1. Contact A Mortgage Professional
The first and probably one of the most important steps to a future home purchase is to speak to a mortgage professional to get pre-qualified and to discuss your financing options. The lender will be able to guide and prepare you for the home purchasing process. By reviewing your credit and finances the mortgage professional will be able to reveal a loan amount you are qualified to finance, the current mortgage rate you will be able to attain and the type of loan. By speaking to the mortgage professional early in the home purchasing process you are able to uncover any unforeseen issues that can be resolved before it is too late. The mortgage professional can assist you in repairing your credit, greatly improving your eligibility for loan with a lower interest and a higher amount. Being pre-qualified also tells home sellers you are a prepared and serious home buyer.
It is vital to speak to a local mortgage professional. There are many reasons for using a local professional. Customer service is important to them since they also work by referrals. They want you to be happy. There rates are competitive and believe me, they are much easier to work with than some random person you speak to at your bank or on the phone. I can recommend a mortgage professional and I will personally vouch for the integrity and professionalism.
If you plan on purchasing a home with cash, have your banking institution or accountant provide you with a statement showing â€œproof of fundsâ€.
2. Find A Home
By now you should be receiving the “Listing Cart Update” by email when new listings matching your criteria become available or currently active listings have a price adjustment into you price range. If you are not receiving the updates, please let me know so we can get you set up today. This will help inform you about the Brevard real estate market.
Review the listings I have sent to you and give me your feedback so we can narrow down what your needs and wants are for your future home. Once we have a list of homes that fit your needs we can set up a meeting to check out the homes you like.
3. Make An Offer
Once we have found a potential home the next step is to prepare the offer. Together we will determine what the fair market value for a property is. Of course you will have to make the final decision of what to offer since you, the buyer truly decides “market value”. There are many aspects and variables in the offer that we will discuss in greater detail as we prepare the offer. One aspect of the offer is the escrow or good faith deposit. This is an amount of money (usually around 1% of the offer) that is collected and put into an escrow account once the offer is made. If a contract is not established, which means the seller does not agree to the terms, the escrow money given back to you. Another aspect is the down payment amount. Since you followed step one in the home buying process and spoke to a mortgage professional you know how much your down payment will be on the purchase.
4. Accepted Contract
If the offer is accepted by the seller or the seller counters with an offer that is acceptable to you, we now are officially under contract. The next step is to apply for the loan and submit the contract to the mortgage professional. The standard contract requires loan application be done within 5 days of the contract effective date.
A home and termite inspection done by licensed professionals and paid for by the buyer are essential to help uncover any potential defects with the home that are not readily seen by you. The contract is usually written so that the buyer can cancel the contract without losing the good faith deposit/escrow. Or if the buyer decides to continue with the purchase after the inspections, require the seller to make repairs to the defects or credit the buyer for the repairs at closing.
The typical costs of inspections are between $200 and $600 depending on the size of home and the licensed professionalâ€™s rates.
6. Finalize The Loan
The mortgage professional will require a lot of paperwork from you to submit to the lender. Time is of the essence so communication with your mortgage broker is essential.
The lender will also order a bank appraisal of the property. The lender and the title company will require a recent survey be done on the property. This is required and paid for by the buyer. On some occasions the seller may have a recent survey and will usually be sufficient for the lender and title company. The appraisal will be part of the lenderâ€™s fees and charged to the buyer and varies in price depending on the appraisal company the lender chooses. The survey costs run between $275 and $400, but can be more if the property is larger.
The last thing required by the lender will be homeowner’s insurance. I will supply you with some companies that can give estimates on insurance rates. Insurance is relatively easy to attain regardless of what you hear or read in the media. Insurance will have to be secured prior to closing so once again time is of the essence.
7. Prepare For Move
As we get closer to the closing date and the lender has given loan commitment you will want to contact the utilities, cable/satellite and phone companies to establish accounts and to make sure these systems are in place when you move in.
8. Close On Your New Home
The closing date has arrived. The closing will be done at the title company. The title company insures title to protect you from any issues that may turn up later. They will explain the closing documents to you. The mortgage professional will be there to explain the loan documents (hopefully you chose to use the person I recommended or there is a high possibility any other lender wonâ€™t be attending the closing). You will need to bring a valid driver’s license or picture I.D. Also, any person listed on the loan will have to attend the closing as well. It is possible to do a “mail away” closing if you are unable to personally attend the closing.
You are now the owner of your new home. Congratulations!
FHA-approved lenders were recently given the green light to develop bridge-loan products that would allow first-time buyers (anyone who has not owned a home in the last three years) to use the benefits of the federal tax credit “upfront.”
Under these HUD developments and guidance, FHA-approved lenders can develop bridge loans that buyers can use in different ways. Most notably, you could use it to help cover closing costs, possibly buy down your interest rate, or even offer more than the minimum 3.5 percent down, which would allow you to make a stronger offerâ€”a key strategy in some markets where first time buyers are competing with investors in specific price ranges.
HUD officials indicate that the loans can’t be used to cover the required minimum 3.5 percent down, only to supplement the down payment. In addition to this new development, there remain many state, local and nonprofit lender resources and programs for buyers needing help with the 3.5 percent down payment.
These new developments, combined with the (up to) $8,000 tax credit and the historically low prices and still low mortgage rates, make this an opportune time to buy. Call me for a free consultation to discuss your specific opportunities and situation. The tax credit is only good through 2009, so now is the time to take advantage and not get caught in the crunch toward the end of the year when procrastinating buyers will scramble to buy before the tax credit expires.