If you think you are prepared to take the leap from renter to homeowner, then it is important to take a financial inventory of your lifestyle, debts and assets. Are you gainfully and reliably employed? Lenders look for those who will pay their loans payments on time, and consistent income is a must to qualify. Do you have enough money saved to put up a down payment? Your credit score should be in at least fair to good shape and only contain a few outstanding debts that can be easily resolved. Your payment history should show a good record of payments being made on time. WHAT IS THE LENDER’S FORMULA?
The lender’s formula is a complex configuration of debt-to-income ratio, available credit and score, credit history and the amount of available cash for the down payment and closing costs, as well a few other numbers. WHAT IS PRE-QUALIFYING VERSUS PRE-APPROVAL?
Before setting up any appointments to view homes for sale with a real estate agent or homeowner, find out the likelihood of you being able to get approval for a home loan. In pre-qualification, you are given an estimate of what you may be able to borrow based on limited financial information provided in a form. This is an easy way to determine how much you could possibly spend on your real estate home purchase. To be pre-approved means a financial institution has agreed to work with you and has already taken a deep view into your financial situation. Pre-approval gives potential home buyers more solid answers on how much they can afford during the home buying process. SHOULD I TALK WITH A BANK BEFORE LOOKING AT HOMES? BUDGETING
The answer to the question is YES! There are tons of reasons why you should talk with a bank or mortgage specialist and get pre-approved before looking at homes. First and foremost, it can help you understand exactly how much you can afford. There is no reason to look at homes that are listed for $250,000 if you can only afford up to $200,000.
If you’re a first time home buyer there are many first time home buyer programs available. These programs can vary from state to state and county to county, so knowing exactly what’s available to you, is critical.
Another important reason is so you understand exactly what costs are associated with buying a home. There are many home buyers who don’t understand the difference between a down payment, pre-paid items, and escrows, which can be thoroughly explained by a mortgage professional. A mortgage professional can give you advice on the type of financing you should be looking to obtain and also whether or not you should request the seller to contribute towards your closing costs, also known as a seller’s concession.
WHAT DO I LOOK FOR IN HOMES?Working with a licensed real estate professional can help you walk through a buyers need analysis to look into this further. How son do you want to move? Where do you want to move? Is this home in my budget? Style of home, age of home, square feet, number of bedrooms, bathrooms, and more. What is most important to you? What do you not want in a home? What could I do without if I had to?
Everyone buyer has different needs such as school systems, drive time, how many levels, and so much more. Walking through this with a licensed real estate professional will help you find the home that is right for you.
SHOULD I ASK FOR A HOME WARRANTY?The decision to purchase or ask a seller for a home warranty for the purchase is entirely up to you, the buyer. Some sellers may offer one up in their listing agreement or agree to one based on your offer. A home warranty provides coverage on appliances and specific items for a specific amount of time, typically at least a year. Many first-time home buyers may purchase a home warranty or request one to be offered by the seller in their offer, so they are covered immediately after making their home purchase. This is smart for a buyer, as finances may be thinner during this time, and in the event of unexpected repairs or replacements, the warranty will kick in to save the day. WHAT SHOULD I EXPECT AT CLOSING?
The time an offer is submitted and accepted and up until the closing date, many events and documents will transpire and be signed. This is done so at closing; the experience is designed to be as seamless as possible. This is the formal signing of all documents to make the transfer of the property. All documents requested should be provided, funds delivered ahead of time or brought to the closing table, final documents signed, and keys passed to you the new home owner. DO I REALLY NEED A REALTOR WHEN BUYING A HOME?
When buying a home, it’s strongly recommended you have a REALTOR®. They have a responsibility to help protect you during your buying process. They will also be able to do a lot of the legwork of coordinating up showings, assist in drafting up purchase agreement, and assist in coordinating up all inspections, ensuring appraisals are ordered, sellers are delivering all documents required by title company, and more. WHO PAYS THE REALTOR® FEES WHEN BUYING A HOME?
This is dependent upon a number of elements. The buyer may be responsible based on if they have an exclusive buyers agreement. The seller may be responsible if they coordinated up an exclusive sellers agreement and are offering up a percentage to co-op brokers, which then pays for the buyers agent. Make sure to ask your real estate professional this question. IS A PRIVATE HOME INSPECTION WORTH THE MONEY?
It absolutely is! For most people, a home is the largest investment they will ever make and protecting that investment by spending a few hundred dollars is well worth it. An inspector checks the safety of your potential home. Home inspectors focus especially on the structure, construction, and mechanical systems of the house and will provide you with a report of any repairs that need to be take care of, suggestions on how to maintain your home, and most importantly, will provide you with peace of mind. Some sellers will allow you to make the sale of the home contingent upon completion of a satisfactory home inspection. In this case, the seller will either make the proper repairs or compensate you for the repairs that need to be made.
Please be aware that the purpose of a home inspection is to point out repairs that can affect the safety and resale value of your home, not cosmetic blemishes. Be sure to choose a home inspector wisely. Be sure to ask questions and find out how many years they have been in the business. Talk to your family, friends, and REALTOR® to see if they can recommend one to you.
WHAT IS RADON?Radon is a radioactive gas released from the normal decay of uranium in rocks and soil. It is an invisible, odorless, tasteless gas that seeps up through the ground and diffuses into the air. In a few areas, depending on local geology, radon dissolves into ground water and can be released into the air when the water is used. Radon gas usually exists at very low levels outdoors.
Radon can enter homes through cracks in floors, walls, or foundations, and collect indoors. It can also be released from building materials, or from water obtained from wells that contain radon. Radon levels can be higher in homes that are well insulated, tightly sealed, and/or built on uranium-rich soil. Because of their closeness to the ground, basement and first floors typically have the highest radon levels.
Any home can have a radon problem. This means new and old homes, well-sealed and drafty homes, and homes with or without basements. In fact, you and your family are most likely to get your greatest radiation exposure at home. That is where you spend most of your time. Nearly 1 out of every 15 homes in the United States is estimated to have an elevated radon level (4 pCi/L or more). Your home inspection may want to include Radon checks. There are also kits available at many of your local hardware stores that you can purchase to test yourself.
WHAT MAKES UP CLOSING COSTS?Closing costs could be made up of the following:
- Attorney’s or escrow fees (yours and your lender’s if applicable)
- Property taxes (to cover the tax period to date)
- Interest (paid from date of closing to 30 days prior to first monthly payment)
- Loan origination fee (covers lender’s administrative cost)
- Recording fees
- Survey fee
- First premium of mortgage insurance (if applicable)
- Title insurance (yours and lender’s)
- Loan discount points
- First payment to escrow account for future real estate taxes and insurance
- Paid receipt for homeowner’s insurance policy (fire and flood insurance if applicable)
- Any documentation preparation fees
The seller must complete a Disclosure of Information on Lead-based pain and/or lead based pain hazards for any home built prior to 1978. It simply asks the seller to disclose any known use of existing lead-based paint or lead based paint hazards. It also requires any purchaser to acknowledge the received of this document and received all information listed above and to receive a pamphlet titled Protect Your Family from Lead in Your Home. Certain areas of communities may be more prone to Lead-Based paint than others, so make sure to talk to your REALTOR®.
