Published on November 21, 2019
1. The Hudson Group New Home Buyer’s Quick Start Guide
2. Assemble your team! The first step in buying a home is getting pre-approved with a lender The lender will check your credit score, ask you some questions about your job history, your income, and bills. This is to determine your purchasing power. We work alongside your lender to keep the process running smoothly from contract to close! That’s why we partner with expert loan officers who have your best interests at heart and will ensure you understand each step of the process. Type of Loan Key Features Conventional 3% minimum down payment. MI can be removed if applicable. Down payment can be gifted. FHA 3.5% down payment. MI is for the life of the loan. Down payment can be gifted or through a grant. VA Offered to Veterans at $0 down payment. No MI, but has funding fee. Seller can fund closing costs.
3. Set yourself up for success! Do not apply or open any new credit cards Do not close any current credit cards out Do not change jobs during the process of buying a home Do not finance new furniture or appliances until after your closing Do not buy a new car Do not move large sums of money around Do not skip a payment or be late on a payment Do not spend your savings
4. You and your agent Hiring an agent to represent you as a buyer costs you NOTHING Your agent’s commission is derived from the seller’s proceeds of the home sale Your agent is your advocate, your consultant, and your personal market expert Make a list of your top ‘must have’ items, for example: 1. School district 2. Open concept kitchen and living room 3. Storage shed 4. Community pool 5. Game room
5. Information About Brokerage Services (IABS) Setting the ground rules Your agent will have you review and initial the IABS. This is a required form that defines the roles and duties of an agent and real estate broker. *This form is for informational purposes only and is not a contract.
6. Wire Fraud Warning Preventing Wire Fraud This is another required form intended to inform buyers and sellers about the potential theft of funds from fraudulent emails or phone calls from criminals posing as real estate professionals. *This form is for informational purposes only and is not a contract.
7. The OFFER Once you find the perfect home, it’s time to make an offer! Simply stated, you’re trying to spend as little as possible while the seller is trying to make as much profit as possible. Your expert agent will look at the recent sales and comparable properties in the area and offer advice when making an offer. There are multiple offer strategies dependent on the current market conditions and price range of the home. Trust the knowledge of your agent when deciding on the initial offer price! Once your offer is accepted, you’ll have pre-negotiated out-of-pocket expenses.
8. Out-of-pocket Expenses Earnest Money – Payable to the Title Company For the seller to take the property off of the market they will expect Good Faith Funds. This deposit can be as little as $500 up to $5000 depending on the size of the purchase. This is credited back to you at closing. Option Fee – Payable to the Seller This buys us the time we need to complete a full home inspection and negotiate any needed repairs. We can withdraw our offer with only a small monetary penalty at risk in the event we find something wrong with the property or you just want out. This is kept by the Seller in the event you withdraw during the option period. If you continue with the sale, this is usually credited back to you at closing. Your agent will work together with the seller’s agent to negotiate the best and most acceptable terms for all parties involved. This includes the sales price, closing costs, home warranty, closing cost allowances, repairs, and much more.
9. The INSPECTION Not mandatory, but ALWAYS recommended! Home inspections can cost from $400-$550. This is money well spent! An inspector will devote several hours at the house detailing the condition of the home, including the roof, HVAC, sprinklers, and pests. If there are major defects and you do not wish to go forward with the sale, now is the opportunity to walk away and get your Earnest Money back and start your search again. In this case, the seller keeps your option fee. If you wish to continue, you should review the report and decide which items are considered deal breakers and are for the honey-do list. If you go forward, the option fee will be credited back to you at closing.
10. The INSPECTION If there are defects and you still wish to continue there are several options: 1. Ask the seller to fix the issues before closing date 2. Ask for an allowance to be given to have the issues fixed by you after closing 3. Move forward regardless of the inspection report without requesting repairs Sometimes the seller will agree to these requests and sometimes they will refuse. Often there is a compromise on both sides because all parties want to make sure this sale takes place.
11. The APPRAISAL Mandatory, if you are financing your purchase Home appraisals can cost from $500-$650. The purpose of the appraisal is to ensure the house is worth what the lender is loaning. A lender will not loan more money than the property is worth. If the appraisal comes back lower than the agreed upon sales price there are several options: 1. The agent can challenge the appraisal and offer new data for consideration 2. The seller can lower the sales price to meet the appraisal value 3. The buyer can produce the difference out of pocket 4. The buyer and seller can negotiate and agree to a solution acceptable to both parties
12. The CLOSING The title company has been working to make sure ownership of the property can legally transfer to you. They are checking to make sure no unknown parties have a claim of ownership. The title company has been preparing and submitting the necessary documents to execute the sale of the property. When the title company completes their work the lender will be notified. Once the lender is notified the title is clear, they will once again look at your file. If all requirements have been met they will issue the final approval, known as the Clear to Close. On closing day, you be responsible for your portion of the final closing costs. Your lender and the title company will have given you what that amount is ahead of time. Depending on the negotiated agreement and type of loan, these costs can vary significantly. It’s another reason working with a professional realtor and an expert loan officer is extremely important.
13. Call or Email us to find out your options and to get started! You can also visit us at https://www.facebook.com/myhudsongroup
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