|
While you and your DDA Buyer Specialist are reviewing your criteria and finding prospective homes that meet your needs, here is outline of the other phases you will encounter throughout your process. While this is not a comprehensive guide, it provides a starting point for planning. Your Buyer Specialist is here to discuss your specific circumstances and criteria to help you prepare for this process.
Phase 1 Housing Budget As you begin your search, it’s a good idea to do a little financial planning. Evaluate how much house you can truly afford, taking into consideration your current spending and savings habits. Knowing how much money you have available to spend on a house payment will help focus your search. Include in this planning not only how much you want to spend monthly, but how much you want to invest into your down payment. Monthly payments include four costs called P.I.T.I., principal and interest on the mortgage loan plus property taxes and insurance against fire and other hazards. Monthly housing costs may also include homeowner association dues, condominium fees and mortgage insurance. Prequalification vs. Pre-approval Most lenders offer potential home buyers a prequalification analysis. Taking into consideration your current income, debts and estimated down payment amount the lender is able to provide you with a ballpark estimate of the maximum mortgage you may qualify for. The analysis does not typically require the lender to review your credit report and there is no cost or commitment for either party. Buyers looking for more than just an estimate are likely to apply for a mortgage loan pre-approval, which typically results in a written loan decision following the completion of a mortgage application. A pre-approval can be applied for prior to signing a purchase agreement and many lenders will allow you to lock in your interest rate at the time of application. Pre-approval can sometimes put you in a stronger negotiating position with the seller.
During the lender selection process, have each lender that you talk to provide you a good faith estimate of the closing costs.
Some examples of these costs are:
Your Buyer Specialist will be able to offer you a lender referral and get you started on either the prequalification analysis or the pre-approval application. He or she can also answer many of the questions you may have about mortgages and loans. *If you are including Foreclosure properties, REOs or short sale properties in your home search, it is important to know that many properties have specific requirements regarding the preapprovals that accompany offers. Your Buyer Specialist will inform you of this situation if it applies to any properties you are interested in submitting an offer on. Phase 2 Submitting an Offer You’ve chosen the house that meets your criteria and you’re ready to write an offer. Based on a number of factors your Buyer Specialist will help you determine what amount to write your offer for. The signed offer will be submitted to the seller’s agent with what type of financing you desire. If the seller accepts the offer then it becomes the sales contract. Your agent will be able to walk you through the sales contract from top to bottom to make sure you thoroughly understand the terms and conditions. Once you and the seller sign the purchase agreement, you are agreeing to the contract conditions. Counter Offers The sellers are not required to take your first offer for purchase. Often times if your first offer is for less than the list price of the house, the sellers will make you a counter offer. When you receive the counter offer you will have the option to accept, reject or counter their offer. We recommend that you look to your agent for guidance. The offer to buy only becomes a contract when all parties involved have initialed every counter offer, signed the offer and received notice of acceptance. When you sign the offer to buy you will also have to submit a deposit to show that you are earnest about your desire to buy. This deposit is appropriately called “earnest money.” Contract Provisions
All sales contracts differ. Depending on your circumstances there are certain provisions you may want to talk to your Realtor about including in your sales contract. These provisions are put in place to protect you and your potential 
For example, many buyers include an Inspection Contingency in their contract terms. This means that the contract Your Buyer Specialist will answer any of your questions and can elaborate on any of the following contract provisions: 1. Deposit 2. Contingencies 3. Settlement Terms Phase 4 Mortgage Approval There are many different types of Mortgage Loans available, each with its own set of guidelines and contingencies. After your offer is ratified, your Lender will require documentation to verify all of the information provided on your application. It is important that you be as honest and forthcoming during this phase as there are important timelines to be followed in order to keep the purchase moving forward From here, the lender will verify that the information you provided is accurate, obtain a credit report, arrange for a property appraisal, review once more your application and decided whether or not to give you the loan. If you are approved for the loan your purchase will move forward. If you are not then the sales contract will close. Phase 5 Obtain Title Insurance Title insurance protects you and your lender from damages that may have occurred to the title of your property before your transaction took place. Title insurance is a one-time expense and while most people will never need to use it, it is a small amount of money compared to the amount you could spend mitigating a problem found with your title after purchase. Most lenders require borrower’s to carry title insurance on the amount of the loan. It is common practice for the title search and insurance to be handled by the title company. Your Buyer Specialist will discuss with you the specific course of events with your purchase. Have the House Professionally Inspected If your contract includes a contingency for Home Inspection you will arrange for this prior to the settlement. Home inspectors are trained to spot flaws the average home buyer might miss when reviewing the property themselves. Even if no serious problems are found, having a home inspection will create invaluable peace of mind that the investment you’re making is a good one. Keep in mind that the service is normally an additional cost that is your responsibility, not the home sellers. Appraisal A home appraisal is used for two purposes. One, to act as security to the lender ensuring the bank that the home will sell for at least the amount of the loan and two, to determine the taxable value of the property. The buyer usually pays for the appraisal when he or she applies for a loan. Final Walk-Through After all of the inspections, appraisals and repairs have been made the only things left standing between you and your new home are the final walk-through and scheduled settlement. In most cases, both of these go smoothly, but it is important to be prepared! A day or two before settlement your agent will take you on a final walk-through of the house, this is known as a walk-through inspection. The purpose is to determine that all conditions of the contract have been met. You and your agent will make sure that all equipment is in good operating condition and any promised repairs have been made. Check to make sure the light switches are working, the appliances are working, the water runs, the toilets flush, etc. This is your last opportunity to see that everything is how it should be. Phase 6 Be Prepared for Settlement The day you’ve been waiting for has arrived and you’re eager to sign on the dotted line, but first it is important you are adequately prepared. Although your Realtor will likely review with you the items you need to have with you, below are five essentials: § Review your Settlement Statement prior to closing. Typically this is not available until a day or two before settlement, but it is important to have because it totals the amount you’ll need at closing and breaks down how these funds are dispersed. If there are any discrepancies between what the statement says and what you believed your costs would be this will be your opportunity to iron these out. § Confirm your down payment arrangements. Many title companies will allow you to arrange for funds to be wired directly to the title company, however you may be asked to bring the funds in the form of certified funds or a cashiers check. § Secure a homeowner’s insurance policy prior to the date of closing and bring a copy of the statement with you. § Bring your personal checkbook to pay any additional costs at closing § Bring your driver’s license and other proper identification. A title company representative, all buyers, all owners, and the listing and selling sales associates will attend the closing. Signing on the Dotted Line There are two different types of legal documents to sign for: 1) The agreement between you and the lender regarding the terms and conditions of the mortgage 2) The settlement statement itemizing all charges to both you and the seller for the transaction. At the time of closing you, the seller and the sales associates will be provided a copy of the closing documents and closing statements. |
