| Buying a Home 101 | |
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Keys to Smart Home Buying Buying a home is one of life's most important investments and exciting adventures, but even experienced buyers can find this complex process a bit overwhelming. As your Coldwell Banker Sales Associate, I will guide you every step of the way. In addition to the crucial step of locating and presenting properties that match your search criteria, I will help you along the path from "I want this home!" to "I own this home!" The Search Begins Determining your price range. How much can you afford? While lenders use various formulas for arriving at this figure, most prefer that you spend no more than 28% of your gross monthly income on housing costs or PITI (principal, interest, taxes and insurance), and no more than 38% on combined total monthly house and long-term debt payments. However, each person's financial picture is unique and I'll be happy to put you in touch with a lender I trust to evaluate your buying power. Understanding the Asking Price Many factors influence the price that a seller expects to get for their home. While only you can decide how much you feel comfortable offering for a property, I can gather critical information that impacts how much you should consider paying for the home. These items include:
Being pre-approved by a lender can put you in a much stronger negotiating position, because it shows the seller that you are a committed buyer, financially capable of buying the property, and more likely to close on the property. Pre-approval is different from pre-qualification, which is merely an estimate of what you may be able to afford. Pre-approval occurs when the lender has reviewed your credit and believes that you can finance a home up to a specific amount. However, neither pre-approval nor pre-qualification represents or implies a commitment on the part of a lender to actually fund a loan. Here are some of the documents you'll need to get started:
The financing process can take anywhere up to 90 days, but typically runs 30 to 45 days. I'll be involved throughout the process to help it run smoothly. Here is a basic timeline for what will happen along the way:
You may make your offer subject to certain terms or contingencies, including securing of financing or perhaps the sale of your current home. You may also make the contract subject to various inspections by both you and professional inspectors. Most contracts include some standard provisions, such as proration of property taxes, insurance costs, utility bills, and special assessments between buyer and seller. Others outline what happens if the property is damaged before closing, or if either party fails to go through with the sale. I will review every aspect of your offer with you. Together, we will plan a strategy for getting the most advantageous terms at the price you are willing to pay for the property. Inspections Real estate contracts often contain contingency clauses that allow buyers to inspect the property. Certain inspections are required by lenders and others are a matter of observation and what is particular to a region or area. Which party pays for these inspections is negotiable. The two most common types of inspection are: Wood Destroying Pest and Organisms (Termite) Inspection. This inspection identifies existing or potential pest, dry rot, fungus and other structure-threatening infestation or conditions. The initial inspection fee covers only those areas which are accessible to the inspector. Inspections of inaccessible areas cost more and are subject to an estimate by the inspector. These inspectors must be licensed and can give estimates to correct noted problems, can make the suggested repairs, and/or can certify that the work has been completed. General Home Inspection This noninvasive, physical inspection identifies material defects in the essential components of the home. There are no licensing requirements for someone to be a home inspector. These inspectors are not allowed to give estimates to correct noted problems, nor can the inspector perform any of the repairs. Title Search Process A title search determines who has the right of ownership for a property. It is considered "clear" if there are no claims or liens against it. In order to make sure nothing will prevent transfer of the property to you, a title company will conduct a title search and prepare a Preliminary Title Report that indicates what recorded matters affect the title to the property and if the title insurance company is willing to insure the title. At the close of escrow, the title company will issue an Owner's Policy of Title Insurance to protect you against losses that might arise from covered claims on the title. For more Information click here. Closing Costs A home purchase is a complex transaction involving many parties and associated fees. In addition to your deposit and down payment, there are a variety of other costs involved in the close of escrow. These include:
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