Your Credit
Building positive credit before starting the home buying process and then checking your credit report regularly is a must. Once you apply for a mortgage the loan officer will pull a credit report before formal loan application is even made and then again right before you close on your home. It is very important that you do not apply to purchase anything on credit while you are in the process of buying a home. We have seen home purchases get almost to the closing table only to fall apart when the final credit report is pulled exposing new lines of credit. In some cases this has prevented individuals from owning the home of their dreams.
The Buyer
Are you tired of renting and thinking about purchasing a home of your own but unsure of the first steps to take? Or if buying a home is even the right decision for you and your family? You’ll want to start by reviewing your credit report and fixing any errors. Next determine what you need, want and desire in a home. Needs are based on your situation for example: “We need at least 3 bedrooms..” Wants are non essential but preferable for example: ” We’d like a fenced yard. Desires are the luxury things for example: a swimming pool or a hot tub! Not all the items on your list will fit into your budget so you will need to be flexible. As you start looking at homes in your price range decide what items on your list are most important to you and adjust as necessary.
Your Credit
The first step in the loan process is to get either a pre-qualification or a pre-approval from a lender. A pre-qualification tells a buyer how much home they could potentially afford. It gives the purchaser a ball park as to where to start in their home search. A pre-approval means a lender has done a more in depth examination of the purchasers financial situation and that the lender is ready to give a more concise opinion. In order to move toward loan approval the buyers will need to have a ratified sales contract, a complete a loan application, and all the documents about their finances that the lender requests. The loan documents, along with the appraisal eventually go to the underwriter to get the loan finalized and ready to close.
The Mortgage
The Appraisal
The appraiser is hired by the bank to determine the value of the property the buyers are purchasing. The appraiser is governed by a set of rules that they must follow and each loan program has a set of guidelines that must be adhered to. When an offer to purchase is made it is the duty of the realtor to know if the property can be purchased with the buyers loan program. Repairs recommended by an appraiser must be completed before a sale can go to closing.
The Home Inspection
The home inspector works for the buyer. It is the home inspectors job to inspect the sellers home and recommend needed repairs. The buyer can request the seller make any repairs at cost to the seller. We offer all of our sellers a FREE home warranty during the listing and after closing to the buyer, giving both the seller & buyer peace of mind that the big ticket items are covered by a home warranty.
The Contract
You have found the perfect home and your are ready to make an offer on the property. Making an offer spells out the terms between the buyer and the seller. These terms are negotiable, for example the purchase price, the day of closing, the number of days to do the due diligence with inspections etc. Once the terms have been agreed by the buyer and the seller, the offer to purchase then becomes the a contract. The contract is not completely “ratified” until both the buyer and the seller have a copy in hand.
Loan Programs
Loan programs are the expertise of the lender not the realtor. The loan officer will recommend the type of loan for the purchaser based upon the purchasers needs. For example there are loans designed for rural properties. These types of loans are based on homes in a certain density of the population and are known as Rural Development (RD) loans. A VA loan is designed for veterans only. There are no money or low down payment loans and the more traditional loans with larger down payments. Meeting with a lender before starting the home buying process is advisable for any purchaser
Costs To Purchase
Costs to purchase a home are all the normal expenses you can expect to pay from the time you write an offer up to, and including at the closing table. Once your offer has been accepted your first expense is probably going to be a home inspection. The cost of a home inspection will vary depending on the sq ft of the home you are purchasing. The average price for a home inspection for a 1000 sq. ft. home is $325. An appraisal is another cost that will be paid for before you go to the closing table.