Home Buying Process
Buying A Home
Purchasing a home is one of the biggest decisions most people will make in their life. It involves a long-term commitment financially and emotionally, but it can also be a very exciting and rewarding experience. Don't worry, your agent will walk thru' every step! (BTW- I am a certified "ABR"- Accredited Buyers Rep.)
When buying a new home, there are a few things to consider:
· What monthly payment can I afford?
· What am I looking for in a home?
· Working with a REALTOR®
· How much cash do I need at closing?
· How do I obtain a mortgage loan?
Before You Begin Your Search
Before you actually begin the process of looking at homes, you should complete the following:
#1 Get Pre-Qualified. This is huge! By contacting a mortgage loan specialist before you begin your search, you are able to determine the amount of loan for which you qualify. You don't want to fall in love and waste time w/ houses you can't comfortably afford. Getting "pre-qualed" does not cost you anything and you are not obligated to get your actual loan from that lender-- although they will be very helpful in hopes that you will come back to them when you have found your future home. Prequalification is good for several months (unless your income or debt changes), and you will be required to submit a "pre-qual letter" w/ any offer to want to make. Unless you are able to pay cash for your home, most buyers will need to go through the process of applying for a mortgage. Typically, a borrower is pre-qualified for a loan that amounts to 28%, or less, of their gross monthly income. In addition, if you know the amount of the monthly payment you would be comfortable paying, a mortgage specialist can calculate the price range for your home search.
Part of the pre-qual process is checking on your credit report. There may be errors that you may discover on your credit report that need to be corrected before you can move forward. Also, you will want to reduce your consumer debt as much as possible by paying down credit card balances-- now is not the time to make any other major purchases.
By going through the pre-qualification process, your mortgage specialist can provide you with an estimate of how much cash you will need for the sales transaction. Cash is needed for the down payment, earnest money, and closing costs of the transaction. I have several excellent mortgage folks that will be happy to pre-qualify you. Call me @ 864-494-8815 or 330-5626.
Cash Buyers: Be prepared. You will need a "proof of funds" statement that shows your ability to make your cash purchase. It can be a statement on letterhead from your bank rep, accountant or a current copy of your bank/asset statement (w/ account #s blanked out). You may be asked to have your funds wire transfered to the closing attorney (instead of a certified check) as most attorneys will not proceed until funds have cleared.
#2 Make an Amenities List: Decide what features are most important to you in a home. By establishing your priorities, you will save time shopping for homes that do not meet your needs. Also, consider what locations you are interested in. When making an amenities list, determine which criteria you absolutely cannot live without and which ones you are willing to budge on.
Some typical criteria may include:
· Price range
· Neighborhood or subdivision
· School districts
· Proximity to work
· Proximity to shopping, restaurants, hospitals, etc.
· Number of Bedrooms
· Number of Bathrooms
· Storage space
· Lot sizes
Choose An Agent: Make sure you understand South Carolina Agency Relationships, and decide which agent you want to work with. The advantage of working directly with the listing agent for a single property is that they know their individual properties better and you may get answers to questions faster. The advandage of working with one agent for ALL your house searches, is that your agent will get to know your likes and dislikes and help you better narrow down your search efforts, ease of coordinating showing appointments and routes, help you with research, etc.
Remember, there are typically no out-of-pocket fees that you pay to your agent. These costs are usually, but not always, incurred by the seller. Your TLC agent will research the property listings that you are interested in and schedule showings for you at a convenient time. In addition, they will provide guidance and coordination during all phases of your home search, offer, negotiations, and transaction.
Beginning Your Search
Most buyers these days like to begin their searches online at their own convenience. You can do all your research on this website under "SEARCH" at the top. You can also sign up for Auto Home Finder (same place) which will email you new listings that meet your criteria. Another great resource that is timely and accurate, is Realtor.com, which can help you look outside the scope of our immediate MLS area. Your agent can usually help you with those properties as well, or refer you to an appropriate agent if they can't. Based on your criteria that you provide your agent, he/she can also help you with database searches and For Sale By Owners. Pictures don't always do a place justice- your agent may have personal knowledge of "good-fit" homes that you skipped over at a glance.
Every home is unique! Even if every home you visit has all of the main criteria you are looking for, each will have different characteristics. Bring your Amenities Checklist with you to all homes that you visit. Check off which features each house has. Make notes on each home of what you like and dislike. Discard the ones you don't like and always keep a top couple favorites in mind. If you find a home that fits you- but want to keep looking just in case there's something better "around the corner"- that's ok, but be aware, he who snoozes, loses. It's very possible that some of the homes you look at will be sold while you're still making a decision.
Additional things to consider when touring homes:
· Cost of upkeep and utilities
· Amount of maintenance required
· Cost of updating or decorating
· Homeowner's dues
· Traffic patterns in the neighborhood
Taking notes and using your checklist will help you later when you can sit down and compare properties. By comparing notes, this will help to prevent you from making an emotional and impulsive decision.
Making an Offer
Once you have found the right property, it is time to prepare an offer to purchase. Your Buyer Agent can provide guidance to you on the price you should offer to pay for the property. Have your agent compare prices for similar homes that have sold in the area recently. This will help you to determine a reasonable price to offer.
In addition to the selling price, the other items to include in the terms of the Offer to Purchase include:
· The amount of earnest money (deposit) to offer.
· Concessions that you want the seller to make, such as a carpet or paint allowance, or help with closing costs.
· Home inspection contingencies.
· Financing contingencies.
· A clear definition as to what is to be included with the home, such as appliances or window treatments. Remember that anything the Seller is offering on the MLS is based on them getting their Asking Price. Sellers are not obligated to convey anything not stipulated via written contract. Personal items should be listed on a separate Bill of Sale as lenders will not make home mortgage loans on contracts that include items like tractors, pontoon boats etc. Talk to your agent on how to best handle this.
· A closing date.
Don't be surprised if your initial offer is countered. If you put in a "low-ball" offer (well below the normal "list-to-sale ratio" or average difference between asking prices and actual sale prices for the area), don't be surprised if the Seller counters close to their asking price. Sellers DO want to sell, but in most cases, they also expect fair market value. Your TLC REALTOR® will provide you with the market information you need to make intelligent decisions when you are negotiating with the Seller.
Closing the Deal
Once your offer has been accepted, it is time to work on the final details of purchasing your home or property. There are several tasks that will need to be accomplished during this phase of the sales transaction:
Home Inspection: Arrange to have a professional come out to inspect the home. They are able to spot electrical, plumbing, and structural problems that may not be noticeable to you at first glance. The home inspection is not required, but it is in your best interest to have one done on the home so that you do not receive any surprises once you move in. This is an expense incurred by the buyer, and may be able to be included in your closing costs. If land, do your Buyer's diligence per your agent's recommendation.
You will also be responsible for getting a pest inspection on a house to get a "clear CL100 letter" required by your lender. The letter states that there are no live termites/wood destroying fungi or resulting structural damage. If there are issues discovered by the inspection, this becomes a negotiable repair item. You will not be able to close without those issues addressed as required by your lender, and the letter, once "cleared" is only good for 30 days. Your REALTOR® can provide a list of reputable inspectors.
Repairs: Once you receive your home inspection report, review it carefully w/ your agent and prioritize any repair requests (unless purchasing "As-Is"). Review your purchase contract carefully, so you have a clear understanding of what the Seller is and isn't obligated to fix. Other repairs may be negotiable. Your agent will help. When repairs are completed, you should have the option to reinspect to ensure all repairs have been done as agreed. Note: Seller is not actually obligatedto do repairs until your loan has been approved. As this often happens just before the closing date, be prepared for the possibility that you may either have to have your closing date moved out to finish repairs first, or, be prepared for the Seller to have quoted contractor funds for the repairs put in the attorney's escrow account, which will be paid directly to contractor(s) upon your satisfactory approval of completed work.
Apply For A Loan: Once an offer has been accepted, you will need to contact your mortgage specialist to officially apply for a loan usually within 5-10 days as stipulated in your purchase contract. Your agent will want your lender's contact info.
Items that you will need for your loan application include:
· W-2s and/or tax returns from the past 2 years.
· Proof of gross monthly income for the past 30 days.
· Proof of investment income, including rental incomes.
· A list of creditors, including account numbers, balances, and monthly payments.
· Two months worth of banking statements.
· A copy of your ratified purchase contract.
The Final Walkthrough: Your final walk-through should be done as close to the closing date as possible, if not on the same day. It is your responsibility to inspect the home and ensure that everything meets your approval. If not, your closing may have to be delayed by several days.
Things to look for during your walkthrough:
· The seller has repaired items included on the purchase agreement.
· The house is in "as-was" condition (everything is in pretty much the same condition as it was when you signed the purchase agreement).
· The house is vacant and/or contains the items agreed upon to stay, and the house is clean. The home does not have to be spotless, but there should be no remaining trash or junk left behind in the house or in the yard.
· Occupants have moved out prior to your closing unless you have agreed in writing for them to stay.
Closing: Usually at the time an offer is accepted, or after you have a commitment from your lender, a date and time will be arranged for your closing. The closing procedures are usually, but not always, handled by an attorney of the Buyer's choosing. (Homes owned by Relocation companies typically require their closing attorney be used.) Usually the day before, you will be told the total dollar amount you will need to bring to closing by the closing attorney. They will also provide you with any additional information you may need to prepare yourself for the proceedings, such as having proof of home hazard insurance in place, preparing for a wire transfer of your funds etc. YOU will be responsible for transfering all utilities to your name by closing day to avoid possible shut-off and restart fees.
On the day of closing, remember to bring:
· If appropriate, a certified check from a recognized bank for the total amount of your closing costs/down payment, unless you have been advised to use a safer wire transfer. Note: our local attorneys will not proceed until your funds have either been cleared or verified, and therefore in most circumstances, will require your funds to be wire transfered.
· An official picture ID, such as your Drivers License.
· Your personal checkbook.
During the closing, details of the sales contract will be explained to you. If everything meets your approval, you will sign the contracts to finalize the deal.
Congratulations! You are now a new homeowner!!!!!!
Your TLC agent has been with you every step of the way.