Buying a Home

There’s no doubt that searching for a home can be one of the most stressful experiences that you can ever have in life. But it doesn’t have to be! And you certainly don’t have to go it alone. I’ll custom tailor a buying program that is just right for you, and by doing so, I can guarantee you a pleasant and rewarding experience!

So if you are even remotely thinking about buying a home, call me and ask to set up a “buyer’s consultation.” We’ll discuss your needs and come up with a plan that’s perfect for you. In the mean time, I’ve outlined (and over-simplified) the technical steps to buying a house below.

Seven Simple Steps to Buying a House

1. Contact a lender to either pre-qualify or be pre-approved for a loan.

If you do not already work with a lender, I can help you by providing a list of highly qualified professionals in the field. Pre-qualification is the simple process that can be done online or over the phone. When you contact a mortgage company to be pre-qualified, they will ask you for some basic information about your finances, how much money you earn, your debt load, etc. They will then give you a rough estimate of how much of a loan you might qualify for. Pre-approval is more of an in-depth process. The lender will perform an extensive check of your finances including your credit rating, whether or not you're a first-time buyer, what your debt load is, how much money you have to put as a down payment, etc. This figure will be a much more reliable estimate of what you can afford. In the Austin market, pre-approved buyers are typically preferred over those that are merely pre-qualified. Being pre-approved lets the seller know you have gone through an extensive financial background check and there should be no unexpected obstacles to you purchasing their home.

2. Find a property that fits your needs, and put an offer on it!

To help you determine an offer price that has the best chance of being accepted, I will provide you with a Competitive Market Analysis (CMA) which reviews the recent sales of homes in the area that are similar in size, quality, conveniences and amenities. Once you decide you would like to proceed with the offer, we will create a written contract with your offer that details what needs to be done by both parties to execute the transaction. The contract should ensure your financial position as the buyer.

A contract should include, but is not limited to:

1. A legal description of the home
2. An offer price
3. The amount of down payment
4. Financial arrangements
5. A list of fees and who will pay them
6. The amount of the deposit
7. Inspection rights and possible repair allowances
8. Appliances and furnishings that will stay with the property
9. A settlement date

3. Have money readily available for all necessary expenses.

Putting a contract in on any property entails paying certain fees that will move you closer towards ensuring your position as a buyer and eventually owning the home. These include:

1. An option fee – This is one of two payments that are made as soon as you decide to put a contract on a house. The option fee is a payment for an “option period.” That is a period of time in which you should get the house inspected and negotiate with the seller for repairs. It is also the period of time in which you have the right to change your mind about the house without putting your earnest money at risk. If you choose to exercise your option during the time allotted, you may opt out of the contract without losing your earnest money. Generally, option fees are between $100 and $200 for a 10 day option period.
2. Earnest money – This is the other payment that is generally made as soon as a contract is submitted. The earnest money is kept “in escrow” at the mutually agreed upon title company. Earnest money is required in order to make the contract legally binding. Usually, the earnest money is equivalent to 1- 1.5% of the sales price. This money is then applied to your down payment at the time of closing.
3. Inspection fees – It is highly recommended to have any home inspected before closing on the transaction. Home inspectors are licensed by the Texas Real Estate Commission and they inspect the plumbing, electrical, foundation, roof and overall condition of the house. They also inspect for termites and other wood-destroying insects. Costs vary depending upon the square footage of the property, but usually the price of an inspection is about $350.
4. An appraisal fee – If you use a lender to purchase your house, they will insist that the home be appraised by an independent appraiser. This is to ensure that they are not loaning you money on a bad investment; however, the buyer is obligated to pay for the appraisal. An appraisal usually costs around $400. Certain lenders will ask for this to be paid up front and not at the closing, while others will add the cost to the fees paid at closing on the settlement statement.
5. Down payment (if applicable) – Buyers will typically work with their lender to determine the amount of down payment that is required for their specific loan program. Today, lenders offer a variety of different loan packages with down payments starting as low as zero percent. Check with your loan officer to determine what works best for you.
6. Closing costs (if applicable) – In addition to any down payment that you are required to make, you might be required to pay some closing costs as well. Closing costs will vary from transaction to transaction, but are generally three percent of the loan amount. Depending upon the market and the circumstances, some sellers are willing to pay some of these closing costs for you, as long as your lender permits them to do so. Some examples of closing costs are: originations fees for the lender, escrow fees charged by the title company, appraisal fees, survey charges, etc.

4. After the property is under contract, schedule your inspection.

After your offer is accepted, I can help you coordinate the activities of service providers and serve as your advocate when working with them. I will help you schedule any necessary procedures, make sure the vendors have access to the property, and will oversee the execution of those procedures on your behalf. The first procedure that should be performed is an inspection of the property, the foundation, and the surrounding environment. This is necessary to make sure the property meets the standards set forth in the contract. If there are issues or inconsistencies brought to light during this time, it may delay or even nullify the contract. I will be more than happy to provide you with a list of several reputable inspectors to contact.

5. Line up the necessary home and/or hazard insurance.

Experts recommend that you obtain Title Insurance equal to the full replacement value of the home. This kind of insurance is purchased at the closing of the property and protects the buyers in the unlikely event that the title to the property becomes invalid. Homeowners Insurance protects against theft, fire and liabilities. It often includes things such as bicycles, furniture and jewelry. Flood Insurance is generally only necessary for flood-prone areas. The federal government issues this kind of insurance. In addition to aforementioned types of insurance, you may want additional assurance for your new home. Home Warranties are one way to protect yourself after you buy. Warranties for new homes protect against plumbing, wiring and structural defects. Existing home warranties cover things like major appliances and structural problems.

6. Schedule your utilities to be turned on.

You will need to have your electricity, cable and phone set up. Also be aware of typical upcoming homeowner expenses such as Neighborhood Association fees, landscaping costs, and annual taxes, and budget for them accordingly.

7. Attend the closing … and get ready to MOVE!

As the closing date draws near you will need to be in contact with the title company and your lender to make sure all necessary documents are being prepared and will be delivered to the correct location on the appropriate date. Find out what form of payment you will need to bring to the closing, as there may be more than one form of acceptable payment for your closing costs. It is also very important to make sure that your payment is made out to the appropriate party. Last but not least, be sure to bring an official form of identification along with your necessary form of payment.

The closing is traditionally a formal meeting that most parties involved in the process will attend where ownership of the home is legally transferred from the seller to the buyer. Closing procedures are usually held at the title company's office. Your closing officer will coordinate the document signing and the collection and disbursement of funds. After the closing and funding, you are the official homeowner of the property. Congratulations!