Could you give me a rundown of the entire buying process?
This is a basic overview of what happens when you buy a house. The whole process really isn't so intimidating if you know what's going on.

  • The first thing you should do when thinking of buying a home is get pre-approved with a lender. This way you'll know exactly how much house you can afford.
     

  • Next, you should sit down and determine exactly what you are looking for in a home. Write down the number of bedrooms and baths you need, and any other details you can think of (garage, yard size, proximity to schools, public transportation, etc.)
     

  • Once you know what you want in a home, I can help you find all the homes on the market that fit your needs. We'll set up appointments and view the homes. You may want to take notes on each property to compare them after seeing everything.
     

  • As soon as we find the right house for you, I can help you write up an offer and I'll present it to the seller. Hopefully, your offer will be accepted right away. If not, you can negotiate with the seller until you reach an agreement that suits everyone's needs.
     

  • After the offer is accepted, you will probably want to have a home inspection, to make sure there aren't any problems with the property.
     

  • The next step in the process is the Purchase and Sale Agreement. This is a document very similar to the original Offer to Purchase, but much more detailed. You'll want to give your lender a copy of this document as quickly as possible so they can have an appraisal done and verify the rest of the paperwork for your mortgage.
     

  • Once your lender has all the information and documentation they need to close the loan, they will give you a commitment on your mortgage. As soon as this is done, the closing attorney will schedule a closing.
     

  • At the closing, you and the seller will sign some documents and you will then be given the keys to your new home.

 

How should I prepare for buying a home?
Make sure you know where your down payment funds will come from. If you need to sell stocks, or get the money from a relative, do it now. You'll be relieved not to have to worry about it when you need it.

Write down a list of everything you could possibly want in your dream home. Then go back through your list and circle the things that you absolutely MUST have. These are the items that are most important to you. Keep this list with you when you are looking at homes, and use it as a guide to narrow down your search.

Gather the documents you'll need to apply for your mortgage. Most lenders will ask for the following:

  • W-2's for the last two years: If you are self employed, commissioned or own other real estate you should have 2 years 1040's with all schedules.
     

  • A recent paystub for all jobs.
     

  • Bank statements for the past 3 months for all accounts and any retirement or investment accounts.
     

  • Statements or payment books for any installment loans including mortgages.
     

  • The name and address of your landlord for the past 2 years (to verify timely rent payments) or 12 months canceled rent checks.
     

  • Proof of funds for your earnest money deposit.
     

  • Self employed borrowers may need to prepare a year to date profit and loss statement.
     

  • Addresses, Loan, tax, insurance info and leases for any other real estate owned.

 

What is the first step in the home-buying process?
Get pre-approved with a lender. This means you will submit a loan application and most of the necessary paperwork to obtain a mortgage. Your credit will be checked, and your mortgage will be approved. All you'll need to do then is find your new home.

 

How do I find out how much house I can afford?
There are a number of formulas you could use to determine how much house you can afford. You would do best, however, to speak to a mortgage lender. They could give you a much more accurate idea of what price range to look in based upon your income, debts, current interest rates, and the loan programs that are available. A lender will be able to make suggestions for the loan program that will meet your needs best.

 

What is the difference between a pre-qualification and a pre-approval?
A pre-qualification is a letter from a lender stating that, based on your income and a rough idea of your expenses, you may qualify for a certain loan amount. This is subject to a full credit check and supplying the necessary paperwork. A pre-qualification is not a guarantee that you will be able to obtain financing, it is solely an estimation of what you could afford.

A pre-approval means you have already submitted a loan application and most of the necessary paperwork to obtain a mortgage. Your credit has been checked, and your mortgage is already approved. All you'll need to do then is find your new home.

Being pre-approved gives you a distinct advantage when making an offer on a property. A seller is more likely to accept an offer when they know you will not have a problem getting a loan. It also makes the process much easier on you. Once you find a home, you'll want to concentrate on planning your move, not worrying about whether your loan will be approved.

 

Can I buy a home below market value?
It depends on the market. In some cases you can find a "bargain" and pay less than market value for a property. The most common examples of these are homes that need rehab work and foreclosures or government-owned property. If you have the time and money to put into a rehab, and are wise about how you go about the project, they can be a wonderful investment, sometimes giving an excellent return. If you are considering a bank or government-owned foreclosure, make sure you do your homework first, as most of these properties are sold "as-is".

 

How is an asking price determined?
Asking price is usually set using a CMA or Comparable Market Analysis. This method uses other properties that are similar in size, style, and condition, that are currently on the market or have recently sold, to determine a reasonable price.

 

What contingencies are usually put in an offer?
Most offers include two standard contingencies: an inspection contingency, which allows buyers to have professionals inspect the property to their satisfaction and a financing contingency, which makes the sale dependent on the buyers' ability to obtain a loan commitment from a lender. If the seller is to make any repairs to the property, they should also be written into the offer, along with any other specific arrangements made between the parties.

 

Do I have to put down a deposit with my offer?
In order to show good faith to the Seller, a deposit, usually, a personal check or money order, accompanies the written Offer to purchase. Many times the amount of this initial deposit is between $500. and $1,000.

 

How can I make my offer stand out against competing buyers?
Being pre-approved for a mortgage gives you a distinct advantage when making an offer on a property. A seller is more likely to accept an offer when they know you will not have a problem getting a loan.

 

What happens to my deposit if my offer is accepted?
Once all parties have agreed to a price and terms and have signed the Offer to Purchase agreement, the deposit is placed in an escrow account, where is stays until the closing. The deposit is usually counted as part of your total down-payment.

 

What happens to my deposit if my offer is rejected?
If the Seller rejects your offer outright or if all parties cannot agree on price and terms, the deposit is returned to you.

 

What is a final walk-through?
A final walk-though is an opportunity to for the buyer to walk through the property and make sure everything is the way you agreed in the Purchase and Sale Agreement. Any work that was to be done before the closing should be completed at this point, and if the property is to be delivered vacant, any tenants should have moved out. If there is a problem and things are not as you'd agreed, then arrangements can usually be made at the closing to remedy the situation. The final walk through is usually done right before the closing.