Getting Started - What you need to know!
Buying a home is a big step, it's complicated and can be a little overwhelming. One of the most frequent questions we get is "what should I do first?" and "how do I get started?" So here are some tips to keep you in good shape and on the road to your new home!
Protect your data - I always recommend protecting your data as the best first step. There are a lot of predators and pushy sales people and you may be surprised that they obtain your information through the inquiry on your credit report when you apply for new credit. Good news though, you can opt out and keep your information from being sold to dozens of 3rd parties. Click here to see how.
Be careful with the online home search sites as well. It's OK to look but if they ask for your contact info most likely it will be sold to multiple real estate, insurance, and mortgage providers. Instead use the link provided by your realtor for more accurate info without the annoying telemarketers. You can also use my search engine to ensure your information isn't sold.
Complete the Application - Now that you have opted out and won't want to throw your phone out the window because of the unwanted solicitation calls, It's time to complete the application and get qualified. This step is going to give me the big picture information so that we can see how much home you qualify for and give you some options regarding loan programs, monthly payments, cash to close, etc.
Schedule your Consultation - This is a key step that get's skipped by most lenders. Buying a home is the largest and most complicated financial transaction ever conducted for most people. We believe that a financial decision this big requires conversation and thought and push button, get mortgage is just irresponsible. A professional lender should be able to ask you questions and create a strategic mortgage solutions built around your top priorities, needs and goals. Did you know that two different loan options with the same rate could vary tens of thousands of dollars in overall cost? Or that the lowest rate isn't always the lowest cost? Did you review grant options, options based on the homes location or special finance incentives?
Don't get rushed into an option that doesn't fit your financial needs. If your mortgage doesn't fit you can't return it like a shirt on amazon. Let's take the time to get to know what you need and craft a plan around that. Want to talk it over before you apply? Happy to discuss your situation and how we can help anytime. Click here to schedule a consult.
As we work on your mortgage plan, keep in mind that you are not bound to anything. As things change, the plan may change as well and that's OK. We can always make changes to make sure your needs and goals are covered. We'll continue to dial everything in as we go to ensure we are on the same page and your best interests are always top of mind!
Upload your Documents - Our application system is intuitive and will automatically provide you a list of items needed based on the A.I. analysis. If you have already uploaded documents you are ahead of the game. If not, this is were we want to be pro-active and help you take the stress out of this process. Most lenders will require your documents once you are under contract. We prefer to get everything up front so we can verify income and assets and have you fully underwritten and approved. This way when you find your dream home we just need an appraisal and your finished. No stress, no worries, just a beautiful new home.
This also helps us give you an advantage in multiple offers since we can let the listing agent know you are all approved and good to go! We'll customize the list of the documents that are specific to you but here is the typical stuff but it will not all apply to you. Click here to view standard items needed.
Get your Mortgage Report - Our consult is going to give us an idea of what you want. Then we want to put that on paper so you can review the numbers and look at the options. My mortgage report will analyze your situation and look at different loan options for you to consider. We'll also consider options now as well as in the future as we graph out the benefits of each option long term. This is a great tool to help you ask questions that you didn't know you had. Then we'll discuss which option meets your goals and works best for you and which ones we are leaning towards as your best mortgage solution.
Home Shopping - It's always a good idea to get the financing in place and make sure you are comfortable with everything before finding your new home. It takes away the emotional response to buy more than your comfortable with. Now that you know your budget, the payments your comfortable with your REALTOR can lock in on the properties that meet this criteria. If you need a an introduction to a great agent just let us know and we are happy to help. As your shopping we want to maintain the integrity of your approval so be careful about credit and spending.
Know the up-front costs - If a lender is asking you for up front fees you should have some concerns. There could be some costs to other 3rd parties or deposits related to the purchase but nothing should be paid up front to the lender for their fees or services.
Let's take a look at the costs that may be required as you purchase your new home:
Option Fee - this is a fee paid to the seller for the option to terminate. It's your get out of jail free card. It allows you to cancel the contract for any reason and get your deposit back. Option fees are typically non-refundable and are a negotiated fee that is typically between $200 and $500.
Earnest Money Deposit - This is the up front deposit held in escrow until closing. This amount is included in the final numbers and deducted from the total cash to close. This amount is also negotiable and is typically between 1-3% of the purchase price.
Inspection Fee - While you are not required to order an inspection it is highly recommended. This is a fee paid to a licensed inspector who inspects and reviews the home for safety and functionality and then provides this to you in a report. It is best to conduct the inspection during the option period to ensure you are moving forward with the purchase. Inspection reports range between $450-$650. (The inspector may call out add'l items found that could require add'l inspections as well. For example if foundation repair is suspected they could recommend an engineers report, etc.)
Appraisal Fee - Appraisals are required by all lenders. A licensed appraiser will come out to the home and compare it to other homes in the area to determine an opinion of value. The appraised value must meet or exceed the purchase price, otherwise the loan terms will need to be restructured. Appraisals are typically between $450-$650 but can be higher for very large or unique properties or properties located in remote or rural areas.
Survey Fee (maybe)- Survey's are required to ensure that the property is not encumbering another properties boundary lines, easements, etc. This item can be provided by the seller or the buyer depending on the contract negotiation. Often a previous survey is provided by the seller and as long as the title company accepts it no add'l survey is needed. If it is required that the buyer obtain a new survey in many cases the cost is added to the closing costs and not required up front however some title companies could require payment in advance. Most likely this will not be required up front but I wanted to include it as a possible item.
Other Fee's (maybe)- There can be other costs, depending on the type of property or situation, maybe a condo questionnaire fee paid to the condo association, maybe an engineers report if you want to make sure the foundation is sound. Feel free to contact us for advice before you pay any up-front fees regarding your new home purchase.
Outside of these costs you just have to be aware of the balance of your down payment and any closing costs. We go over all of these items in the mortgage report so that there are no surprises at closing.
Everything Else - Undoubtedly other items will come up as well. Did we mention it's a complex transaction? Remember, that's why were here, to answer your questions, look out for your best interests, and help guide you through this home buying journey. If you have any other questions or need assistance just contact us and let us know how we can help you best.