HOMEBUYING BASICS

A step-by-step guide to the homebuying process.

The process

Below is an outline of the steps you’ll be taking as part of becoming a homeowner.

·       How much can you afford?

·       Getting pre-approved for a loan

·       Deciding on a mortgage

·       Fine tuning your budget

·       Begin searching for a home

·       Making an offer

·       Your offer is accepted

·       The closing

Getting Started

You’ve decided to purchase a home! Buying a home is an exciting and smart investment. Homeownership brings a sense of security and the freedom of having your own space. Financially, it can provide a tax shelter and the opportunity to build equity.

How Much Can You Afford?

Before you begin searching for a new home, you need to determine a realistic budget that takes into consideration your current debt(credit cards, loans,etc.) as well as homeowner expenses such as taxes, insurance, utilities and maintenance.

Getting Pre-approved

A lender will lend you money if they are sure your credit is strong and if they are confident you can pay them back.

To determine if you’re a good candidate for a loan, they look at your credit score and study your financial history, income, federal tax returns and long-term debt such as credit cards, auto loans, child support, etc. If your credit looks good, you have an excellent chance of obtaining a mortgage.

Establishing Good Credit

At one time or another, many people blemish their credit report. If your credit report is tarnished, there are steps you can take to repair the damage.

First, examine the credit report thoroughly and make sure it’s accurage. If there are mistakes on the report, contact the credit reporting agency and ask them to remove the mistakes immediately.

Here are some other helpful tips:

·       Pay your bills on time and in full

·       Limit how many credit cards you have

·       Keep separate checking and saving accounts

·       Stay at your current job for a few years-the longer the better

Decide on a Mortgage

After you are pre-approved for a mortgage, it is time to decide on a mortgage type. There are many types of mortgages, and choosing the right one for you is an important decision. The two most common mortgages are a Fixed Rate Mortgage and an Adjustable Rate Mortgage (ARM). If you are interested in exploring additional mortgage programs, talk to a local mortgage professional.

When you apply for a mortgage, have the following items available for each borrower:

Two most recent pay stubs

Summary of current debt

W-2s or 1099s for the last two years

Federal tax returns for the last two years

Last two months’ bank statements

Fine Tune Your Budget

Now it is time to calculate your budget in more details. To help you, here are three major costs associated with purchasing a property.

1.     Down payment: This is how much you pay upfront. The larger the down payment, the smaller your mortgage. The standard down payment is 20% of the cost of the home, but other programs are available, especially for first-time homebuyers.

2.     Monthly Mortgage costs: Include the mortgage, homeowner’s insurance, mortgage insurance, property taxes and escrow deposits, which can be combined with the monthly mortgage payment.

3.     Closing Costs: Include appraisals, title insurance, inspections, title transfers and additional fees.

The Fun Begins

Your financial papers are in order, you’ve been pre-approved for a mortgage, and you have calculated your budget, now it is time to start searching for a new home!

Make an Offer

You’ve found the perfect home! Now it is time to make an offer. We will help you decide on an offer based on your pre-approved loan, current market conditions and the competition.

After you’ve determined an offer amount, we will present it to the seller on your behalf. Negotiations may follow between you and the seller as you work toward an agreement. This is normal, and we can support you through the process objectively and professionally.

Your Offer is Accepted!

Now it is time to finalize your loan and have inspections done. Based on the inspection results, repairs may need to be completed. The property is appraised, the title analyzed, the title insurance commitment is issued and the property is surveyed if necessary. At this point you need to secure homeowner’s insurance.

The closing

 

This is the day you have been waiting for! If closing is a new experience, try not to worry, we will guide you through it.

Bring identification, documents requested by the title company and escrow company. All fees and transaction charges will be disclosed as separate line items within the statement. During closing, the sale transaction is finalized. The Final Closing statement is released, all paperwork and agreements are signed, and the title of property is transferred- the home is now yours!

Congratulations!