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Jacki Rutter Cathy Flood |
1375 Martin Street |
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What To Expect When Buying a Home 1. Talking to a lender You will be asked to “GO TO A MORTGAGE LENDER”. This is because it is important to know what price range you qualify for in a home and what your closing costs will be. The closing costs are the fees involved in purchasing a home, for example the attorney’s fees for doing a title search or the lender’s fees for preparing the mortgage documents. At the meeting with the lender you will find out if you qualify for special loans also. And, if you qualified for a specific type of loan (ie rural housing) or require cash back from the Seller to help with closing costs, it may limit the houses that are available to you. Your real estate agent needs to know this information. Going to a lender first makes sure you know what price range to look in for your home and also provides you with a pre-approval letter. When you find the right house and your real estate agent writes an offer on the house the listing agent will most likely require a copy of the PRE-APPROVAL LETTER from your mortgage lender to accompany the contract. That pre-approval is a guarantee that someone will lend you the stated amount, and it does not stop you from checking interest rates with other lenders at a later date. When the lender is pre-qualifying you (the first step to pre-approval) they will request (with your permission) a copy of your credit report. It is not uncommon for mistakes to show up on these reports and by checking this report early you will have time to correct them. This way, once you have made an offer on a house the sale won’t be delayed because of an unknown problem with your credit report. If it is not a mistake and you have blemished credit, you may still be able to get a loan, but under more stringent terms. And lastly, if you are not able to qualify now, most lenders will give helpful advice on how to improve your credit history so you can qualify for a mortgage later on. 2. Talking to a real estate agent First, look for a REALTOR (a member of the REALTOR”S Association, holding to a code of ethics). Don’t be surprised when you call a real estate agent if you are asked to “COME INTO THE OFFICE”. This will probably be the only time you’re required to do this, but for the first meeting it is a comfortable environment where we have access to everything we need to answer all of your questions. It is also a matter of safety for the real estate agent and shows us that you are a serious Buyer. BE PREPARED TO SIGN PAPERS. Pennsylvania law requires that a potential Buyer or Seller be given a CONSUMER NOTICE on the first meeting where there is a substantive discussion about real estate. The Consumer Notice is NOT a contract but a disclosure that explains how we work as agents with the different types of representation available to the public. At the same time a BUSINESS RELATIONSHIP AGREEMENT should be discussed. Depending on how the Business Relationship form is filled in it is either a contract or a disclosure. If you opt for representation then the Business Relationship form is completed as a Buyer Agency contract stating what we are doing for you, what the length of time of the contract is and what the fees or commissions are. Don’t go under the assumption that the person you are talking to is representing you unless the above mentioned paperwork has been reviewed and you understand and have signed both forms. A word to the wise…..If an agent does not offer these papers on the first meeting they are in violation of the Real Estate Licensing and Registration Act. Do you really want to work with someone who is cutting corners before you even start? Now for the fun. We can finally do what you and we have wanted to do all along; search our database of homes to see what fits your needs and go look at them! We start by checking the computer to see all the current available homes in our database that fit your criteria. This database is known as the Multi-List System or MLS. If we are representing you we also check the office exclusive list which gives information on all listed properties which are not posted in the MLS. We also check the “For Sale By Owners” in the area. After you select homes you would like to see, it is necessary for us to make appointments to show the homes. We need authorization to enter any home, even a vacant one and most sellers prefer 24 hour notice because of pets that may need to be removed, last minute cleaning the owner wants to do, a guest in for the weekend, etc..It may also be difficult to reach the owner but that doesn’t mean we won’t try get you in on short notice if that’s most convenient for you. We make the appointments by contacting the listing office who, in turn, will contact the owner of the property. We try to adhere to what you tell us you want in a home but after years of experience, we sometime take the liberty of adding something which might not fit your criteria but that we think might be worth your time to see. Every agent has their own style of showing. We prefer to set the schedule so that we show houses quickly the first time through. That way you can see as many as possible and eliminate from there. Having your opinion on a large group of homes also helps us narrow down what you like and dislike. Usually you can tell almost instantly if you like a house or are going to eliminate it. We will then schedule second showings for any that you like, allowing more time for you to look at the details. WHEN YOU’RE READY TO MAKE AN OFFER OK, you’ve found the house, now what? First we will do a Comparable Market Analysis of the property (CMA) to confirm the price is a fair market price. Next we will complete the purchase agreement form. We use the Pennsylvania “Standard Agreement for the Sale of Real Estate” form to make the offer. In most cases we have provided you with a blank copy to review long before you’re ready to make an offer. The form gives you multiple options for inspections, deadline dates, financing, etc. along with addition space for special clauses or contingencies you might want to add. We will review all the options with you to help you decide what works best in your situation. We also work with your lender to provide you with an estimate of closing costs prior to signing the agreement of sale. At this point you will have to give a deposit made payable to the listing Broker. The deposit is sometimes called “good faith money” or “earnest money”. The amount is negotiable, and the check will not be cashed until the contract is accepted. The check does not have to be for the full amount you will be putting down, but should be substantial enough to let the Seller know you are a serious Buyer. After everything is signed by you, we present the offer to either the listing agent, or if feasible, directly to the Seller. The seller can accept, reject, or counter the offer. If a counter is made, all the changes must be signed and initialed by all parties. THE OFFER IS NOT A CONTRACT UNTIL ALL PARTIES HAVE SIGNED AND/OR INITIALED ALL THE CHANGES AND ALL PARTIES HAVE A COPY OF THE AGREEMENT. While it rarely happens, a Seller (or Buyer) can verbally accept everything, and change their mind anytime before everything is signed and delivered back to their agent. Once the offer is accepted by the Seller you and we need to work on the conditions and contingencies set by the contract. Any deadline outlined in the contract must be met, or you will be deemed in “default”. The inspections chosen, your mortgage application and mortgage commitment dates are examples of a few deadlines. If you are in default you have no recourse if a problem is found, or, in the case of the mortgage application deadline, could leave you in danger of losing your deposit. Unless otherwise agreed upon in the purchase agreement, you will have 10 days to go to a lender and complete a full mortgage application. This is different from a pre-approval letter as this will be an application for the purchase of a specific property. You can compare various lenders, and are not obligated to use the lender who originally gave you a pre-approval letter as long as you do this and have a completed application into the lender of your choice within the 10 day timeframe. One word of caution….DO NOT allows every lender to run a credit check. Too many inquiries into you credit can adversely effect your credit rating. If you have chosen to have inspections completed on the home you are purchasing you will need to choose an inspector for various items you may want to have inspected. Three of the major inspections are Home, Wood Boring Insect and Radon. We will gladly supply names of inspectors and contact information. We suggest you call and talk to a few different inspectors. The final decision on what inspectors to use is always up to you, it should be someone you feel comfortable with. You will be responsible for paying the inspector either at the time of the inspection or, if they allow it, at the time of closing on the property. It is not necessary, but strongly suggested, that you attend the home inspection. It’s a great time to talk to the home inspector about any repair items that might be found and get a better feel for how serious they are, and to make you aware of preventive items you should be considering. Once inspections are completed we will have contractors provide repair estimates so we can negotiate these repair costs with the seller. These repairs can be done prior to closing, money can be escrowed and arrangements made to have the work done after closing, or you may be offered a monetary credit allowing you to arrange and pay for the repairs at your convenience. The repairs agreed upon will be put in writing and both you and the seller will need to sign the form. Once the mortgage is approved and the findings from the inspections deemed acceptable or a remedy negotiated we’re ready to start closing plans. CLOSING The closing date is determined when you make the original offer. Usually it will be 30 to 60 days from the time the contract is accepted. This allows time for inspections, the appraisal, and final lender approval. It is possible to close in less than 30 days if needed. However if the closing is going to be further in the future than 45 to 60 days from acceptance of the agreement you need to check with your lender on what additional fees you may have to pay to lock the interest rate and secure the loan. You, as the buyer, can pick the attorney (or settlement agent) you would like to use for the closing process. Again, we can provide names and contact information if you need it. The Attorney/Settlement Agent is responsible for putting together all the paperwork including the final costs to purchase your new home and also will supplying Title Insurance. The title/deed of the property is what tells everyone that you own that piece of property. Title Insurance is required by the lending institution and protects them and you from anyone claiming they own any part of the property. To confirm ownership the Attorney/Settlement Agent is hired to verify that the title of the property is free of any liens and encumbrances. In that respect the Settlement Agent is actually working for the bank, even though you pay the bill and do reap the benefit of knowing you have a clear title. Because a majority of the closing costs is the Title Insurance and the price is state regulated, you should not find much difference in the cost of different Agents or Attorneys. The final costs for your closing will usually not be supplied by the Settlement Agent until a day or two before closing. We will be given a copy for review, as will you. We try to make sure that every outstanding bill is paid on the settlement statement. You may hear this statement referred to as a HUD1 form. Occasionally something is overlooked on the settlement form. If something is missed (such as an inspector fee, cost of something additional you are purchasing from the Seller, etc.) you are still responsible for that fee. We do everything we can to avoid this from happening, but please be careful to look everything over for your own protection. A few weeks before closing, we will supply you with a reminder notice stating the day and time of closing. At that time we will also supply you with the names and numbers of utility companies you should contact. The Seller keeps the utilities in his or her name until the day of settlement, but will call ahead of time to arrange the services be terminated as of the day of closing. To avoid hook-up fees or termination of utilities you should call at least a week before settlement and make arrangements to have them transferred to you as of the day of closing. Shortly before going to the Settlement Office, we do a final walk-thru of the property. This is to determine that everything is in the same condition it was when you agreed to purchase the property. It lets you know that nothing was damaged or accidentally removed during the Seller’s move, that the property hasn’t been vandalized, and that the property was left “broom clean”. The Seller has no obligation to wax floors, clean windows, or shampoo rugs (unless specified in the contract.) They are obligated to remove any debris and leave the property in reasonable condition. Unfortunately “reasonable” is a subjective term! At settlement you will be required to show a government issued picture ID such as a driver’s license. The amount you need to bring to the settlement as stated on the HUD1 form will have to be paid in with a cashiers or certified check from your bank. If there is a small discrepancy in the amount of your check, the balance can be paid by a personal check. If you have brought more than necessary, the overage will be refunded to you by the settlement attorney. Now, go enjoy your new home!!!!
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