WHAT TO EXPECT WHEN BUYING A HOME
- First you will need a pre-approval letter from your lender. If you do not have a lender in mind I can give you several referrals. This is to insure you are looking at homes that you will qualify for. Plus it will determine what type of loan fits your needs, help determine what type of loan and the current interest rate and get an idea of your approximate closing costs. I will also need a copy to send along with your purchase agreement to insure the seller you are a qualified buyer.
- Start looking at those homes you are interested in. When you find a home that you like I will do a market analysis of the neighborhood to see what homes are selling for to insure you are not offering more for the home than it is worth in today’s market. Please note that the appraiser will not let you pay more for the home than it is worth as well.
- Write an offer to purchase home. Please make a reasonable offer to the seller. If not you may risk offending them or losing the opportunity for any future negotiating. At this time you will need an earnest deposit of usually $1000 made out to the Title Company who will be handling your transaction. We will negotiate the price and terms of the agreement until all parties agree. Once agreed upon and final signatures received I will send purchase agreement to your lender to start your loan process and give you a good faith estimate of your closing costs and down payment needed at closing.
- Please make all of your payments on time and do not purchase anything such as furniture, a car, etc. and do not quit your job or change jobs. Ifyour marital status changes I will need to know this information as well. They will check your credit again before closing to insure you still qualify for the loan. If they see a large purchase or charge on your credit card this could change your available credit. So please wait to purchase large items until after you have closed on your new home.
- I will set up your home inspection to be completed within 10 days. We will meet with the inspector at the home to go over all the details of the inspection, and show you all of the important information about the home that you will need to know as a home owner. If there are items that did not pass the inspection we will ask the seller to repair or replace. You will need to pay for the inspection at time of service. The cost depends on the square footage of the home and is on average between $300 to $500 dollars. If this is part of closing costs paid by the seller you will be credited at closing for the amount of the inspection. I will get all home repair receipts from the seller to make sure the repairs were made appropriately.
- Other inspections. Appraisal, termite and any other inspections you requested will then be ordered by the title company.
- Home owners insurance. This is your job! Please check with me prior because this may be part of your closing costs that are paid by the seller. If that is the case you will not need to pay for it up front. It will be paid by the title company at closing. You will just need to get the information to your lender.
- Final walk thru. 24 to 48 hours prior to closing we will do our final walk through to insure the home is in the same condition as it was when we looked at the property initially.
- Closing. You will be required to show a form of identification and to bring a certified check made out to the title company for the remainder of your down payment and closing costs. This amount will be on the HUD 1 Statement that your lender will send you the day before closing usually. This statement breaks down all costs and if you or the seller will be responsible for that amount. The closing process normally takes 30 to 45 days. Please be aware that there could be delays. So it is very important to get all requested information to the lender as soon as possible to prevent any delays. At closing you will sign all documents to purchase the home and get keys to your new home. Then you are free to move in when ever you like. The home is now yours. Congratulations!
Out of Pocket Expenses
Earnest Deposit Due at time of offer on home and is subtracted from your total due at closing. (Usually $1000.)
Home Inspection Due at time of inspection (3 to 5 days after accepted offer.)(Approximately $300 to $500.) If this is part of your closing costs paid by the seller it will be subtracted from the total amount due at closing.
Appraisal Due when appraisal is ordered (depending on the lender. Not all lenders require you pay for it up front) (approximately $500.)
Home Owners Insurance Due before closing (unless it is part of your closing costs paid by the seller.)
Down Payment and Closing Costs Due at time of closing.
Closing Costs are usually between 3% to 5% of the purchase price of the home. In today’s market it is typical to have the seller pay for most or all of these costs for you as the buyer up to a purchase price of about 250K to 300K. This means you can purchase a home for as little as your down payment.
VA Loan – No down payment is required. 100% financing for Military personnel.
FHA Loan – Down Payment is currently 3.5% of purchase price.
Conventional Loan – Down Payment is either 5%, 10%, 15% or 20%.
Rural Communities – 100% financing may be available. No down payment.