Maxxum Realtors & Associates Inc

You're Only 11 Steps Away From Buying a Home

Step 1, Get Your Finances in Order Your credit reports are an ongoing look at how you manage your finances. You must know exactly what your credit reports say about your financial history before you apply for a mortgage, because the reports play an important role in the mortgage approval process and in determining the interest rate and other loan terms that a lender offers you. If you haven't looked at your credit reports, you might be surprised at their contents, because errors are common. Step 2, Get Familiar with the Mortgage Industry Finding the right loan and lender is crucial to your home buying success. It's up to you to determine which lender is best for your needs, and it's always a good idea to have at least a bit of background about the loan process before you speak to a lender. Step 3, Get Pre-Approved for a Mortgage Do you know how much house you can afford? Probably not! Unless, you've spoken with a lender! Pre-approval helps you in other ways. Consider this scenario. A home seller gets two similar offers. One is accompanied by a letter from the buyer's bank that states she is pre-approved for a mortgage in the amount of the offer. The other has no supporting documents. Which offer do you think the seller will consider first? Step 4, Determine Your Wants and Needs Buying a home isn't as difficult as you might think, even if you're short on funds, but the process will go a lot smoother if you get familiar with your real estate market and narrow down your wants and needs before you start looking at houses. Are you a good detective? That's what you'll need to be to find and buy a home you love. The home buying process is a journey that requires you to pay attention to small details, ask questions, take notes and stay current with the real estate market in your area.Grab a piece of paper and divide it into three columns. If you'll have a co-owner, have that person make a list too, but don't share ideas just yet. Column 1, List Must-Have Features If the house must be located in a specific neighborhood or school district. If the house must have 3 bedrooms, a 2 car garage, a large kitchen, a view. If there must be no restrictions against a home-based business. If the home must be one level, with few or no steps. List every feature you feel is a must. Column 2, List Features You Would Like: A basement or a deck. Whirlpool tubs, walk-in closets. A certain type of architecture. Gas heat. Central air conditioning. List all features that are important to you--but that you might be flexible about. Column 3, List Features You Do NOT Want: A home located next to a highway or in a congested area. Certain types of architecture. Homes that need a great deal of work. List all features you absolutely cannot accept. Review your list. If your co-owner made a list, compare them to see if your priorities match. If they don't, you'll need to compromise, revising your lists so that both of you are happy. Making a list is a good exercise because it forces you to think about your wants and needs, but I can almost guarantee you that the list will change and evolve when you actually begin to look at houses. Even home buyers with an unlimited budget rarely find the "perfect" home. Before You Start Looking Before you head out to look at properties, get your finances in order. If you haven't reviewed your credit records, do it immediately. It isn't unusual for records to contain errors--and they can't be fixed overnight. Get as many credit report problems corrected before you talk to a mortgage broker or lender. Here are some tutorials to help you check and correct your credit reports. Step 5, Learn to Work with Real Estate Agents Real estate agents represent buyers, sellers, or both--and in some states they can work as neutral facilitators for either party. It's essential to understand agent duties and loyalties before you make that first phone call.

Does Your Real Estate Agent Work for You?

Agent Loyalties and Disclosures You're buying a home. Does your real estate agent truly work for you? In the past, home buyers often assumed their real estate agent worked in their behalf. After all, the agent showed them lots of properties, called regularly to tell them about new listings, wrote the offer to purchase, and answered questions about mortgages and other issues related to the sale. Buyers felt free to give confidential information to an agent, unaware that it was the agent's duty to pass the information on to the seller. Today, many states have enacted laws to help protect and educate buyers. Most real estate agents are required to disclose whom they work for. The disclosure may take place at your first face-to-face meeting, during a phone call, or by e-mail, but it should always be made before a real estate agent asks for specific information about your needs. Disclosure Terms Seller's Agent An agent working for the real estate firm the seller has employed to sell property. In a Multiple Listing situation, all offices work to sell each other's listings, so even if another firm holds the actual contract, all real estate agents are sub agents for the seller. A seller's agent may ask you to sign a statement that verifies she disclosed her agency status to you. It is not a contract, simply a disclosure. Buyers should not disclose confidential information to a seller's agent. Buyer's Agent A real estate agent who has signed an agreement to work in the best interests of a buyer. The agreement is a contract, and by signing it you are (usually) committing to work exclusively with that agent. Agreements can remain in force for any period of time you both agree to, even as little as one day. A Buyer Agency Agreement doesn't necessarily mean you must pay a fee to the agent. They are usually paid a portion of the seller's commission fees at closing. However, a contract may state you will pay the agent a fee if you purchase a For Sale By Owner home, so discuss that scenario with your agent before signing. Dual Agent Dual agency occurs when a Buyer's Agent shows the client a listing held by her own real estate firm. It's more difficult to handle dual agency, since the agent has responsibilities to both parties. Dual agency must typically be disclosed to the buyer and seller in advance, and both must agree to it in writing. Agent's duty is to get the best possible price and terms for the buyers. Agent must disclose all material facts about property (bad roof, plumbing problems, etc.) Agent should disclose personal facts that indicate sellers will accept a reduced price (such as impending divorce, foreclosure, etc.) Buyer agency isn't the best choice for every situation, but if you are comfortable with an agent, employing the agent to work for you can save you time and money. Real Estate Seller's Agent Agent's duty is to get the price and sales terms sought by the seller. Agent must disclose the same material facts required of a buyer's agent. Agent cannot disclose personal information about sellers without their permission. Real Estate Dual Agent A dual agent cannot disclose personal information about either party. The dual agent must show care for the interests of both the home buyer and the home seller. Step 6, Start Searching for a Home Your agent will give you multiple listing sheets to study. I'm sure you'll also pick up House For Sale magazines and read classified ads in your local newspapers. You'll probably spend time surfing the Internet for homes. You might even plan afternoon drives to preview neighborhoods. Those are all excellent ways to see what's available. Here are some tools to help you narrow your home buying search. Click the link above: Search for Properties. This is live MLS so if you picked up a magazine or book chances are that home might be already sold. Become efficient. Shouldn’t I look for For Sale By Owners? You should definitely look at them and if you like them make sure you do things in the proper manner. There are many laws governing home purchase and sales these days. Make sure all the disclosures are made to you and you know of any latent defects. Step 7, Handle Pre-Offer Tasks Deciding whether or not you want to buy a house involves a look at its structure and its features, but there are many other topics that are every bit as important to your purchase. You should think of these things before purchasing or ask a Real Estate Consultant. How's the Resale Potential? Contract Contingency Basics What Kind of House Is It? Site Built, Modular, Manufactured Do Others Have a Right to Use the Property? Can You Live with the Deed Restrictions? Is the Reported Square Footage Accurate? Is the Heating System Efficient? Step 8, Make an Offer There's no one set of instructions that can cover all the differences in real estate laws and customs that exist throughout the United States, so the mechanics of making an offer and its specific contingencies depend greatly on your location. However, there are some home buying tips that can help you fine-tune your offer, no matter where you live. What Comes With the House? Contract Considerations What Should the Seller Disclose? Determine if Lead Paint Disclosures Are Required Decide How Much to Offer Asking for Possession Before Closing Special Considerations for; For Sale By Owner Purchases Step 9, Home Inspections and Other Tests In some states, home inspections are accomplished before the final purchase contract is signed. In other states, inspections take place after an offer is finalized. No matter when you do them, it's critical to decide which inspections and tests you want to perform. Talk with your real estate agent or other advisor to find out when inspections should be handled and if additional types of testing are important for your specific area. Step 10, Avoiding and Correcting Last Minute Problems As your closing date nears, everyone involved in your real estate transaction should check its progress on a daily basis, because staying on top of things means you'll know immediately if there's a problem that must be dealt with. Here's a bit of information that focuses on a few common problems that home buyers must deal with before they close on a house. Ten Things Home Buyers Should Avoid Doing Before Closing on a Home Your home buying process is well underway. The sellers accepted your offer to purchase. The home is officially under contract and you're counting down the days to closing. The lender pre-approved you, so buying the house is a sure thing, right? Not quite. Nothing is certain until the keys are in your hand and the deed is recorded. There are still hurdles to get past before it's yours, and your actions between now and closing can create headaches, slowdowns and even stop the transaction. 1. Don't Make a Major Purchase You've just found out your credit is A+. That's great news, because a new car would look fantastic in the driveway of your new home. But hang on--if you are depending on a mortgage to move in, you'd best wait until after closing to buy that car. An increase in your debt to income ratio reduces the amount of monthly income available for your mortgage payment. If you tack on a higher car payment, the bank might decide you can't afford the home. Using cash to purchase the car could also create a problem, since banks consider cash reserves when approving your mortgage. If you must make a major purchase before closing, talk to your loan officer before you do it. 2. Don't Change Jobs Unless It's Necessary Lenders like to see a consistent job history. They aren't usually as nervous if you change jobs within the same field, but it's better to stay put until the house is yours. 3. Don't Give an Earnest Money Deposit Directly to a For Sale By Owner Seller Your good faith deposit should go into a trust account. Some for sale by owner sellers don't understand that funds are not theirs to spend until closing. I've heard many stories about sellers who spent the deposit money prior to closing. When the transactions didn't take place for valid reasons--such as financing or repair issues, the buyers had to fight for a refund. Find an attorney or other neutral party who will hold the deposit for you until closing day and make sure your contract dictates what happens to the funds if the transaction doesn't close. 4. Don't Let Your Emotions Take Over Keep a cool head during the entire home buying process, especially during and after a home inspection. Be realistic. No home is perfect, especially older homes. It's not unusual for new owners to take care of some repairs themselves. Don't let the seller's refusal to do a small repair kill the deal on a home you truly love. On the other hand, don't fall so much in love with the house that you'll buy it no matter what needs to be done--unless you're sure you can handle it emotionally and financially. Decide what type of repairs you can realistically tackle, then stick with the decision. 5. Don't Forget to Switch Utilities That sounds simple, but you'd be surprised how many people forget to apply for utility service at their new home. Call the utility companies as soon as you have a contract. Find out how many days lead time they need to switch the service, then get back with them when you have a firm closing date. Don't forget to discontinue services at your old home. 6. Don't Forget to Line Up Your Hazard Insurance A no-brainer, right? But it's another often-forgotten task that buyers scramble to take care of at the last minute. Before closing, your lender will want to see an insurance binder showing you have coverage for the new home. Get it as early as possible so that closing isn't delayed. In some locations, additional types of insurance coverage might be necessary. Talk to your lender about insurance requirements well before the closing date. 7. Don't Become Best Friends with the Seller I'll get some flack on this one. It's great to be friendly, but don't get into too many long discussions with the sellers, because personality conflicts often cloud judgments. Remember, this is their home. You're no doubt excited about moving in, and if you didn't like the house you wouldn't have offered to buy it. But you'll make changes--everyone does. A casual statement about "ripping up that ugly carpet" might be hurtful enough to keep the seller from negotiating with you about repairs or other issues that crop up. 8. Don't Panic if the Appraisal Comes in Low At least not at first. There are some things you (and your agent) can do to correct the problem. Study your options. 9. Don't Go To It Alone If you're working with an agent, it's the agent's duty to track many of the day to day details that involve the lender, the seller, or the seller's agent. Be sure your agent schedules a final walkthrough just before closing. 10. Don't Ignore Lender Requirements Know what is expected of you and take care of it. For instance, a Certificate of Eligibility is required to move forward on a VA loan. That's something you must handle yourself. Answer lender questions and provide required paperwork as quickly as possible--moving into your new home depends on it. Step 11, You're on the Way to Closing Most of your home buying problems are behind you now and you're on your way to closing, also called settlement, the event that transfers ownership of the property to you. Just a few more things to do, and you're there! Closing Thoughts The steps outlined in this article are a general home buying guide. You will encounter issues specific to your location and your transaction, issues that can best be explained and handled by your local real estate agent, your lender, your attorney, your closing agent, or others who are helping you complete the home buying transaction. Never hesitate to ask questions. Ask as many questions as necessary to help you understand the entire home buying process. You are making a long term commitment and spending a major amount of money--you'll feel much better about the transaction if you stay informed and understand what's happening every step along the way.