The first
thing someone who decides they want to buy real estate
is eager to do is search for homes, drive by homes, tour
the interiors of homes, compare homes, etc. Usually the
last thing they want to do is the homework involved in
qualifying for a mortgage and understanding the legal
forms they will encounter during the process. In recent
years the blizzard of new laws and state and federally
mandated forms has escalated to the point that the
amount of homework which any buyer should do is going to
require considerable time and effort. Make sure you
contact one of our agents to get a buyers package which
will include most of these forms so that you can do your
homework without feeling rushed or pressured at a
critical moment during your real estate transaction.
Some of the newer forms below
are for educational purposes only and are not to be used
for use, the more
information you have the better your home buying
experience will be:
This Buyer’s Package will also include purchase
agreements, addendum's, etc. for your review.
The next part of your homework is to qualify for a
mortgage. How much house can you afford?
Most people have a general idea of how much they feel
comfortable spending. It’s equally important how much
the lender calculates you can afford.
-Evaluate your financial situation as the lenders do.
Typically, your total monthly housing costs (PITI)
should not exceed 28 percent of your gross monthly
income. Or, housing costs plus any outstanding monthly
long-term debt should not exceed 36 percent of gross
monthly income.
-Ask how your lender determines the total monthly
housing cost figure. It usually includes your mortgage
principal and interest payments, property taxes and
hazard insurance (PITI).
-Determine how much your financial institution is
willing to lend you. Call on your sales associate for
help during the prequalification process.
-Know how much you can afford in monthly payments.
Lenders factor in sales price and down payment, but
place more importance on how much you can handle
monthly.
Now that you have reviewed the forms in your buyer’s
package and been pre-qualified for a mortgage the last
part of your home work is to establish a criteria for
selecting homes and obtain information about
houses and neighborhoods to help you make decisions.
This web page will help you accomplish this.
Find your Representative:
This should be done with great care and interviews in
particular to first time buyers. Interview at least
three Realtors, inquire about Experience, Knowledge and
amount of Homes they sell every year. If they have any
certifications or designations. Do Not choose a
representative that just happens to be there or entices
you to place a low offer on a home just to get you to
sign a Buyer Broker Contract.
Avoid conflicts of interest, You choose your own
Mortgage Broker and Inspector. Shop around same as
interviewing Realtors.
This is your time, Do Not Rush.
Your Representative should inform and educate you.
Some buyers prefer to house hunt without a
representative and deal directly with the sellers agent.
This is fine as long as you have done your research and
choose your own Mortgage broker and Inspector.
What type of house do you want?
Next you’ll want to define your needs, tastes and
preferences for your new home. By discussing this now,
you’ll save plenty of time in the house-hunting process.
Describe the style of house
you like, whether it be two-story, contemporary,
ranch or something else.
List your priorities in home
features, such as a two- or three-car garage;
gourmet kitchen; a family room or a formal dining
room.
Think about your lifestyle. If
you don’t like yard work, ask your sales associate
to show you condominiums, townhouses or garden homes
with smaller yards.
Choosing a neighborhood.
Bricks and boards may determine the cost of a home,
but a neighborhood determines value.
Consider the identity of the
neighborhood. The overall impression given by an
area is key to its value.
Drive through and around the
neighborhood. Value is enhanced by other
well-maintained properties. Conversely, be cautious
of areas with unkempt yards and homes, and
businesses mixed in with residences.
Ask your Representative about
the property tax assessment in the area, including
any special assessments or pending bond issues.
Pay attention to neighborhood
zoning. Good residential communities are zoned to
keep out commercial and industrial users. Ask about
other regulations in the neighborhood, such as on
street parking. Find out if this area is governed by
any covenants.
List which community services
are important to you. Do you want city water and
sewer or is well and septic alright with you?
Now that you have your homework done you are ready to
pick the agency status under which you want to work with
your agent, sign the state mandated Agency Disclosure
Statement, and then have your agent make showing
appointments for homes you have selected and then hit
the road!
Picking the right home.
When you arrive at each home ask your agent to give
you the data sheet so that you may refer to as you view the home.
You will know which home is right for you, you should
never be "Talked into" purchasing a home or real estate
property. If the agent is too pushy, rushing or does not
supply enough information to fit your needs, Terminate
the Buyer agent contract and find another REALTOR. Yes
you can terminate the contract at any time prior to
writing an offer to purchase.
Making your purchase.
When you find the perfect house, your sales associate
will take you through a step-by-step process to make the
purchase. You know the seller’s asking price, now it’s
your turn to make some important decisions.
When you find your dream home,
First your representative (buyers agent) will supply
you with the sellers disclosure statement. This
contains important information regarding the homes
condition, the seller must answer these questions
truthfully and accurately. In addition to the
sellers disclosure statement you will receive a lead
based paint disclosure along with a booklet
pertaining to lead based paint and your protection
from it.
Decide how much you should
offer. Your representative should construct a Market
Analysis regarding the home in which you are
interested in, This will show you in great detail
the local prices, conditions and market time.
Consider factors such as the home’s length of time
on the market, reasonableness of price, availability
of financing and other costs.
Know what happens to your
earnest money. If you buy the house, it is applied
to the down payment or closing costs. If you fail to
buy the house after the seller has accepted your
offer, he or she may have the right to keep this
deposit.
Require the seller to do a
title search to prove the title is clear. The title
should show no substantial claims or liens against
the property. The type of proof varies by area, and
your sales associate can tell you which kind is used
where you live.
Decide what conditions you
want to place on buying the house. Your purchase may
be made contingent on obtaining financing, a
building inspector’s satisfactory report, a well &
septic inspection, a lead based paint inspection
and/or the addition of a home warranty paid by
either party.
Spell out what you’re buying
in the contract. Common items to be specified
include light fixtures, shades and drapes, storm
windows, and flowers, shrubs and trees, if
appliances are to be included add serial numbers.
Determine what special
provisions should be included, such as for property
taxes, insurance costs and utility bills. Read all
the small print carefully.
Your Representative will take
the offer to the seller or seller’s agent. The
seller will either accept, reject or counter your
offer with changes in some of the terms. You may
either sign or counteroffer at this point.
Sign the document when you both agree to the terms;
it becomes a valid contract, and your sales associate
will help you all the way through Inspection,
Appraisals, Surveys, along with countless details for a
smooth and un-eventful closing.
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