Buying 101

Where do I begin the process for looking for a home? 

The first thing you should do is to begin focusing on what you are looking for in a home. You can start by establishing priorities in the following areas:

• • Budget: How much can I afford  You should contact a lender to find out a price range that you are comfortable with.
• • Location: Are you relocating to a new town because of a new job or to be closer to your current job  How will the location of schools, shops, and transportation affect you choice of neighborhood. 
• • Personal Tastes: How large of a home do you need,  What style of architecture do you prefer , What type of lot do you prefer ? Depending on where you move to, you may have a choice of homes in dozens of styles, sizes and settings.

When applying for a mortgage, you will need just a few pieces of information:

• • Name and social security number of each applicant
• • Current address
• • Phone number where you can be reached
• • Monthly salary and sources of income
• • Information on length of employment, and employer address and phone #

How does buying compare to renting? 

Renting offers a lifestyle that is nearly maintenance free. That may appeal to you, but consider that renting offers you no equity, no tax benefit, and mostly no protection against regular rent increases. If your rent averaged $800 a month for the last 10 years, you have spent $96,000 with nothing to show for it. Its time you invested in yourself, not your landlord. Several financing options hold special advantages for first time homebuyers or families with limited cash reserves. FHA insured and VA guaranteed mortgages can minimize or even eliminate your down payment. In addition to tax deductions you will likely receive, that can partially offset the cost of real estate taxes, insurance and home maintenance, your home may appreciate in value.

When I start visiting homes, what should I be looking for the first time through ?

The house you ultimately choose to call home will play a major role in your family’s life. A home can be an excellent investment, but more importantly, it should fit the way you live, with spaces and features that appeal to everyone in the family.

• • As you look at each home, consider these important factors:
• • Is there enough for you now and in the near future 
• • Is the home’s floor plan right for your family 
• • Is there enough storage space 
• • Will you have to replace the appliances 
• • Is the yard the size that you want 
• • Are there enough bathrooms 
• • How much maintenance and/or decorating will you need to do right away 
• • Will you present furniture work in this home 

What do I need to bring along when I am looking at home ?

Bring your own:

• • Notebook and pen
• • Flashlight
• • Tape measure
• • Camera

What should I tell the sales professional about the homes I look at? 

Tell the sales professional everything you like and don’t like at each home you see. Don’t be shy about discussing a home’s shortcomings. Is the home too small for your needs?  Let the sales professional know. Was the home perfect except for carpeting?  Let the sales professional. However, there are two types of sales professionals in real estate. An agent that represents the buyer and tries to get them the best possible deal and an agent that represents the seller and tries to get them the best possible price for their home.

How do I determine the amount of my initial offer ?

There is really no rule to use in calculating an initial offer. Naturally, the buyer wants the best value and the seller wants the best price. After you have looked at the home’s features, asked questions, checked comparables, and talked about it with your agent you should have a good idea of the home’s value is in the current market. Consider what you can afford and make an offer that you consider to be fair.

What is “earnest money” and how much do I need? 

When you sign an offer to purchase, your sales professional will ask you for “earnest money”. This refers to a monetary commitment that shows you are serious about wanting to buy. Usually, you will be asked to write a check for one to 10 percent of the sale price. This money will be held in a special escrow account. If your offer is accepted, your earnest money will be included as part of your down payment. If your offer is not accepted, you will get back all your earnest money. But keep in mind that if you back out, you may forfeit the full amount.

I would like to have a professional look at the home before I buy it. What does a home inspector do? 

For your own safety, and to make sure you are getting your money’s worth in the home you choose, using a professional home inspector is highly recommended. A home inspector will check a variety of things such as your home’s plumbing, heating, cooling, and electrical systems, and look for structural problems like a damp or leaky basement, etc. Usually, you call an inspector immediately after you have made an offer on a home. However, before you sign any written offer, make sure that it includes an inspection clause that says your purchase obligation is contingent on the findings of a professional home inspector.

Your inspector will not tell you whether he or she things the home is worth the money you are offering. Rather, the inspector’s job is to make you aware of repairs that are recommended or necessary. A seller may be willing to renegotiate a price to accommodate needed repairs, or you may decide that the home will take too much work and money. A professional inspection will help you make an informed decision.

In choosing a home inspector, consider one who has been certified as a qualified and experienced member by a trade association. Your real estate professional can refer you to qualified inspectors in your area.

Should I be present during the inspection ?

Yes. It is not required, but it is very much to your advantage. You will be able to clearly understand the inspection report and know exactly which areas need attention. Plus, you can get answers to many questions, tips for maintenance, and a lot of general information that will help you when you move into your new home. Most importantly, you will see the home through the eyes of an objective third party.

Do I need to talk to my insurance agent ?

Yes, and the sooner the better. Your agent can help you with this, but most insurance professionals have a lot of experience in working with homeowners and can offer useful tips about homeownership, particularly regarding home safety and keeping your premiums low. Once you have found a home, work with your insurance agent to develop a homeowner’s policy that meets your needs. You will need to bring evidence of a fully paid policy for your mortgage lender when you come to closing. Make sure you take this step with your insurance provider as early as possible; in many locations you will possibly have trouble assuming title if you do not have proper insurance in place.

There is so much to remember before I close. What do I have to do ?

• • Your sales professional can help you with many of these considerations:
• • Are all the necessary inspections complete 
• • Are all the required repairs complete 
• • When will you conduct your final walk-through inspection 
• • Is your attorney satisfied that title to the property is clear (no one else has a claim on it) 
• • Have you confirmed a date, time, and place for your closing 
• • Who will conduct the closing 
• • Is your insurance policy paid and ready to go into effect the day you close  You will need a receipt of proof.
• • What form of check should you use (and who should it be made out to) to pay for the closing costs 
• • Has your closing sales professional told you the closing amount 
• • Do you have receipts for the items you have already paid for, including your deposit and inspection fees 
• • Bring your checkbook to cover any last minute extras that might have been overlooked.

What will happen on closing day? 

• 1. The lender’s agent will ask for your paid home insurance policy
• 2. The agent will list the adjustments. These include the money you owe the seller (the remainder of the down payment; prepaid taxes) and what the seller owes you (unpaid taxes; prepaid rent).
• 3. You will sign the mortgage. This gives the lender legal rights to the property if you do not make your payments.
• 4. You will sign the mortgage note (the promise to repay the loan in regular monthly payments).
• 5. You will get title from the seller in the form of a signed deed.
• 6. The lender’s agent will collect the closing costs from you and give you a settlement statement of all the items you have paid for.
• 7. The deed and mortgage will be recorded.