Buyer Info - What you should know before purchasing property
Things not to do before purchasing a home
- No Major Purchases
- Don't Buy a Car
- Lenders loan on a debt-to-income ratio or a percentage between what you owe to what you earn. Major purchases and car loans reduce the amount of available cash you can afford to pay for a mortgage payment.
- Remember buying a home is historically a much better investment than buying a car.
- Mortgage Payment Determination
- First, determine for yourself just how much you feel comfortable paying for a mortgage payment. Take into consideration your life style and past ability to save.
- Get pre-qualified ...Find out how much you can afford to buy before you start looking at homes. Interview several lenders and find the best packages available for you. Links to several local lenders are available on this website, which can provide lot of good information.
- Ask about closing costs and down payment and get an estimate as to what "out of pocket" expenses you will have, for the maximum price you can afford. See the sample below. This is provided for informational purposes only. There are many ways to shave "out of pocket" expenses, like rolling them into your mortgage. Your lender will be able to help further. Down payment requirements may be different based upon the program you choose. Typically, the greater the down payment and the shorter the loan's term, the smaller the interest. Use our link to a loan mortgage calculator to play around with mortgage payments, interest rates and loan amounts. You may choose to buy less than you are qualified for, if your lifestyle dictates otherwise.
- First time buyers are often afforded opportunities not available to others
- For those of low income, consider contacting Snow Belt Housing at 376-2639. They often have programs which can include up to $20,000 in grant money for first time buyers.
- For Veterans, mortgage programs are available for you once you have received your "certificate of eligibility." Contact your local VA office for more information.
- Fanny Mae programs are also available.
How to select a real estate firm
- Interview agencies to find which firm offers the most in depth information about property.
- Determine if the firm is multiple listed, where listings of property of other agencies are provided so you will have a greater number of homes to choose from.
- Check to see if the office offers a website with property listings.
- Check to see if the firm is a member of the state and local associations of realtors. Each has rules of professional standards the members must follow.
How to select a real estate agent
- Interview an agent to determine how comfortable you feel with this individual.
- Determine whether the agent will work with you as a seller's agent or as a buyer's agent. An agreement will be provided for your signature, designating which. This does not require you to buy from the agent, but does tell the sellers who is working for whom.
It is most common for an agent to represent the seller. The seller pays his or her fee.
- Explain what price range you have been qualified for, the area/school district you require, a list of the most important features you need. A search will be conducted to see what is available. Ask for a free copy of the current Multiple Listings Catalogue, a listing of all currents listings for sale in the MLS system. Ask the agent whether or not you should ask for information on another agency's listing. He or she will provide you information on other agencies' listings whether or not they are multiple listed. Your best agent will work to find you your new home no matter who has the listing.
- Ask lots of questions.
- Expect that an agent will work hardest for you if the requirement to buy is within the shortest time frame.
View a seller's disclosure
- For any property you view, ask to see a "Seller's Disclosure." This form is signed by the seller indicating any and all problems they are aware of regarding the property.
Once you find a house
- After the right house is selected, a purchase offer will be introduced. The contract is a legal binding agreement which sets forth the terms of the purchase. It is not uncommon to offer the full price, but you may choose to offer less.
- If unsure, you may employ an appraiser, at the suggested rate of $275-$350 to give you an independent professional opinion of the home's value.
- Make sure all is explained to your satisfaction. You are encouraged to take the agreement to an attorney for review. Once the agreement is signed, it is binding.
- A deposit will be requested between $100 - $1000 or more depending on the property, though no deposit is state or federally mandated. It is normally refunded if the mortgage is not obtained.
The mortgage process
- Take copies of the purchase offer and addenda to the mortgage company. Let the agent know who your attorney will be and request a copy to be sent there as well.
- Make your formal application and be quick to forward any and all lender requested personal information. The quicker the paperwork is completed the greater the chances the house will be yours on time.
- Once all the paperwork is in, call the lender periodically to receive a status report.. There is likely some additional information that will be needed.
- Before closing, review all the paperwork thoroughly to make sure there are no mistakes. In most cases there are none, but it is good to check.
- Call up and ask about anything that does not make sense. The only bad question is the one left unasked.
- Just before closing, call your real estate agent and ask to do a walk through. This is where you have the opportunity to walk through the property one last time to see that there are no material changes.
- Overall the mortgage process is not as difficult as one might think. Most of the work is done for you, Just make sure to keep in regular contact with your lender, and should there be required information from the seller that your agent can provide, make sure that your agent knows. The hallmark of a smooth mortgage transaction is good communication.
Information needed for mortgage loan application
Use this checklist to gather common information you'll need when applying for a mortgage. While this list is non-inclusive, it will give you a good head start in the mortgage application process.
- Social Security Numbers
- Residence Address(s) for the past two years
- Employer's name(s) and address(es) for the past two years
- Tax returns and W2s for the past two years; and four current pay stubs
- Most recent 2-3 months statements of all checking, savings and investment accounts
- Names, addresses, account numbers, balances, and monthly payments of all open loans
- Address(es) and loan information on all other real estate owned
- Certificate of Eligibility or DD214's (VA only)
- Money for credit report and appraisal
- Purchase Agreement, addendums, and disclosures signed by both seller and buyer (typically not required for pre-approval)
- Any additional income you wish to include on your application (eg., child support or alimony)
If self employed:
- Signed copies of tax returns (personal and business) for the last 2 years
- Year to Date Profit and Loss