If you are tired of throwing money away paying rent every month, there are dozens of first time home buyer programs available from local, regional and national lenders. So what’s your budget? What you can afford depends on your income, credit rating, current monthly expenses, down payment and the interest rate. We’ve gathered together these resources to help you find a program that fits your needs.
The very first thing that I tell any buyer (first time or tenth time) is to meet with your lender. You may want to speak with the bank that you currently have checking or saving accounts with or you may want to “shop” interest rates to find out who has the best rate (the rates change daily) but going to the lender is the first step that you need to take. Please do not choose a lender off the internet that is four States away! For one reason, it is a much smoother process if everyone is dealing with someone local. The second, more important reason to me is that I’ve seen clients in the past who were quoted one amount of money needed to close but when they were at the closing table, they found that the dollar amount needed was a good bit more. I don’t want you to have the same experience! Bottom line is, PLEASE use a local lender.
Pre-approved means you actually met with the lender and have taken him all the necessary paper work that he needs. He has done a credit check on you and verified your income and outstanding debt. This by the way, is the most desirable letter to have in hand when we make the offer.
It’s a very good idea to check with the Credit Bureau every couple of years to see what your credit score is. It is scary how many times someone has sat down with a lender and found that someone has stolen their identity (debt showing up on their credit report that is not theirs) or perhaps someone having the same name and their debt showing up as your debt. These things typically can be cleared up but it does take some time. One more reason that it is a very good idea to sit down with a lender BEFORE we make an offer on the house of your dreams. Also, don’t go out and purchase a new car or charge a lot on credit cards during the process of looking for a home to buy. In fact, try to pay down your credit card balances if you have any. This will help your credit score and your debt to income ratio. The lender will explain in more detail each of those to you.
Where do you want to live? There are several things to consider when you ask yourself that question. Do you want to be near where you work? If you have children, are school zones important? If we do end up targeting a particular school zone, I always suggest that you call the School Board and check to see if the school we are targeting is currently capped (meaning the actual school that the house is zoned for is full and your child may be bused to another school); not a good thing to learn AFTER I have helped you purchase the house! When we can target a particular neighborhood or quadrant of town, it really narrows our search so that we can concentrate on that area and not be all over town.
Sit down and think about it. Get out a pad and write down the things that you feel you NEED in your first home. Maybe you have a child or plan to have one in the near future so that would affect the number of bedrooms. Three bedroom homes are the norm and four bedrooms are sometimes a bit harder to find.
After you have made a list of the things that you feel you NEED in your first home, then you can make a list of the things you WANT the home to have. I will tell you this, sometimes you will find the home that has everything that you NEED but not all that you WANTED. That’s when you may need to evaluate how important the features that may be lacking are to you. It’s hard (but not impossible) to find a home that meets all of your needs AND wants. Just try to keep an open mind.
There are some exteriors that require little to no maintenance and then there are some exterior finishes that require more. We can discuss the pros and cons of each so that you can make a well informed decision where the exterior of the home is concerned.
We have found “THE HO– USE” , now what? When we find the house thsat meets your needs, we sit down together, look over a document called the Seller’s Property Disclosure which every home on the market listed by a Realtor should have completed by the Home Owner. It lists any issues, repairs, replacements, and disclosures about the home and information pertaining to the Home Owner’s Association (if the development the home is in is part of one). We then write up your offer on the contract. I will run what is called a CMA for the area. A CMA is a Comparative Market Analysis. It includes all the comparable homes that are close to the same square footage, age, number of bedrooms, etc. in the same area as the home we are preparing to make an offer on. It will have all the homes that have sold in the past six months, all the homes that are currently under contract and that are currently for sale. We then can see what houses have been selling for per square foot in that particular area. That will help us decide what dollar amount to offer. .
When we decide that we want to make an offer, you must give a “ Binder Check ” at that time as well. The binder check is made out to the company that we will close at (typically a title company) and deposited there. You will see a credit in the amount of the actual binder check on the closing statement. The binder is credited towards your down payment on your house. The higher the purchase price, the higher the amount is of your binder check. And the higher the amount of your binder check the more serious you appear to the seller as well. I will discuss the amount of the binder check with you when we get to that point. I will say that it is typically $1000-$5000 but that is very broad considering the fact that I don’t yet know what price range we will be in.
After your offer has been accepted we have ten days to get a Home Inspection and/or Septic Tank Inspection. The ten day count starts the day after the contract is fully executed (fully executed meaning seller and buyer have agreed on the terms of the contract by initialing all pages, all changes on the contract and signing same as well as any other attachments/inclusions to the contract). A Home Inspection typically costs between $200-$300. A Septic Inspection costs around $300. These are costs to you that are not included in your estimated closing costs. I do highly recommend that you have a Home Inspection and a Septic Tank Inspection if the house is not on public sewer, because there are certain items relating to the house that the seller is obligated to have in proper working order at the time that we close on the house; they are referred to as “ Warranted Items “. If any of these items are found to not be in proper working order during the Home Inspection process then we ask the Seller to correct them on what is called an “ Inspection Addendum ” within the same ten days.
Let’s first go over what the “ Warranted Items ” are. They are Plumbing, Electrical, Heating and Air Conditioning, Appliances, Well, Septic Tank, Sprinkler Systems, Security Systems, Pool and Spa. As you can see, they are the “bigger ticket” items. When we find some of the warranted items (during the Home Inspection) to be defective, we then ask for them to be repaired or replaced on an Inspection Addendum and submit same to the Real Estate Agent who represents the Seller and she presents it to the Seller. They then have five days to sign the form and get it back to us agreeing to the replacement/repairs. The Inspection Addendum is not a “wish list”. There will be things with the house that will not be like brand new…that’s because they aren’t (unless you purchase new construction)! We need to keep in mind that we are concerned with the most costly aspects of the home being in proper working order which are the Warranted Items, not cosmetic things about the house.
The one Inspection that you the Buyer does not have performed and are not obligated to pay for is the WDO Inspection. That inspection has to be done within 30 days of closing. It is done by a licensed Pest Control company. If the house is currently under a Termite Bond, the company that it is under bond with usually does the Inspection. The Inspector is looking for any wood rot and/or termites. If there are active termites, the seller is obligated to have the house treated for them. If there is any wood rot or termite damage, the Seller has to have it repaired before closing.
Once all the Inspections have been performed and the seller has agreed to the requested/required repairs, then we move on to the last bit of things that we need to take care of before the closing date.
Your lender has probably already ordered an Appraisal on the house as well as a Survey. Those must be ordered within ten days of the fully executed contract. But now you need check into Homes Owner’s Insurance for your future home. That cost is included in your closing cost (meaning you don’t actually pay for it until closing) but you do need to secure it in advance. You also need to arrange for utilities, water, garbage pick up, and/or gas to be transferred to your name starting the date of closing.
You also need to think about movers; whether you plan to use professional movers or “friends with trucks”! It’s a good idea to have it arranged in advance so that there are no last minute surprises or disappointments.
The seller is required to be totally moved out of your future home on the day of closing (unless a different previously agreed arrangement has been made between you and the seller). The day before closing you (the buyer) and I do what is called a “ Final Walk-thru “. We do this in order to check all things that were to have been repaired and to make sure all items that were to be part of the sale are still there! And last but not least, to insure that the Seller is infact completely moved out.
The day before closing (hopefully), I will receive what is called the “ Closing Statement ” from the title company. It lists all the costs (closing costs) to you the buyer, as well as your mortgage amount, your credit of your Binder Check and the amount of money that you will need to bring to closing in the form of a Cashier Check. I will look over the closing statement to check all charges to you and notify the closing agent of any corrections if they are needed. I will then go over the Closing Statement with you.
By now you are very excited (sometimes called anxious)! I will give you directions or you can ride with me to the closing company. Closings typically lasts an hour or so. You will have gone to your bank and picked up your Cashier Check (the title company can not accept personal checks) and you will have it with you. You also need to have your driver’s license for identification. We are now at the “Big Table” with all involved parties! Do not be afraid to ask questions of the closing agent if you do not understand any part of the closing process or documents that you will be required to sign. This is a new experience for you and there are no stupid questions; please remember that.
As you can see, there is a good bit involved in purchasing a home but with the help of a REALTOR , you are aware of your rights, you have someone looking out for your interests, someone to negotiate on your behalf, and someone that is looking every day for a house that meets your needs. We do all of this being under the impression that you (the buyer, our client) will work with us and only us and eventually have a closing on a house with us. I don’t typically llike to discuss this part with home buyers but I have found that some buyers don’t understand how Realtors are paid for the job that they do. We only get paid if I close a house with you. We are paid strickly on commission. There is nothing more upsetting for me than to get a call saying someone that I have spent valuable time and energy on went and either purchased a “For Sale by Owner” without me or happened to see a house during an “Open House” without me and allowed the Real Estate Agent at the open house to write up the contract. If I did not write the contract, I do not get paid, period. I do not get paid for the work I have done for you in good faith. It would be a lot like you going to your job and working for a month and then when it was time to get paid, your boss tells you that someone else did instead! Not good! I will work very hard for you each day and in return only ask for your loyalty and your loyalty to me costs you nothing! When I say “loyalty” I mean if you are driving around and see a “For Sale by Owner” that interests you, jot down the telephone number and address and call me. I can then call the owner and ask if they would be willing to work with a Realtor. They usually are if I contact them on your behalf rather than you calling them and seeing it without me. They don’t want to find that you are working with a Realtor after the fact. The Realtor usually doesn’t get paid if that is the case. The FSBO typically pays half of commission amount that it would have cost them if they had their home listed with a REALTOR. And it’s also protection for you to have the representation of a REALTOR to negotiate purchase price, make sure warranted items are in proper working order, all disclosures have been made, and the transaction is started on an actual “binding legal contract”. This is one of the biggest if not THE biggest investment you will make in your life, don’t do it without the help, guidance and experience of a REALTOR. If you do happen to go to some open houses without me (a lot of buyers enjoy doing that on the weekend just to get a feel for an area), tell the agent there that you are working with me. She or he will then know that you already have someone representing you. If you decide that you may want to make an offer on that particular home, call me and I will meet with you and write up the offer.
I hope that I have answered a lot of the questions that you may have had and maybe put you a little more at ease in regards to buying your very first home. I know that it can be scary but with my help, I hope to make it a lot of fun and exciting too! I love my job because I feel that I am truly helping people with a “defining moment” in their lives that they will always remember (fondly), especially if it is their first home.
Please feel free to call me with any questions that you may have, I do not mind. Now, LETS FIND YOUR HO– USE !