Buyer’s Guide to a Successful Purchase
First-time home buying can be a scary thought for most consumers, because it is likely the biggest purchase they will make in their lifetime. Below is a list of high level processes to become familiar with.
Before you start your home search, the first step is to obtain a free pre-qualification letter, which gives you a rough estimate of what you can afford. We work with several mortgage brokers who will be able assist in getting you started.
We will help our buyers find their dream home by scanning through multiple listing sources. It is the buyers responsibility to communicate both internal and external requirements to their agent, such as size, location, amenities, school districts, etc.
Once you have viewed properties and made a decision, you will obtain a lender pre-approval letter, which provides the seller with assurance that you will be able to receive a loan commitment (unless of course you are a cash buyer!).
We provide guidance and assistance when submitting an offer. We will perform our due diligence by providing you with a market analysis of the property, to ensure a fair offer. We will advise you through common contingencies to help protect you.
Most consumers will want to obtain counsel from a real estate attorney. We can provide recommendations.
In likely event of a counter, we will provide assistance by helping you weigh your options, but the decisions is ultimately yours to make.
We can provide guidance on different types of financing available. Examples are conventional loans, FHA loans, VA loans. Is a fixed rate of adjustable rate better? What is the current macroeconomic situation? Are we in a period of inflation with rising interest rates? Read more on different types of financing.
Once your offer is accepted, you should begin the loan application process. It is not too late to shop around for the best interest rate. Think about shopping for an interest rate like shopping for a new car. You can solicit quotes from several different mortgage brokers or banks to ensure you're getting the best rate.
Your offer was just accepted! Now what? The offer and acceptance is a legally binding contract. You most likely submitted your offer contingent upon a home inspection, among others, so now it's time to verify or uncover any material defect with the property. You may also need a separate termite inspection.
Unless you are a cash buyer, your lender will require you to obtain home insurance to protect their interest in the property in case of loss. As a buyer, you are responsible to obtain a policy commitment before coming to the closing. The first year's worth of insurance is usually paid as part of the closing process.
Refer to your loan estimate to identify services you can shop for. Title insurance protects you and your lender from any encumbrances or title imperfections discovered after closing. Closing costs can really add up. Your Realtysaber agent is standing by if you need a list of references.
Unless you are a cash buyer, your lender will usually require an escrow account be set up as a condition to your loan. Think of this account as a restricted savings account, or cash reserve controlled by the lender, and funded on a monthly basis as you pay your mortgage. Most first time home buyers like the idea of having this arrangement setup, because it forces them to set aside funds for property taxes and insurance, instead of being a lump sum when these bills come due. The lender usually takes responsibility to pay these bills on your behalf, which takes the stress off you. The borrower will typically make one single monthly payment containing Principal, Interest, estimated Property Taxes, and estimated Insurance dues.
Prior to closing, buyers sometimes prefer to take a final walk-through at the property to ensure it is in the same condition as when they last viewed the property. This is also an important step in cases where the buyer has requested the seller to make repairs which were identified during the home inspection.
Your lender is required by law to provide you with the final closing disclosure, or closing documents, three business days prior to the closing date. It is your responsibility to review these this document for accuracy and understanding, and it should be compared against your most recent loan estimate. If any changes are required, this could delay the closing, because the 3 day time frame resets. Brush up on the elements of a closing disclosure.
At last! The big day has finally arrived, but don't forget to bring the required "Cash to Close". This amount was found on your Closing Disclosure form. Don't bring a suitcase full of cash though, you'll need a certified cashier's check or be prepared to wire transfer the balance. Bring 2 copies of a photo ID, and your checkbook as well, in case there are any last minute changes. Closing Checklist
Hand me the keys! But wait, did you and the seller agree for you to take possession immediately upon closing, or do they need time to move out? Often times you may find yourself in a temporary rent-back situation if the seller has not yet vacated the property prior to closing. Don't worry, you will have negotiated this prior to closing.
Pay your mortgage! Your first mortgage payment is not usually due until the 1st of the month following 30 days after you close. For example, if you close on April 2nd, your first payment is due June 1st. Likewise, if you close on April 30th, your first payment is still due June 1st. If you used a mortgage broker rather than obtaining a mortgage directly from a bank, you will most likely receive a notice of sale/transfer within that first month. This is because your mortgage broker does not actually service the loan, they were only responsible for its origination. They will likely have sold the loan in the secondary market to a larger institution.
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