. This is why it’s critical to talk directly to a lender and obtain a pre-approval before you look at houses.

 

Can I get down payment or closing cost assistance?  

Possibly. There are down payment and closing cost assistance programs available for those who qualify. Most of these programs are for low to moderate income buyers. When you go through the pre-approval process your lender will be able to determine if you qualify. If you don’t qualify for one of these programs, you can still try and negotiate for the seller to pay some of your closing costs. Please contact me for more details.

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I'm not sure if I have good credit or if I'd even qualify to buy a home. How do I know I if I can? 

A lender will be able to pull your credit and determine if you're qualified to purchase a new home. Often people who think they cannot afford a home actually can, so it's a great idea to see what you qualify for now.

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How can I find a lender?

Contact me! I have a list of trusted lenders that I work with and can recommend someone to you if you don’t already have someone.

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How much money will I have to come up with to buy a home?
That depends on a number of factors, including the cost of the house and the type of mortgage you get. In general, you need to come up with enough money to cover three costs: earnest money, the deposit you make on the home when you submit your offer, to prove to the seller that you are serious about wanting to buy the house (later applied to down payment if offer is accepted); the down payment, a percentage of the cost of the home that you must pay when you go to settlement; and closing costs, the costs associated with processing the paperwork to buy a house.

 

Earnest money deposits are typically $500 - $1000. Down payments range from 3.5% to 20% of the price of the home depending on the loan type (a few loan types allow you to put no money down, but you have to qualify as they are not available to everyone. Contact me for more details). Closing costs average 3-5% of the price of your home. These costs cover various fees your lender charges and other processing expenses. When you apply for your loan, your lender will give you an estimate of the closing costs, so you won't be caught by surprise.

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In addition to the mortgage payment, what other monthly costs do I need to consider?
Utilities (water, electricity, etc), home insurance, mortgage insurance, property taxes, city/county taxes, and Home Owners Association (HOA) or Community Development District (CDD) fees are all extra fees you may incur (depending on a few factors). However, it is usually still more affordable to purchase a home than to rent, even with these fees.

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I have my pre-approval and I'm ready to start looking at houses, now what?

Before we go out to look at houses, I always have a consultation with my clients whether over the phone or in person so that I get to know exactly what you're looking for and how I can help. We'll create a list of your must haves and your wants, review what location you'd like to stay within, and then set a home search up for you to review. Then we will schedule a time to go out and start the exciting part- touring properties!

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What happens when I find a house?

Once you find a house and we have successfully negotiated a deal there are several things that will be happening at once. First, you will complete your formal loan application with your lender (within the first 5 days of going under contract). Second, you will have 3 days typically to make your deposit to the title company (the amount of the deposit is negotiable but the standard in our market is $1000). Lastly, your home inspection needs to be scheduled and completed within the first 10 days from the contract date.

 

What inspections do I need? 

You will need to perform a whole house inspection and a termite inspection at minimum. You may also be required to have a 4-point inspection or wind mitigation inspection for insurance purposes depending on the age and condition of the property. The combined cost of these inspections can be anywhere from $400-600 on average depending on which company you use and which inspections are required.

 

What if I find something wrong with the house during inspections?

Most homes are sold “AS-IS” so it’s important to realize that inspections are strictly for the buyer to be aware of items that may need to be addressed after closing. In most cases sellers will NOT make any repairs to the property. If the inspection reveals a serious or costly item of concern to the buyer,  the buyer has the option of cancelling the contract during the inspection period and their deposit money will be refunded.

 

Why should I use a Realtor?

Many first time buyers do not realize the importance of using a Realtor. Here is a list of reasons you should use a Realtor:

• Realtors have access to the Multiple Listing Service (MLS) and this information is not available to the public. The homes you see online on sites like Zillow, Realtor.com, and Trulia are not always up-to-date and many times by the time you see them online they can already be under contract. Your Realtor has access to home information in real time and also can see notes on the property that are confidential and not disclosed on consumer websites. This allows you to have insider information through your Realtor!

• Your Realtor will help you find a home, negotiate, write a contract and submit an offer. There are many properties that have multiple offers and it helps to have an experienced agent that can help you when negotiating a deal.

• Once you are under contract it is important to meet the deadlines within the contract in order to protect your deposit. If you fail to meet certain deadlines in the contract and your deal falls through, the seller could make a claim on your deposit money. Your agent can help guide you and protect your deposit.

• Besides financing there are many steps in the home buying process such as inspections, the appraisal, shopping for insurance, transferring utilities, coordinating with the title company, and doing a final walk through. Your Realtor will be your one point of contact to assist you through the entire process.

• It’s FREE to use a Realtor when you are the buyer because sellers actually pay all real estate commissions.

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Contact me today to schedule your FREE Buyer’s Consultation