It is vital to start with a plan. Home buyers often attempt to do much of the planning themselves before engaging a REALTOR®. Jason has significant experience representing buyers and sellers and is in this business because he loves helping people. Take advantage of his experience! Go ahead and engage him at the start.
Dozens of people can be involved in a single real estate transaction, the majority of whom you will never meet. Your two primary advocates throughout the transaction will be Jason and your mortgage broker. The mortgage broker (also referred to as the lender) is the person responsible for securing a loan so you can purchase a home. Jason has worked with many lenders over the years and can help you choose the one that suits your specific needs.
The three other major players in your transaction will be the property inspector, the insurance agent and the escrow officer – more on all three later.
After you have met with Jason and selected a lender, the next step will be to work with your lender on a pre-approval of your loan. The mortgage broker will present various financing options and should provide you with an estimate of your monthly payments and funds needed to buy a home. The lender will run a credit check, verify monthly income, asset statements, debt-to-income ratio, etc. and determine how much money you can borrow. Afterwards they should be able to provide a pre-approval letter that we will submit with your offer to reassure the Seller that you are qualified to buy their home.
Most listing agents and sellers are now following a standard practice we’ve always followed at Juice where a buyer’s pre-approval letter or proof of funds are required before an offer is deemed complete. Sellers will remove their home from the market upon accepting an offer and want confidence that buyer is ready, willing and able to buy.
There are as many ways to approach a home search as there are buyers. Jason can arrange a home search plan that fits your specific needs. Once you have defined your search criteria, he will create an automated online search to email you properties that fit your needs. This is the fastest way to be notified when a home hits the market that matches your criteria. If one catches your eye, you notify Jason so he can arrange a time to view the property. In addition, he can arrange property tours in which you spend a couple of hours viewing multiple properties that you both feel are strong prospects. This intensive property tour approach can bring you quickly up to speed on the market context and may get you to market clarity a bit sooner.
Most buyers at this point want to know how long the home search generally takes. Naturally, this is determined by the specifics of the search, the availability of the buyer to view properties and the current housing inventory. On average, most buyers find their home within the first 5-10 homes that they view, but clearly this all depends on the buyer’s particular needs and the options the market presents. At Juice we spend time researching properties before jumping in the car to see a home. Sometimes we can identify easy deal breakers like backing to major roads or railroad tracks, issues that might be noted in disclosure statements, or properties that reside in a flood zone.
When you have identified the property that meets your specific needs, it’s time to make an offer. Jason will help you identify the right offer for the home that you choose on the basis of comparable properties that have recently sold. Price is only one of the many terms included in an offer, and Jason can help you present terms that will optimize your offer’s chance of being selected by the sellers. What happens after the offer is submitted depends on the seller and the level of other offers or interest there has been in the property. Negotiating terms with the seller can be quick or can take some time. The key is having an agent who is on top of the process the whole way through. That’s why you’re working with Jason!
When you are under contract and the home is “locked down,” the next step will be to schedule a general property inspector to examine the house. Jason can recommend inspectors and coordinate the process for you. For many buyers the home inspection is the most anxiety-ridden step in the process. Suddenly you discover that your dream home is not without flaws. At this point it is good to remember you are not alone. Almost every buyer (especially a first time home buyer) feels these same emotions and, like them, you too will get through it. The key is to understand which are major issues and which are more minor issues. That’s why an inspection is important.
Occasionally, the general inspector will recommend that you engage another inspector that specializes in foundations, roofs, electrical, HVAC or plumbing. If this is the case, Jason will help you coordinate with these service providers.
All of this will be done during the option period. The option period allows you to a) negotiate any repairs or credits for repairs or b) terminate the contract should an insurmountable defect be revealed. Generally speaking, your option period will last approximately 7 days and all amendments or cancellations must be completed in writing by 5 PM of the last day.
If you have not already contacted your homeowners insurance provider, now is the time. Jason can recommend several insurance providers he has worked with in the past. The insurance agent will provide a policy quote they feel best suits your needs. When you have decided on your provider and policy, the insurer will contact your lender and escrow officer to relay policy details. You will pay for the first year’s premium at closing.
One point of confusion for many buyers is the difference between homeowners insurance and home warranties. If your home burns down, you would pursue a claim on your homeowners insurance. If the air conditioner breaks, you would seek a claim with the home warranty. Homeowners insurance is required by your lender. A home warranty is not required.
If you are getting a loan on the property, the lender will send an appraiser to give his independent assessment of what the house is worth. The appraiser has the final word on whether the home you are buying is worth the contract price. Should the home not appraise for the sales price there would be several avenues to discuss what happens next. It is not common for this to happen, but if you are buying in a “hot” market (where new sales exceed the comparable values of prior sales) this is an important hurdle to overcome.
You may also be required to have a survey of the property. The survey is a depiction of the boundaries of the property and of the dimensions of the structures on the property. If the seller has an existing survey, and nothing has changed that would need to be reflected in the survey, you can opt to use this existing survey. However, it is advisable that you get your own survey as it is the surest way to confirm that the property is accurately cataloged.
In the final weeks before closing, your lender will be working diligently to finalize the paperwork on your loan. At this point the lender may request additional paperwork from you. Returning these remaining items in a timely fashion will be important to ensuring closing on time. When final underwriting is complete and your lender issues a full approval, she will send instructions to her closing department. These instructions will then be forwarded to the escrow officer (also known as closing officer) at the title company. It will be the escrow officer who actually handles your closing and preparation of the final HUD Settlement Statement.
It should be reiterated that any major purchases after you are under contract should be discussed with your lender. Taking on new debt or lowering your cash reserves could impact final loan approval just before closing. Lenders will do a last minute credit check and verification of employment just before closing. So now is not the time to change jobs.
On closing day you will meet at the title company where the escrow officer will review all of the documents needing your signature to finalize the purchase of the home. Jason makes it a point to attend closing to ensure that everything agreed to in the contract is reflected in the closing documents. After you and the seller have signed all the documents, the title company will alert the banks involved, asking permission to fund the loan. After all the money has been transferred between banks, the house officially becomes your home. You might hear the term; “we are funded,” meaning you are the new owners! Sometimes funding can be delayed by hours or even a day, so it is best not to schedule movers until the afternoon of the day after closing at the earliest.
Your relationship with Jason does not end when you leave the title company. He will still be there for you when you decide to sell your home down the road and for all the years in between. He is able to connect you with professional service providers who can help you with all aspects of your home ownership and should be your primary resource in all matters involved in your home sweet home.
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