9 STEPS TO HOME OWNERSHIP

Buying a home, whether for the first time or the tenth can be an exciting, yet sometimes overwhelming adventure. Here is a general summary of the 9 steps you will be taking in your voyage to home ownership. As your agent, I will work together with you, your attorney and loan officer through the entire process.

1. PRE-APPROVAL

This is the first, yet VERY IMPORTANT step in your home buying process. It is necessary in today’s market to have a pre-approval letter so it can be turned in with any offers you might decide to make on a home. By going to the bank or mortgage company, they will let you know exactly what you can afford and the maximum the bank will loan you. There is no charge to obtain a pre-approval letter.

2. LOOKING AT HOMES

I will begin to show you houses in your price range in communities you would like to live in. Most people look at 5 to 7 homes before they find one they would like to make an offer on. I encourage you to look at a variety of homes so you can be sure you’re getting exactly the home you want.

3. OFFER TO PURCHASE

Once you find a home that you like, the next step is to make an offer on the home. I will provide you with a standard “Offer to Purchase” form and complete it for you. It is important to keep in mind that there may be several other offers on the table that a Seller can choose from, so it is wise to make your first offer your best offer. One key point to remember is that just because you make a full price offer on a home, it does not always mean it will be an accepted offer. There may be other offers on the table with better financing terms than yours or may even be a higher offer.

4. PURCHASE & SALES AGREEMENT

Most P&S’s are fairly standard contracts. However, you may decide to have your real estate attorney look over the contract, as this is a legally binding contract. At the time of signing the P&S, there is an additional deposit required depending on the price of the home. This deposit must be a bank check or money order in the required amount made out to the real estate company listing the home. This deposit then becomes part of your down payment. If the sale is not finalized for a reason beyond your control or due to one of the contingencies, the earnest money will be returned to you.

5. HOME INSPECTION

You are given 10 days from the date on the Purchase & Sales agreement to conduct the home inspection. I strongly recommend that you do so. The Buyer pays for the inspection (usually ranging anywhere from $250 to $500 and up) depending on the number of units and the special tests you may decide to add. The home inspection will give you peace of mind. If there are any major flaws with the home that makes you decide not to go forward with the purchase, we will need to notify the Seller in writing AS SOON AS POSSIBLE and request the return of your deposit.

6. MORTGAGE APPLICATION

I can recommend a number of bank and mortgage officers who will complete the mortgage application for you or you may decide to lock in the rate the bank gives you. The rates can rise by the time you close (usually anywhere from 30-60 days). If you do not lock in the rate, you will actually pay the higher rate. Some of the items you will need for this step are the following:

• Driver’s license and social security cards

• Residence addresses for the past 2-5 years

• Your landlord’s name and address

• Names and addresses of your employer(s) for the past 2-5 years

• Pay stubs for the past four weeks

• Two years signed tax returns and W-2’s

• Account numbers for all bank accounts you have

• Information on any stocks or bonds you own

• Details of any real estate you currently own

• Copy of fully executed Purchase & Sales contract and a copy of the listing sheet

• Divorce decree and child support agreements

• Previous bankruptcy discharge if applicable

A “Good Faith Estimate” of the closing costs will be provided to you from the lender. It includes the costs for points, appraisal, title search, title insurance, survey, recording of deed and the banks’ attorney fees. Closing costs can run anywhere from $3,500 and $5,000 and up depending on the points and other fees.

Say you are buying a home for $250,000 and the points are 1% for the loan, that would be $2,500; 2% of the loan would be $4,000.

Private Mortgage Insurance – Most lenders require PMI if your down payment is less than 20% OF THE PURCHASE PRICE. It protects the lender in case you default on the loan. After a year or so, you can request in writing to the bank that they remove the PMI if your home now has increased in value over the 20% requirement.

7. HOMEOWNER’S INSURANCE

This can be obtained through any insurance agency. It’s not a bad idea to shop around as prices may vary. An insurance binder is required by the bank for one full year paid in full before you can close on your home.

8. FINAL WALKTHROUGH

This gives you an opportunity to inspect the home one last time before closing. Please check to see that all requests on the purchase and sales agreement have been fulfilled. Such as checking that fixtures are still in place and items that you requested as part of the agreement have been there as well as making sure any tenants or even the Sellers are out of the premises before you close.

9. CLOSING DAY

You should have your lawyer present if you have decided to hire one. You should also bring your checkbook in case there are any small additional dollar amounts needed. You must also bring your driver’s license(s) with you. The whole process takes about an hour. After signing the numerous documents, you will then become the proud owners of your new home.

CONGRATULATIONS!