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Home Buying 101
Buying a home is one of the biggest decisions a person will make in their life. It can seem like a daunting task. The unscrupulous lending practices of the last decade and "buyer beware" warnings in the media make it hard to know where to start. If you follow the steps below, do your research, and trust your instincts, the process can be fun and rewarding!
Step 1: Evaluate What You Can Afford
Evaluate your income and monthly expenses. Not only will you need to consider what you currently pay in monthly bills, but also account for utility bills and upkeep on a new or larger home. Be certain that, in addition to your mortgage payment, you have enough money left to put into savings, investments, and entertainment. The amount that you decide that you can comfortably afford per month should cover your mortgage, taxes, homeowners insurance, and mortgage insurance (which can be rolled into your payment). Often, people make the mistake of purchasing the largest or most expensive home they can afford. Do not make this mistake! You don't want to find yourself in a nice home, but without the funds to adequately furnish and decorate your home or the financial ability to take part in the fun activities that you once enjoyed.
You will also need to make sure that you have saved enough money for a down payment on your new home. According to the current FHA guidelines, the minimum down payment is $3.5% of the sales price of the home. Closing costs will have to be paid in addition to the down payment and range from approximately $3,500-$7,500 for most transactions. It is not uncommon to negotiate for a seller to pay a portion of a buyer's closing costs. Some loan programs allow "gifting" of funds from approved sources to help with a down payment. This is something that you will need to discuss with your mortgage lender.
Step 2: Financing
Your next step is to find a mortgage lender. We always recommend using a local lender. Online and out of town lenders often fail to come through on promises of low interest rates, reduced closing costs and closing dates. Local lenders can compete with any interest rate that you find online and can get you to the closing table in a timely fashion. They are a part of our community and answer to their customers and to local Realtors both during the transaction and when they see us for years to come throughout the Brazos Valley!
When you meet with a Mortgage Lender, you will need to provide:
They will evaluate your FICO scores (scores used to evaluate your credit worthiness), debt to income ratio, and a number of other factors to determine your interest rate and ideal price range.
Important questions to ask your mortgage lender:
Step 3: Find a Qualified Realtor
The great thing about working with a Realtor when you are a buyer is that you do not typically pay for their services! A buyer's agent is paid by the home's seller.
Finding the right Realtor can make the difference between a seamless transaction and a total nightmare. You need to interview your Realtor prior to making the decision to work with him or her. If you are a first time home buyer, you will probably want someone who will take the time to walk you through the whole process. You will want to be certain that their communication style and availability matches your wants and needs. There are many part-time Realtors that are only available at certain times during the week. You may want to work with someone who can work around your schedule, instead of you having to work around theirs.
A good Realtor will ask you a lot of questions before you set out to look at homes. They should do a thorough analysis of your wants and needs and take the time to answer any of your questions. Be certain that you are 100% comfortable with your Realtor before you move forward.
Step 4: Make Your Wish List
Your Realtor should be able to help you with this step. He or she may think of things that you have not considered. I recommend that you make 3 lists: a list of items or features that your new home MUST HAVE (these items are non-negotiable), a list of features that you WOULD LIKE TO HAVE and things that the home MUST NOT HAVE.
Step 5: Start House Shopping!
Your realtor will either sit down with you in person to review your choices or, if it's better for you, they may email you photos and information on some properties. You will narrow down the list and schedule a time to go view the homes. If you do not find "the" home on the first time out, your Realtor will probably have a good idea of what you are looking for and may preview some other properties for you prior to taking you back out to look at more homes. If you can find a Realtor that will provide you this service, it can save you a lot of time and frustration!
Step 6: Make an Offer
Once you find the perfect home...it's time to make an offer. Your Realtor should review sales of comparable homes from the previous 6 months to help you determine a fair sales price for the home.
Price is not the only element of an offer. There are many terms to be negotiated, as well. You will need to determine:
Your Realtor will probably recommend that you have the property inspected prior to the end of your option period. A General Inspection will evaluate the structural and mechanical aspects of your new home. A Wood Destroying Insect Inspection checks for termites, carpenter ants, and other wood destroying insects. An HVAC Inspection will determine whether the heating and A/C systems are functioning as intended. There are many other inspections that you may want to consider from pool inspections to mold inspections. Your Realtor can advise you on any other relevant inspections. Any items that you feel need to be repaired prior to closing should be negotiated with the seller prior to the end of the option period.
You are in the home stretch! A few final things to remember before you close:
Jen Zweiacker: (979) 324-4796 - Greg Zweiacker: (979) 324-4797
Keller Williams Main Office: (979) 693-9100
2801 Earl Rudder Freeway South, College Station, Tx 77845