Home Buying Process

Are You Ready To Buy?

If you cannot stay in the property as your primary residence for at least 5 years, now is not the right time to buy.  If you are an investor, second home owner, or looking for a vacation property then timing is right.

You will want to assess your financial stability, from your annual salary to how much you have saved for a down payment, to help you figure out how much home you can afford or what your investment tolerance is.

If you need financing you shod check your credit score. Lenders use this score , debt-to-income ratios and more to determine your mortgage interest rate. Your lender will discuss your loan options based on these factors.

Have you set a budget?

There’s more that goes into the cost of buying a home than the listing price.

When it comes time to buy, you’ll also pay closing costs which typically range from 1% to 4% of the home’s total purchase price. Normally, the most significant portion of the closing costs is the downpayment, which can account for 2%-5% of the home’s purchase price.4

In addition to the down payment, closing costs may include:

• Inspection fees: The home inspection evaluates the property’s condition and ensures no major issues or needed repairs. Typically, you’ll pay this out of pocket before closing.
• Appraisal fees: An appraisal determines the market value of the home. This analysis protects you and the lenders, ensuring that the property price is on par with comparable properties and current market trends.
• Title insurance: Protects the buyer and lender against any claims or legal fees related to disputes over the home’s ownership.
• Attorney fees: Professional services to prepare documents and protect your interest in the buying process.
• Additional title agent fees: Cover services provided by the title agent, who oversees the closing process and ensures that the title is transferred correctly.
• Loan origination fees: Lenders charge these fees to process your mortgage application, including underwriting, documentation, and handling services.
• Additional pre-paid costs: These include things like homeowners insurance, property taxes, mortgage interest, and the initial escrow deposit. These include
• Private Mortgage Insurance (PMI): In some cases, if your down payment is less than 20% of the home’s purchase price, you may have to pay mortgage insurance at closing, which protects the lender if you default on the loan.

Your monthly mortgage payment will depend on your home price, down payment, loan term, property taxes, homeowners insurance, and interest rate on the loan (which is highly dependent on your credit score). 

Are You Ready To Buy?

If you are a cash buyer, have a financial statement or letter from a financial institution prepared .  If you plan on getting a loan, get a pre-approval letter.  Many Sellers and Listing Agents may ask for this or a pre-approval letter to just schedule a showing.

Now that you know your financial consideration, it is time to consult with an Exclusive Buyer Agent.  This initial conversation will discuss your goals, objectives, home criteria, personal lifestyle objective, timing and more.

Your agent will be a bridge (or lifeline) between you and the seller of your dream home. You want to make sure you have the right match—personally and professionally—before you sign an agreement with one. Open communication between you and your agent is crucial, and you will want to work with someone you feel is trustworthy to advocate on your behalf.

You will be asked to enter into an Exclusive Buyer Agreement before you can be shown any properties.

Once you are on your house hunting venture you will better define your criteria, neighborhood, and likely they will change from your initial discussion as you learn more about neighborhood, age of home, location, and more.

Making An Offer.

You have found a property to buy and want to make an offer!

Shop For Financing Options.

Congratulations you  are under contract.  Hurry up and shop for the best mortgage you can afford. Rates and terms change daily and your pre-approval lender may not be the most desirable lender now.   There are several loan products and loan costs  vary with each lender.  Get competitive loan estimates from more than one lender.

Here are a few main types of mortgages for you to consider:

Conventional loans are usually easy to process with lower interest rates. You need very good to excellent credit. You may be required to take on private mortgage insurance without 20% down.

Jumbo loans (non-conforming) exceed standard mortgage spending limits and are used for high-cost areas and homes with large square footage. You must have excellent credit and the ability to put down a large down payment to secure the loans.

FHA loans are backed by the Federal Housing Administration (FHA) and only need a 3.5% down payment. They have strict requirements but are easier to qualify for credit-wise than conventional loans.

Renovation loans are great for buyers who love a good fixer-upper, and you can apply for an FHA renovation loan if a conventional renovation loan is out of reach. This mortgage allows you to wrap all the costs of buying and renovating a home into one monthly payment.

VA loans are for military service members, veterans, or eligible spouses offered by the U.S. Department of Veterans Affairs. There are some requirements, but you won’t have to make a down payment if you qualify.

USDA loans are designed to help low- and moderate-income families purchase a home in USDA-eligible rural areas. You don’t need a down payment but must meet income and other requirements.