First Time Home Buyer

Are you ready for that time of owning your first home? Are you wondering how to go about the process? This is the perfect place to start! We give you step-by-step instructions on how to get into your first home!

How to start the home buying process:

• Our goal is to help “demystify” the buying process for you. We’ll help you answer important questions, help you to do your research and plan financially to make the best decision possible for you and your family. By educating yourself on the basics of buying a home & the right home loan before you go house hunting you can save yourself a ton of money, time and aggravation.

• The most important thing to do is to get pre-approved for a loan amount even before you start shopping. Do this first so you will know the exact maximum you can obtain for financing and you can cut the best deal on your new home!

What about community amenities? Are there parks, pools, libraries nearby?

What are the estimated taxes on the home? Every home listing should include information on estimated taxes for the area. You can get tax information from the homeowner, your Real Estate Agent, or from the county’s tax office.

What type of city, county, or private services does the home use? Does the home use city water and sewer systems? Does it have well water? Is it part of a homeowners’ association that provides trash pick-up and landscaping services? all very important factors for possibly saving money.

Determining what area you wish to live in. Consider what you’re looking for in a home. Ask yourself the following:

• Do you only want to see newer homes or are you open to looking at older homes?

• Do you have a certain style of home in mind? The more open-minded you are when it comes to homes you’ll consider, the more options you’ll have when house-hunting.

• Do you have a certain style of home in mind? Are you interested only in single-family or condos/townhouses?

• How many bedrooms and bathrooms do you want? Not only to meet your current family needs, but think ahead to potential future needs such as having a home office or accommodating more children, guests, or aging parents.

• Do you like the kitchen? Does it have the appliances, cabinets, and counter tops you’d like? What about the age and condition of the appliances? How about the traffic pattern? Since families tend to spend a lot of time in the kitchen you want it to be a place where you feel comfortable and have enough space, or at least have an idea about what you’d change to make it the kitchen you’d like.

• Does it have a floor plan that works for you and your family? Do you like how the rooms are laid out?

• Does the house have the type or size yard you’d like? Is there enough space for kids to play or to entertain? Is it fenced? Can you landscape the way you’d like?

Should I have the home inspected by a professional?

Yes, no matter how closely you review the property, there are things you either wouldn’t know to look for, or wouldn’t be able to evaluate on your own.

By law, sellers are required to disclose anything that they know is wrong with the home; you’re also protected by a home inspection clause. Having a home inspection means that a professional home inspector will come and examine the home to give you an accurate picture of the home’s condition. The report will include the home’s interior, exterior, foundation, insulation, electrical wiring, plumbing, and more. A home inspector will not comment on the value of the home, or whether or not you should consider buying the home. Their only job is to report on the condition of the home.

It’s a good idea to be there during the inspection if possible. A good inspector will show you everything he or she is looking for. It can help to know what you’ll need to replace or update, and what to be on the lookout for that might give you problems down the road. The inspector should give you a copy of the report. Depending on what the home inspection turns up, you’ll have the opportunity to possibly renegotiate the contract to offer less for the home, or require the homeowner to make specific repairs before agreeing to close on the home sale.

What about working with a real estate agent? Real estate professionals can be very helpful in the home buying process. The benefit of using us for your financing is that we work with some of the best real estate agents in the business. Check with one of our loan professionals, they know exactly who will be best suited to your needs and goals.

Some of the benefits of using a real estate agent:

• They have access to the Multiple Listing System (MLS). The MLS is the electronic listing of all homes being represented various agents throughout your area of interest. This helps the agent locate multiple choices for you based again on your needs and goal.

• They may also know about homes that are available in your area of interest that are not being actively marketed on the MLS. They can also get referrals on homes in your price range from their large network of agents.

• They have time to research the local market, make appointments for you to see home. All of the things that you might not have time to do or want to do for yourself.

• They will prepare and handle all the paperwork related to the home sale for you.

• They can help you determine how much the home is really worth based on comparable sales in the market area.

• They have a responsibility to act in your best interest. Agents will always try to negotiate the best possible deal for you.

Offers & Counter offers

When you’ve found the home you want the next step is decide whether or not you want to make an offer, meaning that you want to tell the seller that you want to purchase the home. Making an offer is where you outline exactly how much money you’re willing to pay for the home and under what conditions.

Terms and Conditions

In addition to the sales price, your mortgage, and personal property, you’ll want to include your requests for terms and conditions of the purchase such as:

• Are there any repairs you want the seller to make? You should include any in the contract.

• What is your preferred date to move in?

Contract Contingencies

A contingency is a clause in your contract saying that if something goes wrong you are not legally bound to purchase the property.

There are two standard contingencies that most home buyers include in their contract: a financing contingency and a home inspection contingency.

• The financing contingency means that you are not obligated to buy the home if you aren’t able to secure specific financing from a lender either because you don’t qualify for the loan, interest rates rose above your listed maximum rate, or because you’re unable to sell the home you’re currently living in that you were planning to use as money for the down payment.

• The home inspection contingency means that you have the right to renegotiate the terms of the offer or can walk away from the deal altogether if the home inspection turns up something that you weren’t aware of or is something that carries a high dollar value, such as termite work, replacing a roof, deck, etc..

Where to Begin?

If you’re using a real estate agent you’ll have help in negotiating with the sellers and filling out the paperwork. If you’re buying a home on your own the seller may have an agent that will handle the process. Remember, the seller’s agent does not work for you he/she works for the seller and they are obligated to get the highest price possible for them.

Don’t do it alone! If you are not using an agent, it’s a good idea to have it reviewed by a real estate attorney. Whether you have an agent helping you walk through the process or not, the most important thing to know is that when it comes to making an offer on a home everything must be in writing.

Arriving at the Sales Price

How much do you offer for a home? The answer really depends on what type of a real estate market you’re in. In a hot selling market, it sometimes takes an offer over the asking price to get the home. If it’s not such a competitive buying environment you’ll have more room to maneuver and in that case you can consider offering less than the asking price.

What affects the price?

• Any repairs you may have to make
• Comparable sales in the neighborhood
• How long the house has been on the market
• Whether or not the price on the house has been reduced
• The seller’s personal situation, if they are getting a divorce, if they are relocating and need to move quickly all these may assist you as the buyer.

Tests

You can and should request an assortment of tests to be run on your home prior to purchase, including a test for radon, lead-based paint, asbestos, and termites.

• Termite Inspection. The termite inspection is required. If the home fails the termite inspection, the seller will be required to have the property treated for termites prior to selling.

• Lead-Based Paint. If the home you’re buying was built before 1978 you may also want to consider ordering an inspection for lead-based paint. Prior to 1978 lead-based paint was commonly used in residential homes.

• Radon Gas. Radon is a colorless, odorless gas that moves up through the ground and enters homes typically through the foundation or basement area. Radon has been linked to lung cancer, particularly in smokers.

• Asbestos. Although asbestos is harmless unless airborne, if you’re looking to purchase an older home, chances are good that the builder used asbestos in the flooring, walls, siding, or other area of the home. If you’re considering doing major renovation to an older home it’s good to know if you’ll be working with materials that contain asbestos. Asbestos has been linked to lung cancer.

In addition to ordering the tests, you can also negotiate to have the seller pay a portion or all of the fees for the tests to be performed.

Earnest Money Deposit

You will have to make an earnest money deposit to show the seller that you’re serious about your offer. A seller doesn’t want to take his/her house off the market, which is what happens when they accept a contract, if he/she is not sure that you’re genuinely serious about buying the home. The amount of the deposit that you’ll be required to make varies, but is typically between 1 to 3% of the sale price.

The check will not be cashed right away, it will be held by a third party (such as a title office, attorney or a real estate agent) to ensure its safety. If your contract is accepted and you purchase the house your check will be cashed and the deposit is subtracted from your down payment and/or your portion of closing costs.

Different scenarios if the contract falls through.

• If you back out of the deal you’ll forfeit your deposit.

• If the seller breaks the contract the deposit will be refunded to you.

• If you have a home inspection contingency and the home inspection reveals something that you want to ask the seller to repair and the seller refuses, you have the right to walk away from the contract and the deposit will be refunded to you.

The contract should indicate who would hold the deposit and under what circumstances it will be refunded to the buyer (usually only if the financing falls through or if the seller backs out of the agreement to accept another contract) will this be the case.

Before Sending the Offer

Review it with your agent or professional, attorney. Once the seller accepts the contract it is legally binding.

After Making the Offer

• The seller rejects your offer and the contract offer is null and void, or

• The seller presents a counter offer with revisions to your original offer.

• • This is where the negotiating begins. You know what you want, the seller knows what he/she wants and the counter offer is best described as the middle ground everyone can or cannot agree upon.

• • Once they accept or make a counter offer you will review the counter offer add any additional changes on your part or sign/initial to accept changes and send back. This could go on forever, but usually an agreement is reached in the second or third counter offer (keep fighting).

Once you are successful you go into escrow or settlement:

This is where you and the seller “close” the deal. Closing on the property and your home loan transpires when you sign all the papers transferring ownership of the property from the seller to you.

Balance of your Down Payment

At the closing the balance of your down payment is due and payable. Remember that earnest money deposit? It will now be applied toward your down payment amount. A cashier’s check or a certified check is typically required for the down payment. Your bank will supply you with one.

Time to Move In

Once you finalize all of the documents it is time to move in. GREAT JOB!

If you have any unanswered questions be sure to contact one of our loan professionals for additional advice and professional contacts.