|
BUYERS
Table of Contents
Summary
Choosing your real estate agent
Time frames
When you’ll need money
Estimated costs
Building a working relationship
What you can expect from us
Our commitment to you
What we expect from you
Agency
Details of buying
Determining how much house you can afford
Meeting with your lender
Describing your home
Looking at houses
Making an offer
After acceptance
Closing
Summary
Choosing Your Real Estate Agent
Buying a home is a complex process. Choosing the right real estate agent can make it simple for you. It is important to choose someone you trust in addition to being knowledgeable about the real estate market and process.
The right agent real estate agent will guide you through the entire process and help you jump any hurdles. Your real estate agent will be the one professional who knows and understands each step in the purchase of your home and will be committed to staying in touch with all parties throughout the process. A good real estate agent knows that working with you is all about good service from the day they meet you until the day you move in. Although a good real estate company is important, it is truly a good real estate agent that makes the difference.
Buying a house involves a variety of people and companies such real estate agents, lenders, title companies, escrow companies, inspectors, lawyers, and so on. Every person in this process completes their own specific task. Your real estate agent is responsible for getting his/her portion done and for over-seeing that everyone else gets their portion done correctly and timely. In essence, your real estate agent is the one you will call to make sure everything is getting done the way it should.
Buying a house takes about 45-60 days from the day you get motivated to actively pursue buying a house to the day you move in. You and your real estate agent will seem like best friends for 2-3 months. You will talk regularly, oftentimes several times daily. You will be a team that is committed to getting you the house you want.
The first step of buying a home is choosing the right real estate agent. We hope that we can earn your confidence and have the opportunity to be your agent. Please read the rest of our short booklet describing the purchase process. We hope that this will help you understand the process and help us earn your trust.
Time Frames
(Approximately)
Prior to Looking at Homes
Loan application 1 hour or so
Loan Pre-qualification letter 1 day
Loan Pre-approval letter 1-7 days
Choosing your New Home
Defining your desired home 1 day
Finding your home 1-14 days
Preparation of offer to purchase 2 hours
Acceptance of offer 1 day
Completing the Purchase of your New Home
(Time related to date of acceptance of offer)
Home inspection 7 days
Credit approval 7 days
Appraisal 14 days
Loan approval 20 days
Notice to Landlord after loan approval
Signing of final documents 25 days
Ownership transfer and move 30 days
When You’ll Need Money
Now: Approximately $500 to your lender to start the loan process. (This money is generally to cover the credit report and appraisal and is applied towards your total closing costs).
Time of offer: 2% of the expected sales price to be held in the Stauss & Bush LLC trust account for the Earnest Money deposit. If you default in buying it for no cause, the money may be kept by the seller and/or the agents. When the sale closes it will be applied towards your closing costs.)
5 days after
acceptance Approximately $400 to the Inspection company of your choice for inspection of the property.
25 days after
acceptance: The Balance of the down payment and payment of closing coststo the escrow company in cash or by money order.
Note: The costs of getting the loan, the title insurance, escrow, pre-paids, reserves, etc. are known as closing costs. The closing costs are paid in cash to escrow several days before closing.
Closing costs vary, depending on many factors. For example, pre-paids and reserves change, depending on what day of the month the loan closes. If your loan closes on the 15th, for example, then they would collect the remaining rest of the month’s interest on the loan. Your lender will explain these in detail to you. A rough estimate of closing costs is included on the next page. If you have additional questions, let us know. We’ll work with you so that you feel comfortable with understanding the costs.
Estimated Costs
You can easily calculate a rough estimate of the amount of cash that you will need. The amount of cash required to cover loan and closing is generrally about 3.5% to 4.5% of the loan amount. If you add this amount to your down payment you will have a rough estimate of the cash required before closing.
Your Stauss & Bush LLC agent and home loan professional can give you far accurate estimates of the amount of cash that will be required. Please feel free to ask them about the details. They are used to this question and will have answers for you. The following is a list of common charges.
Down Payment (0-20%)
Items payable in connection with loan
Loan Origination Fee (1%)
Loan Discount Fee
Processing Fee
Underwriting Fee
Appraisal Fee
Credit Report
Lenders Inspection Fee
Mortgage Insurance Application Fee
Assumption Fee
Tax Service Fee
Flood Certification Fee
Items required by lender to be paid in advance
Interest from closing to end of month
Mortgage Insurance Premium
1 year Hazard Insurance Premium
Reserves Deposited with Lender
Mortgage Insurance
Three Months Hazard Insurance
Six Months County Property Taxes
Title Charges
Escrow Fee
Document Preparation Fee
Lender’s Title Insurance Policy
Courier Fees
Recording Fees
Building a Relationship
What You Can Expect From Us
-
Honesty
-
Respect for your real estate desires
-
A commitment to complete the purchase of your new home
-
A weekly update
-
A quick response to your questions
-
Your phone calls returned within 24 hours
-
Respect for sellers, their properties, and their agents
Our Commitment To You
Stauss & Bush LLC is commited to finding you a home that you love, for a price you are willing to pay, with the least amount of time and aggravation.
What We Expect Of You
-
Honesty
-
Willingness to work together as a team to purchase a home
-
Open discussions of your real estate desires and concerns
-
Be ready to purchase when you locate a desired property
-
Be pre-qualified by a lender
-
Provide information necessary for loan approval
-
Look at each property as a possible purchase
-
Immediately communicate any concerns or problems
-
Promptly discuss “what’s needed” whenever a problem arises
-
Promptly finish tasks necessary to complete sale
-
Follow the contracts as written
-
Return phone calls within 24 hours
Agency
The designated broker, Fred Stauss, and YOUR salesperson represent you in fulfilling your real estate needs while the listing agent represents the seller.
Details of Buying
How Much House Can You Afford
The first step in buying a home is figuring out how much you can afford to spend on a house. This means that the actual first step of buying a home is choosing a lender, because your lender will determine how much you can afford. We suggest that you choose a lender that you trust and has a loan program that is right for you. You, your family or friends may already know of someone that they have used and trust. If not, your Stauss & Bush agent can help you find a lender that fits you.
The better your financial status the more options you will have. If you have good credit, good income and traditional work habits, you can probably go anywhere and easily get a loan. You may want to begin by checking with your credit union, your bank and on-line. By checking with a few, you can compare rates, terms and costs.
However, if you have questionable credit or income or have unusual income, you may need a lender that can provide you with a wider variety of loan programs. You may also want to choose a company that allows you easy access to the person actually working on your loan (usually the loan processor). Choosing a company that restricts access to this person may cause difficulty in completing your purchase.
Your lender will help you decide the type of loan (FHA, Conventional, Fixed rate, Adjustable rate, Etc) that is best for you. They will also help you determine the best down payment for you. When you have completed the loan application, they will provide you with an estimate of costs to get the loan and buy the house. And most importantly, they will tell you how much you can afford to pay for a house.
Meeting With Your Lender
Before you meet with your lender, you will need to gather a few things to take with you. Ask them what you should bring with you to verify your financial status. You may also need to bring money with you to pay for the credit report and the appraisal. The following is a list of items commonly requested.
- $500 check to cover the cost of the appraisal and credit report. Some lenders will take your credit card as security rather than collect the funds up front, so in this case you would pay at the end of the purchase, not up front.
- Financial information
- Social security number
Credit card numbers and balances
Other outstanding loans
Other real estate owned
Any loans where you are a co-signer
Any legal decisions that financially affect you
Bank account numbers and balances
2 months bank statements
Paycheck stubs and/or W2 forms
Savings bonds
Other income sources
When you have completed your application, your lender will tell your how much you can afford to pay for a house. You will receive a letter known as a pre-qualification letter. The pre-qualification letter states that based on the information that you have provided, you qualify to borrow a certain amount of money. Once your lender has confirmed the information in your application, they will give a second letter known as a pre-approval letter. This letter confirms that your credit has been approved and the lender will loan you the stated amount of money as long as the house appraises at least as high as the sales price.
Once you are pre-qualified, or better yet, pre-approved, it is time to start looking for your home.
Describing Your Home
Now that you know how much you can afford, you need to find out if your desired home fits in your budget. Begin by describing your desired home. Determine what type of house (i.e. split level, one floor, 2 story, etc.), number of bedrooms, age of house (new construction, old world charmer or something in between), and what features you want i.e. fireplace, garage, shop, kitchen with eating space or separate dining room, etc). Don’t forget to consider where you want your house. What neighborhood, for example. To do this, you may need to drive around to find houses and areas that fit your preferences. Consider the following characteristics:
Give your description to your Stauss & Bush agent. Your agent will be able to tell you if you can find your desired home within your budget. If the answer is yes, you are ready to begin looking. If the answer is no, you have some important decisions to make. You will need to decide what you are willing to give up to stay within your budget. Answering the following questions should help you get in your budget:
1. Would I rather have a house that is not quite as good as I would like, or a neighborhood that is not as desirable as I would like?
2. If I am willing to accept a lesser house, would I be willing to accept a smaller house, a less desired house or one that needs some work?
3. If I am willing to accept a less desirable neighborhood, what neighborhoods am I willing to accept?
After answering these questions, tell your Stauss & Bush agent your revised criteria. Again, your agent will tell you if you can now find a home within your budget. If the answer is yes, you are ready to start looking. If not, you still need to keep going through the above questions to get in your budget. If you are still having difficulties staying within your budget, ask your Stauss & Bush agent to describe the types and locations of homes that would fall within your budget. Hopefully, with the help of your Stauss & Bush agent you can choose a house and a location that fits your budget.
Looking At Houses
Now that you have a rough idea of what you want to buy, your Stauss & Bush agent can start doing the legwork for you. Your Stauss & Bush agent will find 3-5 houses that fit your criteria. You will then go with your Stauss & Bush agent to look at these houses. As you look at each, tell your Stauss & Bush agent what you like and don’t like about each house. This way you can continue to improve the description of your desired home and allow your Stauss & Bush agent to do more of the legwork. As you look, don’t be surprised if your criteria changes considerably. This is quite common. People often learn more and more about what’s important to them as they look at houses.
The average person looks at 12 houses before choosing one to make an offer. You will probably know that you have found the right home as soon as you open the front door of the right house. You then will spend the rest of the time walking around the house and grounds confirming your decision. Rarely will you find something that makes you reconsider your choice.
Once you have found a home, it is usually best to not wait long to write an offer. If you like the house, it’s very likely that others will too. When the market is hot, waiting a day is often too long.
Making An Offer
Your Stauss & Bush agent will prepare the paperwork for your offer to buy the house (often referred to as the Purchase and Sales Agreement or the Earnest Money agreement). Your offer will be prepared by your Stauss & Bush agent by filling in blanks on standardized forms that are created by the Northwest Multiple Listing Service. Your Stauss & Bush agent essentially takes the standardized forms and works with you to make them specific to you.
Your Stauss & Bush agent will then present the offer to the Listing agent who will present it to the Seller. Once agreed upon between you and the Seller, it is a binding agreement between you and the Seller to complete the sale of the property based on the terms of the accepted offer.
When you sign the offer to be presented to the seller, you need to be ready to pay the earnest money, also known as Good Faith money. This is usually 2% of the sales price. Your check will generally be held by your Stauss & Bush agent until the offer is accepted and deposited into the Stauss & Bush LLC trust account or the escrow agent’s trust account upon acceptance of the offer. Occasionally, buyer and seller agree to wait to deposit the check until removal of the inspection contingency.
The offer is usually presented to the seller the same day it is written. Usually your Stauss & Bush agent will fax a copy of your offer to the listing agent who will present it to the seller. By 9:00pm that evening you, through your Stauss & Bush agent, will usually hear if your offer has been accepted, countered, or rejected. If it has been accepted, you have successfully completed the first step of purchasing your home. If not, you need to decide if you want to continue to reach an agreement with the seller to buy this home. Your agent can help you revise your offer or can also help you find another home that will better fit your needs.
After Acceptance
Once you have reached agreement on the terms of purchasing the house, the next step is having the house inspected. You choose the inspector of your choice. Your Stauss & Bush agent can give you the names of several professional inspectors that we trust or you can ask if any of your friends know any inspectors that they like.
The inspector will essentially be your conscious. He or she will look at the house to help you determine its condition and the cost of keeping it in average condition. They will give you a list of suggested repairs and maintenance. You will usually have 7 days to complete the inspection and provide a response to the seller. If you do not provide a requested repair list on time or do not decline the property in writing on time, you may have accepted the house as-is.
Your Stauss & Bush agent will work with you to help you determine if you want to make a request for repairs to the seller. Your agent will also help you prepare that list if you decide to ask for repairs. Your Stauss & Bush agent will then work with you and the listing agent to reach an agreement that both you and the seller can live with. Sometimes the Seller will simply give you money instead of doing repairs. Your Stauss & Bush agent will be with you all the way helping you with your decisions and paperwork. The final decision is always yours. Your Stauss & Bush agent will follow up that the work is getting done and to your standards.
After you and the Seller have agreed on the condition of the house at closing, the lender will send out an appraiser to make sure its value is at least as high as the sales price. Once the value is confirmed and your loan information meets their requirements, they will give you loan approval. Finally, they prepare loan documents and forward them to escrow, where the closing of the purchase will take place.
Closing
Closing is the day the seller is paid for the home and you take ownership. Escrow is the company that makes this happen. Escrow is a neutral party that prepares all the change-of-ownership and final accounting documents. They also work with the title company to ensure that there are no unexpected loans or liens against the property.
You will go to the escrow company’s office to sign all the appropriate documents and pay any necessary funds in cash or money order to finalize the purchase. Escrow then sends your signed paperwork back to the lender for a final review. The Seller goes to the same escrow company but at a different time to sign the Sellers papers.
When everything is signed by you and the seller and accepted by the lender, escrow arranges for the transfer of title to be recorded. They also direct the lender to send your loan funds to the escrow company’s trust account. They then pay the seller and inform you that you are the new owner of the property. Closing of the sale and ownership transfer usually occurs 2 days after both parties have signed the final paperwork.
|
