Congratulations!! You have taken the first step in your purchase of a home!
Use this guide to keep track of the home buying process from start to finish.
My Realtor®: Michelle H. Vick, Century 21 Sterling Combs Company
Cell – (252) 8136505 Office – (252) 937-2121
mhvick@aol.com website: www.michellehvick.com
My Lender:_________________________
My Closing Attorney:______________________________
My Home Inspector & Appt:________________________________
My Pest Inspector & Appt:____________________________________
My Homeowners Insurance Company & Agent:____________________________________
My Closing Date & Time: _________________________________________
The Home Buying Process Step-by-Step
Buying a house requires time and effort. Use the following steps to help you make the best decisions possible, keep track of the process, and to be prepared for each step as you get to it.
Step 1 : Find the Right Lender
Lenders and real estate agents are important partners when buying a home. Research and read online reviews, and ask your friends and family for referrals to lenders who gave them good, professional service and helped to find the most competitive loans.
Step 2 : Get a Pre-Approval Letter
*If there is no lender & you are paying CASH you MUST have a Proof of Funds document prior to making any offer*
Before you start looking for a home, you need to know how much you can spend. You will need to provide some financial information to your mortgage lender, such as your income, bank statements, employment verification, and tax information in order to get a pre-approval and loan type & amount.
Step 3 : Search and Preview Homes
Make a list of your home must-have’s. How many bedrooms and bathrooms do you need? How much space/square footage do you desire? How big do you want the kitchen? Do you need a lot of cabinet and storage space? What size yard do you need? What type of floor plan are you looking for?
Once you have made a list of your must-have’s, think about the location you desire. Do you want to be in a subdivision? Do you want to be inside the city limits? What school district do you want to be in? What is your commute time to and from work? How convenient are shops and grocery stores?
When deciding on location, be sure to take into account any safety concerns and the rate of home appreciation in the area.
With this information in hand I can narrow down the search for you. I will provide and send the Multiple Listing Service (MLS) information for any homes that match your criteria. Be sure to give feedback on your likes and dislikes of each home that I send, and let me know of any changes to your criteria.
When you see a home that interests you, let me know and we can make a list. Once we have a list, you are ready to preview and find the home that is just right for you.
Step 4 : Make an Offer
Now that you have found “the one” we need to make an offer. I will help you decide on a good offer price and terms. I will pull a list from MLS of recently closed comparable homes in the area and what they sold for. Once you have made an offer, the seller may accept or they may counter-offer. Keep in mind this is the negotiation process, so you can accept or you can counter-offer back, however you don’t want to go back and forth too much, somewhere you have to meet in the middle. Once both sides agree on a price and terms, the home is officially under contract and the Due Diligence period begins.
Step 5 : Due Diligence
This is your time to “investigate” the home and set up your loan. I will be there to help walk you through this step by step. Home & pest inspections, loan documents, appraisals, repair requests, and things of that nature will be done during this period.
Step 6 : Get the Right Mortgage for Your Situation
Selecting a loan can be a very personal decision. There are several different types of loans available so it is important to work closely with your lender to be sure you select the loan that meets your needs and priorities. If you don’t understand something or have any questions regarding your loan or terms of your loan, be sure to ask your lender.
Step 7 : Closing on Your Home
The day of closing or the day prior we will do a final walk through of the home to be sure it is in the same or better condition as when you first saw it. You will receive a copy of the Closing Disclosure paperwork which outlines all closing costs so be sure you talk to your lender to understand all costs that will be involved so there are no surprises. Closing costs will likely include (but are not limited to) your down payment, title fees, appraisal fees, attorney fees, inspection fees, and loan origination points.
At closing, you will sign all of the paperwork required to complete the purchase, including your loan documents. It may take a couple of hours for your loan to be funded after the paperwork is returned to your lender. Once the attorney notifies us that the home deed has been recorded at the courthouse, the house is officially yours!
Step 8 : Move In and Celebrate
Once the paperwork is processed, it’s time to get your keys and celebrate!!
Home Buying Timeline
1. Choose a home, negotiate an offer and receive acceptance
(contracts are signed)
2. Day 1-5
Earnest Money and Due Diligence Money is DUE within the first five days of an accepted offer. Earnest Money will be paid to Trust and Due Diligence Money will be paid directly to the seller.
3. Day 1-3
Professional services are chosen and scheduled (closing attorney, home inspector, mortgage lender, etc.)
4. Day 1-2
Lender Documents. I will send a copy of the contract to your chosen lender. The lender will then advise what documents are needed. You need to be sure to get all requested documents to the lender ASAP in order to keep the process moving smoothly.
5. Day 5-10
Schedule Closing Date and Time. The contract will have an agreed upon closing date and I will contact the closing attorney to schedule the day and time based on their availability.
6. Day 2-Due Diligence ending date
Inspections, appraisals, and repairs are completed. You will have 7-21 days to get the home and termite inspections scheduled and completed (you will need to pay for the inspection on the day of service). The lender will order the appraisal (you will pay for this up front directly to the lender) as well during this time to be sure the home appraises for the purchase price. Any necessary repairs are negotiated by both parties and all agreed upon repairs must be completed by the seller.
**there is no refund of Earnest Money at the end of this period in the event you wish to terminate the contract*
7. Day 10-15
Home Owner’s Insurance is chosen. All copies will need to be provided to the lender.
8. 7 Days prior to Closing
Turn on all utilities in your name. This includes garbage pickup.
9. 1 Day prior to Closing Final Walk Through. Verify that all repairs have been made and the home is clean and move-in ready.
10. Closing Day
All required documents will be signed. Be sure to bring proper identification (driver’s license or other approved photo ID) and any necessary funds as stated in your contract (if the amount is less than $5,000 the funds must be in the form of certified cashier’s check, if the amount is greater you may need to wire the funds but this will be verified prior to closing). Once all documentation is complete, the keys will be handed over!
My Mortgage
There are many different types of mortgage programs and as a first-time home buyer you should be aware of the types of loans that are out there.
Adjustable Rate Mortgage (ARMs) – short term mortgages that offer an interest rate that is fixed for a short period of time (usually between one to seven years), but after that the interest rate can adjust up or down every year, depending on the market. These are good for people who do not plan on living in their home very long and/or are looking for a lower interest rate and payment.
Fixed Rate – this is a mortgage rate that is fixed for the life of the loan, it will never change. The principal portion and interest portion of your payment will never change for the duration of the loan.
Conventional – this is a mortgage that is not guaranteed or insured by any government agency. It is typically fixed in its terms and rates and requires a down payment of as little as 3% (the down payment amount can affect the interest rate and final loan costs), however Private Mortgage Insurance (PMI) is required for any conventional loan with a down payment of less than 20%. These mortgages account for more than half of all mortgage loans made in today’s market, and are especially good for first-time borrowers with decent credit and some amount of a down payment.
FHA – this is a mortgage that is “insured” by the government (Federal Housing Administration), although they are not providing the funds they are insuring the loan. This type of loan can only be provided by FHA-approved lenders, and borrowers with a lower credit score and/or past financial difficulties including bankruptcy can still qualify. This option allows for a down payment of as little as 3.5% and slightly lower interest rates in order to keep the monthly housing payment affordable. There is a one-time fee applied to the loan for Up Front Mortgage Insurance Premium (UFMIP) which equates to 1.75% of the loan amount and can be financed into the loan rather than being paid out of pocket, and PMI is required for the life of the loan and is never removed.
VA – this loan is available to any active duty or retired military member, and is guaranteed by the United States Department of Veterans Affairs (a certificate of eligibility is required). The loan allows for 100% financing with low interest rates and no PMI. There is a VA “funding fee” (must be paid up front or can be financed into the loan) of 2.15% to over 3% of the loan amount, depending on the veteran’s status (this fee is waived for any retired veteran with 10% disability or more).
USDA – this is a mortgage loan offered to rural property owners by the United States Department of Agriculture, also known as the USDA Rural Development Guaranteed Housing Loan Program. The loan allows for 100% financing in rural areas, with low interest rates and low PMI (which is required for the life of the loan). There are income limits to qualify (which vary by city/county) and property restrictions. There is a one-time fee “Guarantee Fee” (must be paid up front or can be financed into the loan) of 1% of the loan amount.
Mortgage Closing Costs Estimates for Buyers
Down payment amount (0% – 20% of loan amount)
Origination Fee (1% – 3% of loan amount)
One year of property taxes escrowed
One year of homeowner’s insurance escrowed
Credit Report ($25 – $100)
Lender Fees (vary)
Typical Closing Costs Estimates for Buyers
Appraisal $450 – $700
Closing Attorney $550 – $900
Home Inspection $350 – $475
Termite Inspection $50 – $75
Deed Recording Fee $26.00
Title Insurance $100 – $1,500
Home Warranty $400 – $600
HOA Setup/Transfer $99 – $200
Termite Bond Transfer $99 – $200
Survey per Acre $450 – $500
Elevation Certificate $550 – $600
(if the property is in flood zone)
Tips
Do NOT place untraceable funds into your bank account
Do NOT change jobs, max out credit cards, close accounts, consolidate debt, or pay off collections without first talking to your lender
Do NOT make any big purchases over the next couple of months and/or apply for any new debt until after closing
Keep a close watch on your spending
Stay current on bills and make payments on time
Take notes of your likes and dislikes for homes you see
Complete change-of-address forms prior to moving day
Register children at new schools if necessary
Turn off or transfer cable/satellite service
Questions:_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Notes:__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
