Know your Score

It’s important to keep up with your credit when looking at buying a home.  There are three major credit bureaus that maintain credit scores in the US: Equifax, Experian, Transunion.  This day and time, it’s easy to obtain your general credit score through apps like Credit Karma and other sources.  Understand that those scores may not be the same scores that a mortgage lender may get.  There are so many factors that go into scoring your credit.

Knowing your general score will help you when you begin speaking with mortgage lenders because it helps guide them in understanding your current position without pulling your score.  There are several factors that go into scoring your credit, here are a few factors:

• Payment History

• Timeliness of payments

• Debt to income ratio

• Balance ratio of Credit Cards

• Number of open accounts

Shop Lenders

Don’t choose the first lender you come across.  Also, it’s important not to choose the lender just because you have done business with them your whole life.  Or your entire family did their business there forever.  It is important to shop around to get the best possible rate based on your circumstances.  Each lending institution has their own guidelines in regard to lending and those guidelines are going to determine your interest rate and amount of closing costs you will need to close the transaction.  Shopping the lender and letting the lender know you are looking for the best deal will help ensure you get the best deals.

Please don’t allow them to tell you, if you shop lenders that will lower your credit score. The credit bureaus understand the value of getting the best deal.  They will not lower your score based on multiple pulls of credit generally as long as you move forward and establish credit within a reasonable time of the credit pull.  Please ask a reputable lender about credit pulls, or research online at one of the credit bureaus.

Online lenders can be good, but if you are a first-time buyer, I caution you on the use of them.  My firm has learned through experience, about 67% of buyer are first time buyers.  It’s a long tedious process to navigate even for the most experienced. If you are going through this for the first time, I want you to be able to sit in front of a lender and have them explain every step of the process to you.  I want them to be able to explain why they need a bank statement, or why they need to know what deposit was made to this account or that account.  It is important to have that one on one interaction for your first home purchase and being able to do that through the use of a personal transaction is really important.

Secure a Pre-Approval Letter

Once you have determined what lender you are going to proceed with, it’s important to get pre-approved with them.  They will begin asking you for documents.  They will need bank statements, pay checks, W2’s, tax returns.

There are several things they may need from you, depending on the lender, these documents may vary.  The quicker you get these documents, the easier and smoother the process will proceed.

Having this letter will give you better negotiating power when it comes to writing an offer once you find the home of your dreams.  Although, REALTORS® will agree that not all lenders are equal, we will all agree that if you have taken the time, energy, and effort to go through the process to secure financing prior to writing an offer that puts you ahead of the game.

Know your out of pocket expenses

When purchasing a home there are several expenses that will come due.  Some prior to the home purchase and others at the closing.  These expenditures are dependent upon the type of loan you will be obtaining from your lender.

Some expenses prior to closing could be: earnest money deposits, home inspections, appraisal fees, termite inspection fees. 

Some expenses at closings can be: down payment of loan, difference in loan amount, and sales price minus the amount the seller agreed to contribute at closing.  Again, there are several factors.  It’s very important to understand all of these numbers prior to writing your offer so you can see if you don’t have enough money you will be able to obtain your money rather than end up potentially risk losing earnest money because you didn’t understand the process.

Do you have more questions about what your out of pocket expenses could be?  Let me know, I can help you!  

Conduct a needs/wants assessment

This is the point that you sit down and determine exactly what it is that you want!  You have now determined what it is you can afford; you have determined what your payments are going to be and how you are going to pay for them.  Now the fun part begins!

Where do you want to live? How big of a home do you want/need?  Are there any must haves in the home?  What are your School Districts?  Do you have job distance restrictions?  Have a need for a fenced yard?  Do you have the ability to make repairs should there be some to be made?

Set reasonable expectations up front so that before you start looking, you know exactly what you are looking for.  You aren’t wasting your time, and as your REALTOR® I'm not wasting your time scheduling homes to be shown that don’t match your criteria.

Understand the difference between a REALTOR® and a real estate sales agent

This is a huge deal in Georgia and totally there’s a huge difference!  There are roughly 78,000 real estate sales agents in the State of Georgia.  However, there’s only about 38,000 REALTOR® in the state.  REALTOR® is a trademark of the National Association of REALTOR®.  Being a REALTOR® is a pride of passage and a standard of excellence, not a minimum standard.  We are held to a much higher standard as well as to the REALTOR® Code of Ethics whereas a real estate sales agent is not.

Furthermore, the real estate sales agent that is not a REALTOR®, will not have access to Georgia’s GAR state contracts that are court tested and tried and true contracts that have been used for many years.  These are the contracts that have been used for many years. A few years ago, the Georgia Association of REALTORS® decided to discontinue allowing Non-REALTORS® the use of forms.  Their position was they spend valuable dollars and time creating the forms to be used to protect the homeownership and property rights of the clients they protect, and they did not want to pay for agents to benefit from their work who did not want to be a REALTOR® member.

Understand the value of your home before you place an offer on the home

You have an agent; they have sent you homes via the internet.  They have gotten you out and shown you homes, you have narrowed down the homes and you have found “THE ONE”. It’s time to write an offer!   Now what?

The majority of the time, the buyer asks; “what should we offer?” As a buyer you should want to hear from your agent facts, not opinions!  Your REALTOR® should know how to price properties, ask them to show you how they arrived at the price that they are suggesting you should offer on the property.  Sometimes it’s not a bad thing to offer the asking price of a property, especially if you are asking the seller to give you things; such as closing costs, appliances, home warranties.  Every dollar you are asking them to contribute, even though you aren’t taking it off the asking price, you are still taking it off the seller’s “bottom line”.

As your REALTOR® they should be able to pull comparable homes that have sold, ideally within the last 6 months, and should typically be within the same elementary school district, within about 15% of the square footage of the subject property and within three to five years in age of being built.  You truly want to compare apples to apples!  Make them show you, not just tell you about the value!  It will make a big difference in your confidence in making an informed decision!

Home Inspections

After you have navigated through the negotiation process, gotten your contract binding, submitted your earnest money deposit, now is the time to schedule your home inspection.  A home inspector is there to inspect the home to ensure the home is in good order.  They ensure the major mechanicals are in good working order, the roof is sound and free of leaks and in general to “knit pick” the home of little things so that you can identify things that could be wrong with the home.

Just because the home inspector identifies items on a home inspection, that doesn’t mean they must be fixed.  It is their job; you have paid them to identify those flaws for you.  We then use that report to negotiate further with the seller to either repair or replace some of those items on the report.   The seller can also opt to reduce the sales price in lieu of making any repairs.  And in most cases is preferable because, most repairs are never done to the satisfaction of the buyers and then not all parties are happy so a reduction in sales price typically seems to work best for all parties!

Understand the Homeowners Association (HOA)

Before you get too far into the deal, make sure you are okay with the terms of the agreement.  Most homes have some sort of agreement called a “covenants and restrictions”.  This document tells you what you are and are not allowed to do on the property to ensure the property value of the community.  They aren’t trying to tell you what you can or can’t do on your property, they are simply attempting to maintain property values.

It’s really simple, if you are good with someone telling you that you aren’t in compliance with the rules from time to time (it happens to the best of us), then an HOA may not be the best option for you to purchase in.  Should you write an offer in a subdivision that you discover there is an HOA that you don’t agree with, so long as you are within your contractual “due diligence” period.  You may have the ability to terminate, or walk away from the contract.  That’s the good thing about the due diligence periods of the GAR contracts, it gives you that inspection period to walk away for any reason and ensure your earnest money is secured.

Don’t put yourself out of a home by making yourself ineligible to purchase

There’s nothing more frustrating to a REALTOR® then them having to tell their buyer they are no longer qualified to purchase a home.  This happens because the buyer when to the local furniture store, opened a line of credit with 60 months “same as cash, no interest, no payments for twelve months” financing 3 weeks prior to closing to furnish the entire house.  What this caused was for the buyer’s debt to income ratio to be too high and made them unqualified borrowers and no longer could purchase a home.  It happens more than you could imagine.  If you are purchasing a home, DO NOT open nor close any accounts that have to do with or are associated with your social security number without first talking with your mortgage lender.  This is huge and can cause you to not be able to purchase a home.

Make Closing Time a Happy Time

At closing, it should be a happy, smooth, stress free time.  All the pieces of the puzzle at this point should have fallen into place, your lender has done their job, your REALTOR® has been the middle person between everyone and now you are at the attorney’s office, signing your life away!  Now is the time to sit back, enjoy some chocolates, enjoy the calm before the storm and get ready to enjoy your new home!  Everything including all the figures should have been explained at this point, you should have no questions!

Enjoy your move

As your moving day comes, make sure you pack carefully.  We recommend you first pack a suitcase as if you were going on a week’s vacation.  This will allow you to not have to rush getting things in place right way.  Secondly, label your essential kitchen items so that when they get to your new home, you will be able to identify them quickly.  Thirdly, just a friendly reminder, if you are moving yourself and ask your friends to help you move; what comes around goes around and that favor shall to be returned some day!  Welcome home, enjoy!

 

I hope you found this helpful in understanding the steps in finding your home.  Obviously, buying a home has many, many steps and I highly recommend the use an experience REALTOR® that has your back!

During this process, I continually tell my clients I only have two jobs; a) find their dream home b) MOST IMPORTANT TO ME, Protect them at all cost!

I would love to help you find your dream home, if I could be of assistance to you, let's have a chat, CONTACT ME today for an opportunity to talk and set up a time for a NO OBLIGATION chat that I can go into more detail about the buying process and partners that my firm already has in place that can assist you!

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