RICKY'S FIRST-TIME HOME BUYER CHEAT SHEET
These are the Steps, In Order: Not Necessarily NEW CONSTRUCTION:
Find a Great Realtor (CHECK!)
Get Pre-Approved with a local Lender (Pre-Approval is where the lender takes a more in-depth look in your credit and finances; usually they require 2 Years Tax Returns, 2 Months worth of Bank Statements, and 2 Weeks Pay Stubs)
ASK YOUR LENDER FOR A GOOD FAITH ESTIMATE / TRUTH IN LENDING - That is your estimate of closing costs, so that you will have an idea of how much cash you will need at closing.
Start gathering your docs for loan application - your lender will give you a list (ie tax returns, paycheck stubs, etc)
** Don't buy anything on credit near/during the time of buying a home - one new credit card, new car, etc can effect your qualifying!
Determine your wants and needs in a property, get a list of active listings from agent, drive by them before the "showing" to make sure you like the area / neighborhood / etc.
You've found a great house, now what?
Making an Offer:
Realtor will provide a CMA (comparable market analysis) to help you determine a fair offer on the property
Any offers must be in writing, on a formal contract, can be signed electronically
Realtor submits offer to the Listing Agent along with Buyer's pre-approval letter from Lender
The Seller typically has 2 days to respond - they can either accept the offer, counter on the offer (make changes), or reject the offer - if they counter, buyer typically has 2 days to respond and can Accept, re-counter, or reject.
Once all parties have agreed to the offer, we are under contract and have an EFFECTIVE DATE - the date that all parties have signed on all terms
Now, you're under contract - now what?
In a STANDARD Contract to Closing (some things could vary, depending on the property and the offer, but this is basic info:)
Realtor will submit your effective contract to the Lender of your choice and to the Title Company of your choice.
Escrow deposit (EMD) is due within 3 days after EFFECTIVE DATE - it is typically 1% of the purchase price, and is held at the title company in an escrow account until closing, at which time it is CREDITED to the BUYER towards down payment. (example - $150,000 sales price, Escrow deposit - $1500) - Title company will provide EMD instructions.
Full loan application needs to be made within 5 days of EFFECTIVE DATE - that may include paying for your loan application fee and appraisal fee up front (** check with your lender on those fees - should be approx $600-800 for both?)
Inspections are due within 15-20 days after EFFECTIVE DATE - Realtor will assist you in hiring your inspector. Inspection fees are due and payable at time of inspection - price ranges $300-500.
If your home was built prior to 2002, you will also need a wind mitigation inspection for your homeowners insurance policy - $75 +/-
Once inspections are done, we relay the repair request to Seller's Agent. Once that is settled we give the Lender the clear to order your Appraisal. The appraisal determines the market value of the home, and is required by the bank.
The title comapany does a title search on the property to make sure all previous liens are satisfied, and will issue you a clear title at closing and a title insurance policy. They will also order a survey on the property, showing you boundary lines and setbacks to make sure there are not encroachments (title defects) on the property - required by lender, paid in your closing costs.
You gather homeowner insurance quotes and select a policy prior to closing. Once you get quote; you will forward to your lender along with your Insurance Agent’s contact info
A week prior to closing, we get utility company information so you can begin scheduling your transfers
3 days prior to closing, we review your Closing Disclosure, closing costs, etc, and know what the balance to close is
A day or two prior to closing, we do a final walk-thru - make sure all repairs the Seller was obligated to do have been done, house is ready for closing, etc
Day before closing: Wire transfer your "funds to close" - balance of down payment plus closing costs (amount from Closing Disclosure)
DAY OF CLOSING - Sign docs @ title company, once title company confirms receipt of Buyer's wire transfer and loan funds from Lender, KEYS are given to the Buyer, you now own your new home!