BUYER’S GUIDE
BEGIN YOUR SEARCH
After much contemplation, you finally made the decision to purchase a home. Congratulations! What next?
Step 1: Get Pre Approved
Step 2: Find a Realtor!
Once you contact me, my team and I will take care of all your home buying needs. From researching communities to showing you available properties to negotiating on your behalf, we will be with you every step of the way.
When searching for your dream home we can provide detailed information on almost any property currently listed for sale – whether it’s listed by Baird & Warner or another real estate company. We will always give you our utmost attention, the attention you want, the attention you deserve. Simply stated, with Baird & Warner you receive the ultimate result – a successful real estate experience. A Buyer’s Broker does NOT charge any additional fee to their client. This is a no-cost service to the buyer. It is the seller’s responsibility to pay both the Listing Broker and Buyers Broker a commission.
THE FINANCE PROCESS
1. First complete the loan application. An application fee may be required by the lender.
2. The lender begins processing the application.
3. The lending institution requests an appraisal of the home, a credit report, and verification of employment and assets such as bank accounts.
4. The lender will provide a booklet containing specific loan information and a good faith estimate of closing and related costs.
5. An estimate of your loan costs in the form of an initial Truth in Lending Disclosure Statement (Reg Z) is issued.
6. The lender evaluates the application, along with supporting documentation, and approves the loan.
7. Once you sign the closing documents, the loan is funded.
8. The lender disburses the funds to the settlement or closing agent. The seller is paid and the title to the home is yours.
9. The appropriate documents are recorded at the county recorder’s office.
When you apply for a mortgage, you will need to furnish information regarding your income, expenses and obligations. It will save time if you have the following items available:
- Two most recent pay stubs
- W-2s for the last two years
- Federal tax returns for the last two years
- Last two months bank statements
- Long-term debt information (credit cards, child support, auto loans, installment debt, etc.)
Have you had situations in the past that have put blemishes on your credit? Some lenders will work with you to find a credit solution. They have special programs and financing options that allow you to get a mortgage even with minor credit blemishes. However, it is in your best interest to keep your credit report in good standing.
Here are some helpful hints for your credit report:
- Never go over 90 days past due on any accounts
- Keep your credit card debt below 50% of your monthly obligations
- If paying bills after the due date, always pay within the grace period
FINANCIAL FAQs
A prequalification consists of a discussion between a home buyer and a loan officer. The loan officer collects basic information regarding the customer’s income, monthly debts, credit history and assets, and then uses this information to calculate an estimated mortgage amount for the home buyer. The prequalification is not a full mortgage approval, but estimates what a home buyer can afford.
A preapproval, on the other hand, is a comprehensive approach using basic information as well as electronic credit reporting. Preapprovals, in most cases, are true mortgage commitments. The lender commits to financing your home and indicates the total mortgage amount available to you.
Currently, there are numerous different mortgage products available, including, but not limited to:
- 15, 20, and 30-year fixed rate loans
- Adjustable rate loans
- New construction financing
- VA and FHA loans
- 5 and 7-year balloon loans
All mortgage products have their own benefits and disadvantages. Talk to your financial institution to discuss which product is best for you.
Usually about 45 to 60 days, although it can take as few as seven days and as long as 90 days for some transactions.
The actual time depends on how quickly the lender can get an appraisal of the property, a credit report and verification of employment and bank accounts.
If you provide the lender with complete, accurate information, everything should go smoothly.
You may face a delay if the lender discovers credit problems, such as a history of late payments or nonpayment of debts, or a tax lien. You may then be required to submit additional explanations or clarifications.
You should also be sure to notify your lender if your personal or financial status changes between the time you submit an application and the time it is funded. If you change jobs, get an increase (or decrease) in salary, incur additional debt or change your marital status, let the lender know promptly.
You may also be delayed if the home you selected fails to appraise for the agreed purchase price.
Not if it’s an FHA or VA-insured loan. With most other loans, you can pay your own taxes and insurance if you borrowed no more than 80% of the purchase price or appraised value of your home. Check with your lender to be sure.
Closing costs cover processing and administration of your loan. In addition to a loan fee, you’ll usually be asked to prepay interest charges, to cover the partial month in which you close, and impounds for property taxes, hazard insurance and mortgage insurance.
Usually about 30 days after closing. The actual date of your first payment will be included in your closing documents.
HOME PURCHASE NEGOTIATION
Why: Market times indicate supply and demand for properties in the area and can give you an idea of whether it’s a buyer or seller driven market.
Why: A price reduction may indicate a seller’s desire to attract an offer.
Why: This information may indicate the home seller’s expectation.
Why: Knowing if you are competing for a property with another home buyer may affect the terms of your offer to purchase.
Why: Motivation is a key element in any negotiation. As an example, if the seller has already purchased a new property, your ability to close quickly may be an attractive element of the negotiation.
Why: Recent enhancements can effect the buyer and seller’s perceived value of the property.
Why: Knowing when the seller wants to move can be helpful during negotiations.
Why: Anything the seller is willing to leave behind that you won’t need to buy when you move in has real value. Consider those items in your offer.
Why: Most states require all home sellers to provide property disclosure statement(s) for your review.
YOUR RIGHTS AS A BUYER
Inspections As a home buyer, your Real Estate Purchase Agreement will typically include a clause allowing you to conduct a professional inspection(s) of the property. We recommend that you invest in this objective visual examination of the physical structure and systems as they appear and operate at the time of the inspection. A standard home inspection report usually covers:
- Exterior components
- Structural components
- Roofing condition
- Interior plumbing
- Electrical systems
- Heating and air conditioning systems
- Interior condition of walls, ceilings, flooring, windows and doors
- Visible attic insulation and ventilation
A professional home inspector may also provide home maintenance tips and suggestions for improvements you may want to consider after purchasing the property. We believe it’s important to make an informed decision about a property and hiring a professional home inspector for an objective assessment gives you that opportunity.
State law requires sellers to provide buyers with a Residential Property Disclosure Statement. This report indicates any known material defects in the property that the seller is aware of (ie. flooding problems, leaky roof, cracks in the foundation, faulty furnace, air conditioning or plumbing, or lot line disputes).
By indicating knowledge of any defects in a property through this report, a seller is not obligated to make repairs. However, if you have signed a contract and then receive information through this report about any defects, you can rescind the contract within the number of days stated in your contract.
Sellers must also disclose known information on lead-based paint hazards before selling a house. Sales contracts include a federal form about lead-based paint in the building. Buyers will have up to 10 days to check for lead hazards.