BUYING A HOME
Steps for Buying a Home with Ease
1. Get Financed. For more info on getting a home loan, view these easy steps.
2. Find the right area to build or purchase your home. For tips on choosing your new neighborhood, click here.
3. Decide if you want to buy a home or build a home. Here are some tips to help you decide.
4. Continue to work with your lender by providing documents in a timely fashion.
5. Pay attention to the progress of your home preparation and get a home inspection. Here’s how.
6. Obtain homeowner’s insurance. The closing company will require this information in advance. Your homeowner’s insurance is typically paid out of your escrow account (thus out of your total monthly mortgage payment.)
7. Connect utilities. Click here for a list of utilities you might need.
8. Choose a home warranty. Here are some helpful insights.
9. Schedule closing. Here’s how.
10. Attend your final walk-thru with your Realtor or builder. Here is what to expect.
11. Attend closing. Here is a breakdown of a normal closing.
12. Enjoy your new home!
Financing Your Home
GET PRE-QUALIFIED. This means find out what your spending power is and make sure your credit is healthy enough for a home purchase.
1. Contact your personal banker if you have a relationship with your bank. Or ask people you trust whom they used to finance their home, and set up a meeting with a lender or lenders.
2. Your potential lender will obtain an application from you and then run a credit report to determine your eligibility. It is vital that you are completely honest about your income and financial obligations when you make application.
a. If you have any issues with your credit, debt-to-income ratio, or employment situation, they will notify you. Once your repair your credit, you can reapply. It could be as simple as paying off a small debt that you forgot you had.
b. If you are “approved” they will give you a preliminary qualification called a “pre-qual” in the business. Ask for a pre-qualification letter and give a copy to your Realtor® or builder.
c. Also ask them what type of loans you qualify for and what is required of you to get the loan. Ask if you will need a down payment, and determine in advance a general estimate of closing costs.
3. Find a home and make an offer. Make sure they accept your financing type in advance (your Realtor® should only show you homes that do.) Once you have an accept offer, your Realtor® will send your contract to your lender to process it.
4. Help the process by turning in needed documents in a timely fashion.
5. Do NOT make purchases on credit while your loan is being processed. This means no cars or other vehicles, no 90-days same as cash, and no new credit cards. This could affect your ability to get financed and you could be liable for money lost by the seller.
6. Do not get frustrated if they ask for documentation up to closing. Each loan is different and they cannot predict everything that the underwriter will require. Cooperation is key and will make the process enjoyable.
7. All loan types require an appraisal to be done prior to closing to ensure that the amount of the money they are lending you is accurate. In other words, they will not lend you more than the home is worth. If your home appraises for less than you agreed to pay, the price of the home will have to be renegotiated (if the seller is willing.) If it appraises for more than the price you agreed upon, then you will have equity in your home right away.
Choosing an Area to Live In
Finding the right area to build or purchase your home can be a great adventure. Here are some tips to having a successful outcome:
1. Research the area and neighborhoods carefully. Crime reports are available online and often through the sheriff’s office or police department. It is also wise to know how far the emergency services are from your home.
2. Research school quality if you have school-age children. The school ratings are also available online. They usually will have information about the number of students who attend, test scores and demographics.
3. Visit your potential neighborhoods. Check them out during different times of the day and evening, including rush hour and the weekend. Talk with neighbors and ask people you trust for advice.
4. If you are new to the area, or have not moved there yet, ask co-workers or potential co-workers. Check out local newspapers or online news sources to check for trends in crime or improvements.
Choosing Between Building a New Home or Buying Existing
Deciding between buying a home and building a home is entirely personal. Some questions to ask yourself are: How much creative control do I want to have in my new home? How flexible am I about the floor plan? How much green space do I need, and how important are mature trees to me (tip: look for a builder that keeps trees whenever possible)?
1. If you choose to buy an existing home, choose a Realtor® to work for you. Realtors® help you get the best price for your home and are legally obligated to look out for your best interest.
a. Establish a budget.
b. View homes online and in person.
c. Write an offer with your Realtor®. In your offer, request a professional home inspection. The home inspection is a buyer’s expense but will make you aware of any repairs that you may need to address. Once your offer is accepted, you will have a contract to purchase your home.
d. Attend your home inspection. If you cannot attend, or choose not to, then review the written copy of your home inspection. Make a list of repairs that you would like to have done before closing. Your Realtor® will help negotiate your repair list with the seller.
2. If you choose to build a home, choose a builder.
a. Choose a neighborhood.
b. Establish a budget.
c. Get a contract with your builder.
d. Choose a floor plan.
e. Make your selections of building materials.
Eye on the Prize
Pay attention to the progress of your home preparation and get a home inspection.
If you are buying an existing home, then get a home inspection. If you and the seller agree to a list of repairs, your Realtor will help you make sure that this list is completed prior to closing. Choosing a home inspector is fairly straightforward.
Here are some tips:
• Ask for your Realtor and friends for suggestions.
• Do a license search on the state-licensing site.
• Inquire about his or her fee and in what format the inspection will be delivered to you.
• Check out their website and reviews (if available.)
Note: Home Inspector’s fees are typically due at the time of delivery of the report, not at closing.
For new construction, check in occasionally to make sure your building materials are correct. Let your builder know if you have any concerns. You can also get a home inspection for new construction for added security.
Utilities & Address Changes
Connect utilities. Start the process of setting up the transfer or connection of your needed utilities and services. Have a copy of your contract handy in case they ask for it.
• Cable or Satellite
• Phone/Cell Phone
• Trash disposal
Other address changes:
• Post office: change of address or P.O. Box set up
• Bank, Credit Cards, Personal Loans, & Investments
• Department of Motor Vehicles
• Professional Memberships and Licensing
• Healthcare Providers & Pharmacies
• Insurance Providers
• PayPal & Other Online Payment/Shopping Services
• Voter Registration
Remember: Not all businesses allow forwarding of their mail, so you must call them directly to make an address change.
Choosing a Home Warranty
Choosing a home warranty should not be daunting. First of all, remember that Blackacre homes come with a 1-Year Warranty, at no additional cost to you.
For existing homes, you should consider purchasing a separate home warranty. This is different from home insurance, and helps offset the cost of home maintenance. There are several companies to choose from. Do your research. Typically, they offer several tiers of coverage. The older the home, the more comprehensive your coverage should be. Look for a home warranty with a low per incident service charge and one that covers all of your major appliances and systems such and HVAC and plumbing.
Schedule closing. Most often, your real estate professional or builder will handle this for you, with your cooperation.
Typically, a buyer and seller attend closing, but in some situations, where it is not possible, the closing attorney can send the documents in the mail. Let them know in advance if you have special circumstances. Also in attendance will be, your Realtor®, your builder, your lender and the closing agent or attorney.
If your spouse is deployed or unavailable to sign the closing documents, you will need to obtain a Specific Power of Attorney, which has the home’s address specifically listed and allows you to sign on their behalf. A general power of attorney will not suffice in home buying. Let the closing company know well in advance if you need assistance obtaining a Specific Power of Attorney.
Attend your final walk-thru with your Realtor or builder. This is your chance to make sure everything is working properly as is aesthetically appealing.
1. Make sure your utilities are on before the walk-thru in order to ensure your appliances and fixtures are working properly.
2. Bring some colored sticky note to mark any areas of concern on the house itself.
3. Realize that some damage to the home can occur while moving your items in (picture large box-springs and mattresses turning tight corners) so ask your builder for a some container of touch up paint so you can repair your walls once you are settled in.
4. You or your Realtor® and/or builder will make a list of needed repairs.
Here is what you will need:
1. Make sure to have your identification and any last minute documentation that they request of you.
2. If you are required to bring any funds to closing, call the closing company in advance to ask what forms of payment they accept. Typically, a money order or cashier’s check is required.
3. Consider purchasing title insurance. Your closing attorney will explain the benefits of title insurance to you at the closing table. Prepare in advance by doing your own research on this product.
Closing generally takes about an hour or less. You will sign several documents that will be prepared in advance for you. If you have a power of attorney to sign for your spouse, it may take additional time as you will be signed your name, as well as their name.
You will receive a packet to take home with your deed paperwork, your loan documents, and where to send your first loan payment. When you get home, start a file with receipts and invoices for your home improvements. This will be useful if you ever decide to sell your home.
Photos by: Knox Shots, knoxshots.com