Property ownership is an excellent investment and most likely the biggest financial decision you will ever make. Whether this is your first purchase or you are an experienced buyer, this decision must be made carefully. It’s important to have an expert in your corner when undertaking such a large purchase.
Complete mortgage application to secure financing.
- Determine how much home you can afford.
- Understand upfront costs of purchasing a home.
- Demonstrates that you are a serious buyer to both your real estate agent and the potential seller.
Closing Costs – Closing costs usually add up to around 2-5% of the purchase price. These charges typically include loan origination fees, brokerage charges, the appraisal, title and lawyers’ charges, title insurance, taxes, pre-paid costs, property insurance, HOA fees, surveys, deed transfer fees, and many various charges.
Due diligence– This is a deposit that is made payable to the seller as a “good faith” deposit. *seller’s money. The Due Diligence fee is due within 24 hours and a personal check, cashier’s check, or money order will be payable to the seller. The due diligence fee is non refundable. Typically .5 – 1% of the purchase price.
Earnest Money – A deposit given by the buyer to bind a purchase offer and which is held in escrow. If the property sale is closed, the deposit is applied to the purchase price. If the buyer does not fulfill all contract obligations, the deposit may be forfeited. If you cancel before the due diligence period, then you are refunded your earnest money deposit. The Earnest Money deposit is due within 5 days of the date the offer is accepted and will be made payable to the closing attorney. Typically .5 – 1% of the purchase price.
Appraisal- An appraisal compares similar homes that have sold to determine a fair value for the home you are trying to purchase. Your lender will require an appraisal to ensure that they are not loaning you more money than the home is worth. Appraisals typically range around $550
Home Inspections– You will always want to order a home inspection to inspect the home from top to bottom and make sure no major issues are present. You may decide to perform other inspections such as, HVAC inspection, Pest inspection, Septic inspection, Water/Well inspection, or Radon inspection. Inspections typically range from $300 – $750 depending on home size.
- Loan Payment: Principal, Interest, [Property Taxes, Insurance-held in Escrow]
- Taxes- Since your mortgage lender does not want to risk a tax lien on your home they require you to pay mothly into an escrow account an estimated tax amount based on the previous year’s taxes. When taxes are due, your lender takes the money from this account and pays your tax bill.
- Homeowners Insurance– A policy that protects you and the lender from fire or flood, a liability such as visitor injury, or damage to your personal property.
- Mortgage Insurance – Purchased by the buyer to protect the lender in the event of default (typically for loans with less than 20% down). Available through a government agency like the Federal Housing Administration (FHA) or through private mortgage insurers (PMI).
- Loan Payment: Principal, Interest, [Property Taxes, Insurance-held in Escrow]
*Utilities, Maintenance and Moving expenses
To make the process smoother, gather these important documents to provide to lender.
– 2 months of pay stubs
– Proof of any additional income
– 30 days bank statements
– 2 year W-2’s
– 2 year full tax return Federal income tax returns (personal and business) with all pages and schedules from the last two years
– Bank statements showing you have enough money to cover the down payment and closing costs
– Profit and Loss statement if self-employed
– Documents for any current assets ( Real Estate, Investments, etc)
– Pension, Social Security, Child Support, Alimony documents
There’s a myth out there that buying a home without an agent will get you a better deal. Only in very rare circumstances will this happen. So, the question is, how much will it cost to hire a real estate agent? The answer is, well, NOTHING!
Real estate agents are paid by the seller. When a seller agrees to list their home with an agent, their agent negotiates a commission that they will share with the buyer’s agent.
- Buying a home is likely your largest investment and can be very risky if you don’t know what you are doing.
- Your agent acts as a shield to protect you from liability and has a legal duty to represent your best interests above their own.
- An experienced agent will be able to walk you through even the toughest transaction. Their relationships with other excellent professionals will be a valuable resource to you.
- Working directly with the listing agent (seller’s agent) is rarely in your best interest and will not get you a discount on the home.
If you were going to court would you want to use the other side’s lawyer to represent both of you? It is wise to hire your own fiduciary to make sure you are getting the best and safest deal possible. And don’t forget, you can have this representation for FREE!
Get to know the neighborhoods, complexes, or subdivisions, which interest you. Drive around and get a feel for what it would be like to own a property in the area. Start getting a sense of the properties available in those areas.
Narrow Your Search.
Select a few properties that interest you the most and have your real estate agent make appointments to visit them. Ask your real estate agent about the potential long term resale value of the properties you are considering.
Time to Buy.
Once you have picked out the property you want to purchase, your real estate agent can help you make an offer that the seller will accept. A good agent will investigate the potential costs and expenses associated with the new property. An agent can also help you draft your offer in a way that gives you the advantage over another offer.
Once your offer is accepted and we have a fully executed contract, your due diligence period begins!
The Due Diligence fee is due within 24 hours and a personal check, cashier’s check, or money order will be payable to the seller. The due diligence fee is non refundable.
The Earnest Money deposit is due within 5 days of the date the offer is accepted and will be made payable to the closing attorney. This money keeps all parties bound to the contract and proves that each side is serious about the transaction.
Finalize loan documents
It’s time to go back to your chosen lender to finalize your mortgage details so you can close the deal. This means finalizing your down payment, interest rate, regular payment schedule and any other financial conditions.
Schedule Home Inspections and Appraisal
You will need to order a home inspection and appraisal. Your home inspection will protect you from buying a house that isn’t structurally sound and your appraisal will protect you from paying too much for a house.
You will always want to order a home inspection to evaluate the quality and safety of its plumbing, heating, wiring, appliances, roof, foundation, etc. You may decide to perform other inspections such as, HVAC inspection, Pest inspection, Septic inspection, Water/Well inspection, or Radon inspection.
Once inspections are complete, we will submit a repair request to the seller. All inspections and requests to the seller must be agreed upon before the due diligence period ends.
If the inspection reveals major problems with the home—like structural issues or expensive repairs—you can ask the seller to Fix the problem, Reduce the price, or Cancel the contract.
During the underwriting process, communication is critical. Make sure you respond to an requests from the lender for any additional documentation. Be patient as your lender finalizes your loan documents. There’s a ton of paperwork that goes into getting a mortgage. On average, it takes 30-45 days to close on a loan.
A buyer’s market is characterized by declining home prices and reduced demand.
- Economic disruption
- Interest rates trending higher
- Short-term drop in interest rates
- High inventory
- Natural disasters
In sellers’ markets, increasing demand for homes drives up prices. Here are some of the drivers of demand:
- Interest rates trending downward
- A short-term spike in interest
- Low inventory
Closing day marks the end of your home buying process and the beginning of your new journey! To make sure your closing goes smoothly, you should bring the following:
- A certified or cashier’s check for closing costs and down payment. *if required
- 2 forms of Photo IDs for each borrower
- Anyone’s name who will be on the title needs to be present for signing
Here’s what to expect:
- You’ll pay any remaining closing costs listed in your Closing Disclosure.
- You’ll sign lots of documents—including a settlement statement listing all costs related to the home sale, a mortgage note stating your promise to repay the loan, and a mortgage or deed of trust securing the mortgage note.
- The seller will sign documents to transfer property ownership to you.
- The title company will register the new deed in your name.
At the end of closing, the deed will be taken and recorded at the county clerk’s office. It will be sent to you after processing. Once the deed is recorded you will be given the keys to your new home and you can begin moving in.
Congratulations, You did it!!