Justine’s Homebuyer Success Guide

Next, create a budget – a financial plan that helps track and control your spending and allows you to save money. A budget shows you exactly how much money you make and how you spend your money. If you manage your budget, you’ll spend less than you make, allowing you to save for your home purchase

For a down payment, most loan programs need a minimum of 3-5% down, and some require zero! However, there are benefits to putting a larger down payment, so consider putting down more towards your home if possible. Sometimes, sellers can assist with closing costs as well if those are negotiated. For closing costs, expect to pay between 3-5% of the purchase price. These costs are incurred to facilitate the purchase transaction and include lender fees, title fees, recording fees, etc.

This is just a guideline, and your costs may vary depending on your contract, qualifications, negotiations, and lender requirements. All fees are approximate and potentially negotiable.

A pre-approval is not a commitment to lend; it is simply how much your lender is willing to lend to you, pending forthcoming details, such as the value of the home and the specifics of your loan. It allows you to look for a home with greater confidence and demonstrates to the seller that you are a serious buyer. Pre-approval letters have an expiration date, so be sure to ask your lender how long your letter will remain valid. To get pre-approved, you’ll complete your lender’s loan application, providing them with important information about your credit, debts, work history, residential history, and down payment. This information helps your lender evaluate your “4 Cs” to determine how much you may be qualified to borrow.

4Cs The “4 Cs“ refers to the four lending criteria lenders use to evaluate the strength of a loan

• Capacity – Your current and future ability to make your
  payments. (Income)
• Capital – The money, savings and investments you have
  that can be sold quickly for cash. (Down payment and
  closing costs)
• Collateral – The home that you would like purchase and
  use as security for the loan
• Credit – Your history of paying bills and other debts on
  time

If your lender determines you qualify for a loan, you’ll receive a preapproval in writing that outlines the maximum amount you can borrow. Remember, it’s a maximum, and not necessarily the amount you should borrow. You’ll want to stay within your budget and comfort level.

Before you begin looking for a home, we will talk about what you want in a home, why you want to buy, and where you’d like to live. I will set up an MLS email search that meets your criteria and takes the stress out of the process. From there, we will see the homes that may interest you and make sure they’re what you’re looking for.

House Hunting Tips and Tricks

• Bring your house-hunting checklist with you and ask questions.
• Know where you want to live, scope out the neighborhood, and evaluate the school district.
• Bring a camera and take pictures.
• Keep an open mind.
• Focus on the things you can’t change, such as the size of the home or the number of bedrooms. (Don’t focus on the things you can change, such as the paint color.)

Through this phase, we’ll work closely together to craft your best offer. I’ll help determine a fair offer price while making sure you stay within range of what you can afford. I’ll also handle all contract negotiations with the seller’s agent.

Determine the Price

You’ve found the perfect home, have your pre-approval letter in hand, and are ready to make an offer. Now what? I will be by your side, helping you determine a fair offer price based on their experience and the following home, market, and budget considerations:

• Recent sales prices of similar homes in the same
  neighborhood (CMAs)
• The condition of the home
• The competition (seller’s vs. buyer’s market)
• What you are willing to pay and can comfortably
  afford

Decide on Contingencies

Contingencies are clauses in the sales contract that would allow buyers to walk away with their earnest money if certain specific conditions are not met. Common contingencies include financing, title, home inspection, appraisal, and sale of prior home. Fewer contingencies make for stronger offers in the current market!

Submit the offer

Next, I will write the purchase agreement to submit to the seller’s agent. The offer will include the purchase price and terms and conditions of the purchase, including Chattel items, such as appliancesEarnest money amount, Inspections, Target closing, Provisions for certain fees, deadline for the sellers to accept or counter your offer, contingencies (e.g., appraisal contingency, home sale contingency, etc).

Negotiate the offer

Oftentimes, the seller will counter the offer, typically asking for a higher purchase price or to adjust the closing date. In these cases, the seller’s agent will submit a counteroffer to us, detailing the desired changes. Following the counteroffer, you have the option tto accept reject, or counter again. I will play a larger role during this part of the process, communicating all changes with the seller’s agent.

Buyer Tip

Act fast! In today’s market, we need to put your offer in ASAP and make sure it’s solid. I will communicate and ask questions of the listing agent to find out the sellers’ priorities.

Once your offer is accepted, the next step is to get the home inspected. The inspection is not a requirement, but it is highly advised as it helps give you a full picture of the home and its systems.

Home inspections allow you to have your the thoroughly examined by a professional. This allows you to be aware of the condition of the home from an experienced eye, and is the due diligence on many people’s largest purchase. You can choose your inspector. I can also recommend several well-qualified home inspectors if you need assistance.

What can you expect from the home inspection?

Your home inspector will assess the foundation to the roof. Their job is
to protect your investment and find any issues with the home,
including:

• The roof
• Plumbing
• Electrical components
• Appliances
• Heating and air conditioning systems
• Ventilation
• Windows
• The fireplace and chimney
• The foundation

After inspection, your home inspector will provide you with a detailed report on the overall condition of the house, including outlining any issues and necessary or recommended repairs. Most things found are for your knowledge and can be completed by a handyman. Major defects/health and safety concerns are the priority.

Having a home inspection contingency in your purchase contract is important because if any major issues are noted in the inspection report, you can renegotiate the sales price, require the seller to make repairs, or back out of the offer altogether.

• If the appraisal matches your offer price:
  The appraisal process is over and everything
  moves forward.
• If the appraisal comes in above your offer price:
  Even better! This means not only are you good to go, but you’re purchasing the home for a price below market value, giving you instant equity.
• If the appraisal comes in low:
  Your lender won’t approve the full loan amount, as in their eyes, you’re overpaying for the property. You’ll need to either make up the difference between the appraised value and the offer price in cash or try to re-negotiate the offer price with the seller. If you believe the appraisal was incorrect, we can try to request a new appraisal from your lender.

We will do a final walkthrough in your new home 1-3 days before you close, even if you’re 100%committed to the property. This allows you to ensure that the seller has made any agreed-upon repairs and has cleared out the property. You should also double-check the home’s systems one last time to ensure they are in working order. If everything looks good, it’s time for you to confidently move toward closing.

Three days before closing, your lender is required to give you the Closing Disclosure (CD), which tells you what you need to pay at closing and summarizes your loan details. Once you’ve reviewed the CD, it’s time to attend your closing. Bring a valid ID, a copy of your C, D, and proof of funds. You’ll sign a settlement statement, which lists all costs related to the home sale, the mortgage note, and the mortgage deed of trust to secure the mortgage note. This is when you will also pay your down payment and closing costs.

After title files with the county, you’re officially a homeowner! We will be able to get the keys based on when you get possession per the contract.

Congratulations!

Now that you understand the steps to buying your home from beginning to end, you’re well on your way to homeownership! There are also some best practices during the process. This will ensure you’re doing everything in your power to get to closing.

Don’ts:

• Don’t make big purchases on credit
• Don’t buy or lease a car
• Don’t co-sign for someone’s debt
• Don’t quit or change jobs
• Don’t make large deposits