Roadmap to Buying Your Home
Deciding to
Buy
Purchasing a
property is most likely the biggest
financial decision you will ever make.
Whether this is your first purchase or
you are an experienced buyer, this
decision must be made carefully.
Why Do You Want To Buy?
Are you tired of
paying rent? Have you decided to pay
your own mortgage and not your
landlord's? Have you outgrown your
current home? Are you looking for an
investment portfolio? Are you looking
for a rental property? Would you like a
larger yard? Would you rather live in a
different area? Do you want to shorten
your commute? Having a clear sense of
your reasons for buying will help you
choose the right property.
Has Your Income Grown?
Property
ownership is an excellent investment;
whether you are looking for your dream
home, a rental property, or to expand
your investment portfolio. Owning real
estate is one of the least risky ways to
build equity or to obtain a greater
return on your initial investment.
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Preparation
Before you start shopping for your
property, it is a good idea to make some
preparations.
Build Your Green File. A green file
contains all your important financial
documents. You will need it to secure
financing for your property. The typical
green file should contain:
Financial statements Bank accounts
Investments Credit cards Auto loans
Recent pay stubs Tax returns for two
years Copies of leases for investment
properties 401K statements, life
insurance, stocks, bonds, and mutual
account information. Check Your Credit
Rating. Your credit score will have a
huge impact on what type of property you
can buy, and at what price. It is first
recommended to check your credit rating
with an experienced lending institution
so that we can determine what you can
afford. The lender will research your
credit ratings from the three credit
reporting agencies Equifax, Experian and
Trans Union. We will be happy to
recommend experienced, knowledgeable
lenders in the residential,
construction, and commercial and
investment real estate fields.
Be
Careful With Your Finances. Now is
not a good time to make sudden career
changes or large purchases. You want to
approach your property purchase from a
position of financial stability.
Choosing a Real Estate Agent
Buying a property requires making
many important financial decisions,
understanding complex issues and
completing a lot of paperwork. It helps
to have an expert in your corner when
undertaking such a large purchase. We
can guide you through this process, and
also provide you with access to property
listings before they hit the general
market.
Here
are some factors to consider when
choosing your real estate professional:
Look
for a full-time agent – one who has
experience completing transactions
similar to yours. Interview a few
agents: Are they familiar with the area
in which you are interested? Ask how
much time the agent will have for you,
and if they are available at night and
on weekends. Ask about their credentials
and education: A good agent will
continually strive to improve and gain
knowledge of the latest real estate
trends and hold the highest designations
in their respective fields of expertise.
Does the agent return your calls
promptly? Time is money when attempting
to buy a property. Ask for a list of
properties they have sold or a list of
references. Choose an agent who listens
attentively to your needs and concerns.
Pick an agent, with whom you feel
comfortable.
Time to go
Shopping Once those preparations
are out of the way, it is time to find
the right property for you.
Take
a Drive. Get to know the
neighborhoods, complexes, or
subdivisions, which interest you. Drive
around and get a feel for what it would
be like to own a property in the area.
Start getting a sense of the properties
available in those areas.
Narrow Your Search. Select a few
properties that interest you the most
and have your real estate agent make
appointments to visit them. Ask your
real estate agent about the potential
long term resale value of the properties
you are considering.
Time
to Buy. Once you have picked out the
property you want to purchase, your real
estate agent can help you make an offer
that the seller will accept. A good
agent will investigate the potential
costs and expenses associated with the
new property. An agent can also help you
draft your offer in a way that gives you
the advantage over another offer.
The Process, Step-by-Step
The
Initial Agreement and Deposit. An
effective agreement is a legal
arrangement between a potential
purchaser and the property's seller.
Some
important tips to keep in mind to
streamline the process: Keep written
records of everything. For the sake of
clarity, it will be extremely useful to
transcribe all verbal agreements
including counter-offers and addendums
and to convert them into written
agreements to be signed by both parties.
We will assist you in drafting all the
paperwork for your purchase and make
sure that you have copies of everything.
Stick to the schedule. Now that you have
chosen your offer, you and the seller
will be given a timeline to mark every
stage in the process of closing the real
estate contract. Meeting the
requirements on time ensures a smoother
flow of negotiations so that each party
involved is not in breach of their
agreements. During the process we will
keep you constantly updated, so you will
always be prepared for the next step.
The Closing Agent. Either a title
company or an attorney will be selected
as a closing agent. The closing agent
will hold the deposit in escrow and will
research the complete recorded history
of the property to ensure that the title
is free and clear of encumbrances by the
date of closing and that all new
encumbrances are properly added to the
title. Some properties are subject to
restrictions which limit various
activities such as building or parking
restrictions. There may be recorded
easements and encroachments, which limit
the rights to use your property.
How
to Hold Title. You may wish to
consult an attorney or tax advisor on
the best way to hold title. Different
methods of holding title have different
legal, estate and tax implications,
especially when selling or upon death of
the title holder.
Inspections. Once your offer is
accepted by the seller, you will need to
have a licensed property inspector
inspect the property within the
timeframe that was agreed upon in the
effective contract to purchase. You may
elect to have different inspectors
inspect the property, if you wish to
obtain professional opinions from
inspectors who specialize in a specific
area (eg. roof, HVAC, structure). If you
are purchasing a commercial property,
then you will need to have an
environmental audit done on the site for
the lending institution. We can
recommend several different inspectors.
Depending on the outcome of these
inspections, one of two things may
happen: Either each milestone is
successfully closed and the
contingencies will be removed, bringing
you one step closer to the close, or The
buyer, after reviewing the property and
the papers, requests a renegotiation of
the terms of contract (usually the
price). Appraisal and Lending. It is
imperative that you keep in close
communication with your lender, who will
let you know when additional documents
are needed to approve your loan
application and fund your loan. If the
agreement is conditional upon financing,
then the property will be appraised by a
licensed appraiser to determine the
value for the lending institution, via a
third party. This is done so that the
lending institution can confirm their
investment in your property is accurate.
Appraisers are specialists in
determining the value of properties,
based on a combination of square footage
measurements, building costs, recent
sales of comparable properties,
operating income, etc. When you are
within two weeks of closing, double
check with your lender to be sure the
loan will go through smoothly and on
time.
Association Approval. If the
property that you are purchasing is
conditional upon an association
approval, request the rules,
regulations, and other important
documents from the seller as soon as you
have an effective agreement to purchase.
Make sure that the application documents
and processing fees are submitted to the
appropriate person at the association by
the required time. Fill out all of the
information completely and legibly so
there is no delay in processing the
application. If you are required to meet
with the association for your approval,
make an appointment as soon as possible
for the interview. Most associations
require a certificate of approval before
move-in. Your closing agent will request
that the original copy of this approval
letter be brought to the closing, so
that it can be recorded with the deed in
the county public records.
Property Insurance. If you are
obtaining a loan, you will be required
by your lender to purchase a certain
amount of insurance on the property. The
value will depend on the lending
institution and the purchase price of
the property. You may be able to save
hundreds of dollars a year on homeowners
insurance by shopping around for
insurance. You can also save money with
these tips. Consider a higher
deductible. Increasing your deductible
by just a few hundred dollars can make a
big difference in your premium. Ask your
insurance agent about discounts. You may
be able get a lower premium if your home
has safety features such as dead-bolt
locks, smoke detectors, an alarm system,
storm shutters or fire-retardant roofing
materials. Persons over 55 years of age
or long-term customers may also be
offered discounts. Insure your house NOT
the land under it. After a disaster, the
land is still there. If you do not
subtract the value of the land when
deciding how much homeowner’s insurance
to buy, you will pay more than you
should. We will be happy to recommend
experienced knowledgeable insurance
agents for every property type.
Closing Day
If you have come this far, then this
means that it is almost time for a
congratulations, but not yet. Do not
forget to tie up these loose ends:
Final Walk-Through Inspection. More
of a formality than anything else, the
final inspection takes place a day
before, or the day of the closing. You
will visit the property to verify that
all is in working order, everything is
the same as when you last viewed the
property, that there are no extra items
left behind, and that everything
included in your purchase is still at
the property.
Home
Services and Utilities. We will
provide a list of useful numbers for the
activation of home services and
utilities after the closing occurs.
Be
Prepared. We are ready to assist you
should an unforeseen glitch pop up, even
at this last stage. Something at the
property breaks down, or some other
minor detail - no need to worry. We have
encountered these problems before so we
know how to handle them efficiently and
in a stress-free manor.
Closing. The closing agent will
furnish all parties involved with a
settlement statement, which summarizes
and details the financial transactions
enacted in the process. You and the
seller(s) will sign this statement, as
well as the closing agent, certifying
its accuracy. If you are obtaining
financing, you will have to sign all
pertinent documentation required by the
lending institution. If you are unable
to attend the scheduled closing,
arrangements can be made depending on
the circumstances and the notice that we
receive. If you are bringing funds to
the transaction, you can elect to either
have the funds wired electronically into
the closing agent’s escrow account, or
bring a certified bank check to the
closing in the amount specified on the
settlement statement. The seller should
arrange to have all property keys and
any other important information for you
at the closing so that you may receive
these items at this time.
