During the initial interview, you’ll share your expectations and learn about the process of buying a home. You’ll obtain valuable market knowledge about areas, prices, financing, your qualifications, and normal procedures. Considering your wants, abilities, and needs, you decide on price, size, style, and area. At this point, we will begin the search to find your new home.
A strategy for a successful purchase is to apply for pre-approval prior to finding a home. Negotiating a contract with a loan commitment can be advantageous to you. There are specific things necessary to make a loan application and assembling them can take some time. I recommend that you organize the required information using a pre-approval list.
Formulating an Offer
When you find the right home, you will want to make an offer to purchase it. This is done in writing specifying every detail that is part of the agreement. There are standard forms that your real estate agent can provide you.
Usually, the seller will provide a property disclosure for interested buyers prior to writing a contract. This will declare the material facts about the physical condition of the property. The property disclosure does not take the place of a buyer’s inspection that is usually made after a contract is completed. A provision for a home inspection can be added to the sales contract identifying the areas to be inspected by a professional inspector. The purpose of the inspection is to find major defects in the home before the sale is completed.
The areas of concern include but are not limited to:
Mechanical – heating, air-conditioning, appliances.
Plumbing – fixtures, lines, water heaters, sewers.
Electrical – wiring, out of date systems.
Structural – doors, windows, roof, foundation, drainage, ventilation, and environmental hazards.
I will be happy to supply a list of recommended inspectors. You are encouraged to accompany the inspector to ask questions and receive a written report itemizing any areas of concern.
Who Pays the Commission?
In most cases the Seller has signed a listing agreement with his agent specifying a certain fee to be paid for selling the home. It can include provisions for splitting that fee with the selling agent, regardless of agency representation. However, an argument can be made that the buyer indirectly pays the commission even if it comes from the sellers proceeds.
Home Protection Plan
Some sellers provide a Home Warranty or Protection Plan for the buyer. They cover certain items for a one-year period like:
· Heating and air conditioning systems
· Interior plumbing
· Built-in appliances
· Electric pool equipment
If a Home Protection Plan is not included with the home you purchase, you can acquire the coverage yourself. The price of programs and coverage will vary between carriers.
The Last Step
Assemble all of the loan papers at the escrow office. You will need to pay the balance of your down payment and your closing costs at this time. Usually, a cashier’s check is required for these funds.
Good Financial Information Leads to Good Decisions
Better decisions are made when they are based on good financial information. Below are some important options. Knowing there are alternatives, helps to determine the right choices. Speaking to a lender before beginning your search is an important first step.
Estimated Purchase Costs – It is important to know how much you’ll need to buy a home not only for the down payment but for all the fees that are charged in connection with getting the loan and conveying title.
Mortgage Qualification – Discover what size mortgage you can qualify for.
80-10-10 – There are savings achieved by eliminating Private Mortgage Insurance. Not only will you save money in the initial purchase costs but also in the monthly payment.
Alternate Financing Plans – Choices will help you to make a better decision as to how to finance your new home. You deserve to know what options are available and that is exactly what you’ll get.
Mortgage Accelerator – Discover the advantage of adding an additional amount of principal to your fixed rate mortgage on a regular basis to shorten the term and save tens of thousands of dollars in interest.
Pre-Approval Is an Advantage
Applying for a loan and obtaining approval before a buyer finds a home they want to buy is a distinct advantage. Making a loan application is necessary eventually anyway unless you are going to pay cash for the home.
Pre-qualification is a procedure where you get an opinion from a mortgage officer about how much you qualify for. In the process, any obvious difficulties hat might cause problems might be discovered. This process is always recommended but it doesn’t have the advantages of a pre-approval.
Pre-approval requires a complete application with credit reports and verifications. The Mortgage Company will issue a commitment subject to a specific interest rate and points and a satisfactory appraisal when the property is identified.
Time limits are usually placed on pre-approval commitments. It is recommended to be ready to look at homes and make a decision after you receive your pre-approval commitment.
The advantage of being pre-approved:
-Looking at the right-priced homes.
-Avoiding disappointment in deciding on a home that you can’t afford.
-Saving money with a seller who is confident about taking their home off the market with buyers who can have a definite loan commitment.
-One less contingency that the seller will be concerned with to get their home sold.
-Closing more quickly. The lengthiest contingency is usually the mortgage approval.
-Minimizing anxiety from not knowing whether you qualify.
Names and addresses for two full years
Gross monthly income
W-2s for two years, if available
Year to date pay stub
Proof of income from rentals, investments, etc
Proof of retirement, disability or Social Security
Proof of child support or alimony paid/received
Two years Federal Income Tax Returns
Current year profit and loss statement
Names and addresses of banking institutions
Account numbers for each
Monthly payments and approximate balances
Amount of child care expenses
Names and addresses of banking institutions
Account numbers for all accounts
Type of accounts and present balances
List of assets in stocks, bonds, and property
Life insurance cash value (documented if used as cash down payment)
If applicant is selling a home, a copy of sales contracts
Social Security numbers for all parties
Veterans – Certificate of Eligibility & DD-214
Cash or check to pay for application fee