Steps to Buying

Trust me, there’s a lot to learn when it comes to buying your new home. Whether you’re buying your first home, looking for that perfect condo, upsizing to fit the entire family, or downsizing because of “too much house,” my in-depth guide will advise you through all the steps of the process to ensure a successful transaction. You can download my simplified free home buying guide or check out the steps below to find out how to:

  • Get approved for the right mortgage so you are financially comfortable with your new purchase.
  • Find your dream home that contains many of the features you ultimately desire.
  • Make an offer to ge the best price, negotiate like a C.I.A agent, and hold your ground during bidding wars.
  • Be prepared for closing to reduce the amount of stress and unexpected costs. The end result is the keys to your new dream home being placed in your hands!

Financing

Get Pre-approved for a mortgage

 

Hey! Question: Which scenario would you choose? Go to your favorite store and simply window shop OR go to your favorite store with a wallet full of cash ready to instantly purchase the item you really want? I’m pretty sure I know you’re answer. When you get preapproved for a mortgage, you are telling the real estate world “I’m ready to buy my dream home and I am able to afford it!” This is the exact reason why obtaining financing is the first and most important step to the home buying process.  This is perhaps the biggest purchase you will make in life…besides the yacht and private island you will have in the future. So what actually happens when you get preapproved?  Your mortgage lender will take a look at your income, debts, and your down payment amount to assess how much “Home” you can afford based on your financial health. Once you are able to prove your income and credit history, your lender will then provide you with your preapproval letter that will be valid for about 90 – 120 days.

 

Mortgage Options

 

Mortgages can be an intimidating subject, especially to the first time home buyer. Once you receive your preapproval, you’ll need to take it a few more steps in order to make sure you are doing the best for your financial health. Read on in order to make sense of it all.

 

Mortgage Terms and Amortization

 

The term refers to the amount of time a lender is willing to lend to you. It is the “life span” of the loan. The typical life span of a mortgage is 6 months to 5 years. Once that term is up, the remaining balance is to be paid in full by the borrower unless you arrange new financing for the next term.

 

“How in the world are you going to be able to pay off your entire home in 5 years??”

 

The good thing is, lenders calculate the mortgage payments over a much longer time, as long as 30 years. They aren’t necessarily loaning you the money for (one) 30 year term, instead they’re just calculating the payments as if it were to take you that long to pay off your home. You will probably renew and refinance your home multiple times during your 30 year amortization. The longer the life of the loan, the lower your monthly payments will be. However, it also means you will be paying more of the interest accrued over the life span of the mortgage as well.

 

Just like there are various credit cards out there that offer benefits such as Travel Reward Points, 0 APR% financing, and Cash back on groceries/gas, there are various types of mortgages with benefits that are available to you to make the best financing decision. The most common types of mortgages are:

 

Conventional – This is the most commonly used type of mortgage. They generally require 20% of the purchase price as a down payment, while financing the remaining balance.

 

FHA – This type of mortgage has become extremely popular over the years. Primarily due to its 3.5% minimum down payment incentive which allows individuals who may not have a lot cash for a down payment to still have the opportunity to own a home.  Be advised, because this type of loan will allow you to borrow more than the conventional 80% of the purchase price, the government requires that you pay PMI (Private Mortgage Insurance) which can add to your monthly mortgage payment.

 

Interest Rates

 

I’m pretty sure you know how interest rates usually work, it is your cost of borrowing, simple. It increases and decreases in relativity to the economy. When shopping for a mortgage, you will generally have two options when it comes to addressing the interest of the mortgage.

Fixed-Rate

  • It’s exactly how it sounds, an interest rate that is fixed over the lifespan of the mortgage. This option can be extremely helpful in an economy that forces the interest rates to spike. You would benefit by having a rate locked in and avoiding paying more money

 

Adjustable Rate

  • This type of interest rate option is pegged to the prime interest rate of the economy and is allowed to float freely. It can increase and decrease with the flow of our economic health. Given the scenario before, if you had an adjustable rate mortgage, you would have been able to take advantage should the prime interest rate drop below your existing interest rate allowing you to save exponentially on interest payments. Obviously it’s not so glamorous should the opposite happen and you find yourself paying higher interest payments than before….ouch!

 

Where to get your preapproval

Finding an entity to provide you with your mortgage is one of the easier parts of the process. They’re usually right within your own network. The two most commonly used are:

 

  • Your own bank or a local bank
    • You’ve already invested in your bank by using some of their products and/or services such as checking and saving accounts, auto loans, CD’s, personal loans, ect. Your lender recognizes this and may be more inclined to give you a better interest rate.

 

  • A mortgage officer
    • Mortgage brokers are the liaisons between you and various lenders; they shop around for the best mortgage rate and term. This takes the pressure and leg work away from you which helps make the financing process a little bit easier.

 

Above all, getting preapproved is the first crucial step in your journey towards home ownership. Once you know how much you can afford, it’s on the fun stuff… House Hunting!

Now that we got the “math” out of the equation, now on to the moment you’ll never forget. What’s it like to find your new home? You know… the one you’ve fantasized about. The one you imagined with your family and friends enjoying your deck on a cool summer afternoon.  The one that symbolizes one of your many successes. I’ll tell you how to find that home  in the steps below.

  1. Set up your wish list
    1. Knowing your own specific wants and needs is the essence of the home hunting process. Like a finished basement? Maybe a high floor in the city’s condo district? A deck for those summer nights? Bedrooms? Bathrooms? — I can already see you picturing the home in your head. What are your must-haves, Like-to-haves, and hell-no’s? This is a great starting point for you get a good idea of what you’re looking for in your new home.
  2. Searching for houses and condo’s online
    1. You can literally type in “real” into google, and it will pull up “estate” as an auto suggestion. Over 90% of Americans begin their housing search online. You can only imagine how many websites there are. With that said, I recommend using com. It is a website owned by the real estate association. It takes data from the Multiple Listing Service and makes those listings available to you online. The data may be delayed a day or two, but it provides ongoing information and is a useful tool.
    2. You can use my app! This will allow you to search for homes right at your fingertips. You can click this link to download my app.
    3. You can ask your agent to set you up on an auto email service that will send you listings tailored to your individual wants and needs.

**Tips for looking for a home online**

  • No home is 100% perfect. Neither is any individual …. nor my singing skills.
  • Keep a positive open mind. Your dream home is definitely out there even if it isn’t available right away.
  • Great photos are definitely not always a great representation of what the home looks like in person. Neither is the description. Always check with your agent to get the real story of the property.
  • When shopping for a condo, always pay attention to the condo association fees and find out if utilities are included in the building your previewing. A higher monthly condo fee isn’t necessarily a bad thing if utilities are included.
  • Don’t get in trouble with your boss for House Surfing during work.
  1. House shopping in real life
    1. Here’s the part where you take your wish list, research, and set up an appointment to view your potential dream home!
      1. Make an itinerary for your day of previewing houses. You will probably find a few homes that match your wish list so you’ll most likely be going on previewingtours so be sure to set your day up accordingly.
      2. Take notes and photos. By the end of your previews, there’s a good chance you won’t remember everything about the first home you visited. Especially when you have 4-5 other homes in your tour. Take notes and photos to help jog your memory of the details and experiences from each home.
  • Get a real feel for the neighborhood. You’ll most likely be living there for a few years, you might want to know where the grocery stores, school(s), parks, and shopping malls are at. Does the home give you the proximity that you’re looking for to these establishments? What are the neighbors like? This will give you an idea of how you’ll feel during your commute home from work.
  1. See past the ugly. I already know what you’re thinking. “This is my dream home! It’s got to be spotless!”  Truth is, you’d be surprised how some people live and your “dream” home may not always be in the best showing condition upon your arrival. It’s ok if the master suite is painted orange and that happens to be your least favorite color; that’s the seller’s taste, not yours.
  2. Did it just rain heavily? This is a perfect time to see if the home has any leaks or penetration of water throughout the home that is otherwise hidden on a nice sunshiny day.
  1. How Austin can help you find the perfect home
    1. Help you analyze the best home for your financial needs as well as maximizing the ROI on your new investment.
    2. Help you stay on top of the market’s newest properties as well as those that have had a price adjustment and now are within your financial grasp.
    3. Help you preview homes in your tour with efficiency and diligence. Learn everything you need about your previewed homes while having more than enough time to handle your personal life.
    4. Help you save time and energy! I help preview properties on your behalf to see if they will be even be worth adding to your tour. You can even get a tour of the property straight from your phone via video message or skype!

You’ve searched and searched, and you’ve finally found the home of your dreams. Now it’s time to put in an offer to purchase the property! An important concept to remember when submitting an offer: The ultimate goal is to find your dream home at the price you’re willing to pay. Keep in mind that in hot markets, multiple bids on a home can cause the selling price to be higher than the original asking price.  That is why it’s important to understand your financial health prior to house hunting and submitting an offer.

It all starts with the purchase contract. This will highlight your offer price, inclusions you want (the oven, washer/dryer),  date you would like to take possession (closing date), and any other contingencies/conditions that are necessary for the transaction to go through. Once submitted, the seller will either accept, reject, or counter.  At that point, we will either move on to attorney review, or counter until both parties are satisfied.

 

How Austin can help you negotiate and get your new home.

  • Help explain the contract so you are understanding what the terms and conditions are of your new purchase. This will also be reviewed by your lawyer with expert consultation.
  • Help protect your best interest without budging or going beyond your level of comfort. We won’t be bullied in ANY transaction!
  • Help put the odds in your favor during bidding wars while also respecting your financial position. You will only pay what you are comfortable spending.

The moment is finally here. You’ve done your home inspection, scheduled your appraisal, and have received your mortgage commitment from your lender. During this time, you’ll want to stay in heavy contact with your lawyer and lender as they’ll need a lot of information from you. The few days before the closing date are the most important. You’ll sign plenty of paperwork and will need to have a certified check for the remaining “closing costs” of your transaction.  Your lawyer, accountant, or real estate agent can help you estimate your closing costs. Some of the things you can expect to pay are:

  • Down payment
  • Title and recording fees with Mortgage and Deed
  • Lender fees (application fees, appraisal fees, loan originator fees, etc.)
  • Adjustments/Proration’s (prepaid taxes, utilities,
  • Lawyer fees

For a more detailed list of items and costs associated, download my First Time Home Buyer Guide

 

CONGRATULATIONS!  You just purchased your new home!  Take the keys and go out to celebrate!