Buying A Home
Buying a home is a big investment.
Buying a home
For most people, buying a home is the biggest investment they'll ever make. Annual mortgage, taxes and insurance costs can range from 25% to 40% of the gross annual income.
If you are reading this, you're on your way to making the home-buying process easier by learning all you can about the process before you buy. Read, talk to family, friends and be sure to talk with a real estate professional. You'll be glad you took the time to learn about the process of buying a home.
- Get pre-approved before you start looking for a home.
The difference between Pre-approval and pre-qualification. In the pre-qualification process, the loan officer will asks you a few questions, and provide you with a "pre-qual" letter.
- The pre-approval process is much more thorough.
During the pre-approval process, the mortgage company does virtually all the work associated with obtaining full-approval. There will be no appraisal or title search at this time because a property has not been identified.
With pre-approved, you have more negotiating clout with a seller. The seller knows you can close the transaction because a lender has carefully reviewed your income, assets, credit and other relevant information. In some cases (multiple offers, for example), being pre-approved can make the difference between buying and not buying a home. Being pre-approved you are in position to save thousands of dollars because you are in a better negotiating situation.
Professional Realtors® don't show homes until you are pre-approved. Time can be wasted and time is money in the Real Estate business. The professional agents do not want to waste your time, or the seller's time.
Most mortgage companies will help you become pre-approved at little or no cost. They'll usually need to check your credit and verify your income and assets.
- Making verbal (oral) agreements!
Make sure that everything you do is in writing. Your agent should also make sure that you understand all the required documentation associated with acquiring an agent, making an offer to closing on the selected home. You should avoid any verbal agreements--the written contract will override the verbal contract. In fact, written contracts almost always override verbal contracts. When buying or selling real estate, Always Get It In Writing!
- Selecting a lender with the lowest rate.
The overall cost of a loan should always be considered when shopping for rates. Pay close attention to the APR, loan fees, discount and origination points. Some lenders include discount and origination points in their quoted points. Other lenders may only quote discount points, when in fact there is an additional origination point (or fraction of a point).
This difference in the way points are sometime quoted should be important to you. One lender will quote all points, while another lender may disclose an extra point, or fraction thereof, at some later date-you don't want any surprises.
Within 3 working days after receipt of your completed loan application, your mortgage company is required to provide you with a written good-faith estimate of closing costs.
Requesting a GFE from a few lenders before submitting your application is a good practice. You will be in a position to better evaluate which lenders are more thorough by getting a few GFEs for comparison. By educating yourself on the costs associated with your transaction you could save a few thousand dollars. However, the GFE with the highest costs may not be a good indicator as to which lender is more expensive than another--in fact, they may be more diligent in itemizing all fees.
The cost of the mortgage, shouldn't be your only criteria. Use all your sources and interview other prospective mortgage companies. You should feel comfortable with the loan officer you are dealing with and feel that he or she is committed to your best interests and will deliver what's promised.
- Your Realtor® may recommend a lender.
Realtors are not financial experts. They may not know which loan is best for you. Your Realtor® do not get any payment from the lender he or she gets a commission only when your transaction closes. As a result, the Realtor® may refer you to a lender who will close your loan, but who may not have the best rates or fees. Most Realtors® will refer you to a lender who has a track record of satisfying their clients--who also may not have the best rates or fees. Although most Realtors® are professional and concerned about your best interests, you owe it to yourself to do your own homework in this area.
I recommend shopping for a loan with at least three mortgage companies before you make a decision. There are countless stories of consumers who ended up paying higher rates, or got a loan that wasn't right for them, because they blindly followed their friend's advice or settled on the first lender they met.
- Locking in a rate.
Remember always get it in writing. You should not trust your lender either. When the mortgage company tells you they have locked your rate, get a written statement detailing the interest rate, the length of the rate lock, and other particulars about the program. If it's in writing you have it.
- Using a dual agent (an agent who represents the buyer and seller in the same transaction).
Buyers and sellers have opposing interests. Sellers want to receive the highest price; buyers want to pay the lowest price. Make sure that your agent has a reputation of being fair and honest with his or her clients. The dual agent should walk a tight line when he has to wear both hats. Some buyer usually require that their your own agent represent them and will not use a dual agent.
Dual agents sometimes can see the whole picture and make sure that both buyer and sell have all the facts to make an educated and qualified decision.
- Buy with a professional inspection.
It is highly recommended that you get property, roof and termite inspections before you buy. These reports will give you a better picture of what you're buying. Inspection reports are great negotiating tools when it comes to asking the seller to make repairs. If a professional home inspector states that certain repairs need to be made, the seller is more likely to agree to make them.
If the seller agrees to make repairs, have your inspector verify the completed work prior to closing. Do not
- Confirm homeowner insurance prior to closing.
Shop for insurance as soon as you have an accepted offer. Many buyers wait until the last minute to get insurance and find they have no time left to shop and pay premium price.
- Read all the documents before signing.
Review the documents you'll be signing and allow plenty of time to do so. Take the time to read and understand all the documents you will be signing. Utilize your agent to help you understand everything, Agent agreements, the closing, and the loan documents. By giving yourself plenty of time you will get your questions answered in a timely manner. Remember to consult your lawer if you have any doubt or legal misunderstanding.
- Take care of all your moving plans.
You will be expected to be out of your current residence on the day of closing if selling and if buying your new home should be available for you to move into after closing.
Loan closing and almost everything that can go wrong will prior to closing causing delays. Plan careful and use your agent to insure that everything has been taken care or prior to the date of closing. Allow some wiggle room just in case
- Moving in.
After closing and the moving company has left and you finally get to sit down you should be comfortable knowing that your insurance is in place and all the alarms are in working order. You should also know that your warranty is in place and all the utilities are working and in good shape. You should be satisfied and your home should provide you comfort and relaxation for as long as you take care of it. Call your agent and discuss any future needs you think you may have and enjoy your new home.
Work with a realtor. Call me at 919-427-8892 for a free consultation if you are not already working with a realtor. This could be the most important call you make.
The Real Estate