And remember, we'll be there for you at every one of them.
1. USE A BUYER'S AGENT (Like us.)
2. FIGURE OUT WHAT YOU CAN AFFORD
One long-trusted measure is 3 to 4 times your annual income plus your down payment.
We say, 3 times is safer.
Another measure: your mortgage payment can be as much as 33% of your gross monthly income. This payment would include principal, interest, taxes, homeowner’s insurance and and/or condo fee.
This is a good time to check your credit rating and see if you want to make any repairs.
3. FIGURE OUT WHAT YOU REALLY WANT
Help us help you find your dream house. Fill in this wish/want/love/hate list and bring it with you to meet with us.
4. GET PRE-APPROVED FOR YOUR MORTGAGE
A pre-approval is a written statement from a reputable lender, reassuring the seller that you can afford their home, and that the lender will lend you some money to buy it. Most sellers won’t even eyeball your offer unless you’re pre-approved.
But do not panic.
You can get a pre-approval in a matter of hours over the phone, from one of our trusted brokers, bankers and other lenders. And there’s no commitment. You can get the actual loan from someone else
Cost: This is free. Phew.
5. MAKE ‘EM AN OFFER.
When you’re ready to make an offer on a home, we’ll help you fill out a longish legal form, the PA Standard Agreement of Sale of Real Estate.
It’s your offer to purchase, and spells out the terms and conditions of the sale, like the date when you want to close. You’ll be asked to disclose financial information, and prove that you’re pre-approved.
Cost: Whip out the checkbook for the good faith deposit.
6. GET AN AGREEMENT OF SALE.
If there’s any haggling over the offer, we’ll do it for you. Typically, each party has 24-48 hours to respond to every offer or counter-offer. If either exceeds that limit, the other can cancel the deal. Finally, when both parties sign the Agreement of Sale it becomes a contract.
7. GET HOUSE INSPECTION (S).
When: Within 10-15 days of signing Agreement of Sale.
Buyer, be there! Walking through with the inspector is a great introduction to your new home. The inspector will probably find things that need fixing and give you a rough estimate of what they’ll cost. You can respond in one of three ways:
- Accept the property as is.
- Negotiate with the seller to make repairs, reduce the sale price accordingly or get a credit.
- If you are not satisfied with the inspection and/or the negotiations you can back out gracefully and get your depostit back.
Print out this checklist and bring it with you to the inspection. Also, be aware that
some items (roofs, drains, patios and sheds, for example) aren’t always included in every inspection, so be sure to ask. In Philadelphia, termite, radon and mold are separate inspections.
Cost: About $350-495 for home inspection, $75-90 for termite inspection. These inspections are paid for at time of inspection.
8.TITLE INSURANCE IS ORDERED.
When: After all contingencies are met
Title insurance protects you from being blindsided by any number of little nightmares that could threaten your right to own your new home. It reassures you that the home really does belong to that particular seller; not his long-lost illegitimate child, not his fuming ex-wife. It also guarantees that the property isn’t subject to old tax liens or “easements” (where a government body can lay claim to your driveway and bulldoze an alley through your kitchen). Many people think title insurance is a silly technicality. Not when the bulldozers arrive.
Cost: In Pennsylvania rates are set by the state, and it's part of your closing costs paid at settlement.
9.APPLY FOR HOMEOWNER’S INSURANCE
When: within 10-15 days of signing the Agreement of Sale.
A good insurance agent (we can recommend a few) can help you decide how much coverage you really need. Typically, you pay your first year in advance at settlement.
Cost: Varies all over, and it’s paid at settlement.
10. APPLY FOR YOUR MORTGAGE
When: within 10 days of signing Agreement of Sale
This isn’t as hard as it sounds, so plunge right in. Be ready with some basic documents:
• Proof of your 2-year work history, often your last 2 tax returns
• Your last two bank statements (if you’ve made large deposits you’ll be asked for their source)
• Your last two pay stubs
• Proof that you have enough funds for your closing costs and a minimum of two months of mortgage payments.
The lender will contact all three credit bureaus to get your rating, and will share the results with you. If your credit score needs some repair, you’re not alone. Here’s some excellent advice about credit repair.
The mortgage company will also have the property appraised. When you’re approved, they’ll give you a written mortgage commitment. Now we’re talking.
11. PAY SECOND DEPOSIT
Cost: This is usually 5-10% of the sale price.
When: After inspection results have been agreed upon.
12.TRANSFER THE UTILITIES TO YOUR NAME
When: Call at least 7 days before settlement to have them moved in your name the day of settlement.
You’re busy packing your underwear by now, so if we’re your agents, we’ll make sure you're taking care of business. Usually, the seller must call each utility before the buyer does, to OK the transfer.
13. GET READY FOR CLOSING!
When: 1-3 days before settlement.
The title company will send you estimated closing costs (also called a HUD-1). Often, the bulk of your hard-earned funds are electronically transferred to the title company just before settlement; sometimes you need to bring a certified check. Are we having fun yet?
14.WALK THROUGH
When: 2-24 hours before settlement
Buyer, be there: Buyer and agent should walk through the home to be sure agreed-upon repairs have been made, a tree hasn’t smacked a hole through the roof, and the home hasn’t deteriorated somehow since inspection.
Breathe in. Smell that air? Soon you will own it.
15. SETTLEMENT
Bring a current and valid photo id, a personal check for odds and ends, proof of home insurance and that certified check if you need it. Some people like to bring a lawyer. And don’t worry, we’ll always be there. Collect the keys and go home.
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Because we’re listening….
We know how important confidentiality is to you. We won’t share your financial information with anyone unless you give us permission. |
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