How are you going to pay for the new home? How much home can you afford? If you are a cash buyer, your budget is already set, but if you are going to need financing, a mortgage professional will help you determine the loan amount you can qualify for, setting the budget for your new home. There are several loan programs available with their own qualifying guidelines. A mortgage lender will be happy to pre-qualify you for a mortgage amount so you can pick out your dream home. You should shop your loan with several lenders to get the best loan program for you and compare the cost of the loan. Sources for a lender include, banking institutions, credit unions, mortgage brokers and internet based lenders. Don’t be afraid to shop your loan, it will not affect your credit score.
Draft an outline of your dream home before you start to search online. Envision the type of neighborhood that appeals to you and consider the following:
Take your vision to your Realtor and share this list. Your Realtor can direct you to the neighborhoods with your specific wants and needs. Drive the communities at different times of day to get a good idea of traffic and neighborhood activity. Your Realtor will set up showings of available homes, than discuss with you your thoughts about the home. Give them feedback.
Now that you have found your dream home and are ready to make an offer. Your Realtor will share with you comparative sales from the neighborhood as well as current market trends. Your Realtor will draft a contract to purchase, review all the parts of the contract with you and submit the offer on your behalf to the listing agent. In this current market, you will want to include a deadline for the seller to respond to your offer. The listing agent and seller will have access to the same comparative sales as the buyer. The seller may accept, reject or counter a buyers offer. In Texas, the buyers can pay for an option period. This option period gives the buyer the unrestricted right to walk away from a sale within a specific timeline for ANY reason. During this time, the buyer is encouraged to have a home inspection and any other kind of inspections that may be needed to become fully knowledgeable on the condition of the property. Armed with the knowledge of the property condition, a renegotiation can be started to address any undisclosed repairs.
Your purchase offer was accepted! All contracts have an earnest money deposit. This deposit shows the seller you are seriously interested about purchasing the home. Earnest money deposits are typically 1% of the purchase price on financed transactions and up to 10% on cash transactions payable to the title company. When a contract has been executed/ ratified by all parties, the earnest money is deposited with the title company. The funds are placed in an escrow account set up for this specific transaction. The title company is neutral third party that processes all documents, provides background title, and money necessary to carry out the transaction. The earnest money will be applied to the final purchase price.
Your Realtor has supplied copies of the contract to all interested parties, the title company, the lender, both buyer and seller. Now the buyer’s option period goes into effect. Depending on the negotiated number of days on the contract, the buyer (with the assistance of their Realtor) will schedule home inspections, pool inspections, and any additional inspections desired such as foundation, soil, well & septic (when purchasing acreage) Once all reports are received, the Realtor and buyer will review and discuss if any renegotiations should take place. A home inspector is required by law to report anything that is not to current building codes. It is important to know that building codes change all the time, so a home built in any year other than the current year, may have items listed as a deficit. The home is still sound, and operating as intended. Repairs you will want to address are any health and safety deficits and if are getting third party financing, any items that do not meet the lender guidelines for the loan, i.e., hail damaged roof, broken windows, some loans do not accept wood rot etc. Your lender will help you with this process.
The Lender will order an appraisal of the property. The appraiser will use the same sold comparable properties in the neighborhood going back up to 6 months. If the number of sales is less than 2, they may expand their search area to similar neighborhoods within a determined distance from the subject property. The appraiser will also look at the condition of the property and make notes if the value is affected by any needed repairs. For example, if the roof is in need of replacement, the report may say, “The value of the property is $XXX,XXX contingent on the replacement of the roof. The appraisal is supplied to the loan underwriter that informs the buyer and Realtor of the outcome. If needed, an amendment to the contract may be required to deal with any contingencies.
Congratulations! You have made it to the final leg of your journey. 1-2 days prior to closing, both the buyer and Realtor will conduct a final walk through of the property to verify it is in the same or better condition as when the offer was accepted, and that any agreed upon repairs were completed. The Mortgage Company will provide a final closing settlement statement to the buyer a minimum of 3 days prior to closing. This statement will include all the cost disclosed during the initial loan estimate in the beginning with the only changes being any renegotiated repairs, credits or sales price changes. The buyer will need to bring the disclosed closing funds amount to the title company in the form of a cashier’s check or you can wire funds from your account to the tile company. All buyers that will take title to the property must bring their identification for notary. Once all documents are signed, they are returned to the Mortgage lender and a request for funding is ordered. When the loan is funded, the buyer will receive keys and be proud owner of a North Texas Home.
Your Realtor is your advisor and friend throughout your entire process and beyond. Be open in your communications, remember they have experienced and handled all aspects of home buying and selling and have most likely been through any given scenario a number of times. We are there to take the stress out of making a purchase or selling your home.