So, you've decided to buy a home? Congratulations on taking the first step toward the American Dream! For most, buying a home is the single largest purchase you will make in your lifetime. With that said, I am sure you can only imagine the many steps necessary to complete the transaction, not to mention the pitfalls that greet you along the way. I would advise any homebuyer, whether it is your first or tenth home, to read through this section to familiarize yourself with the process so you can feel more educated and, thus, more comfortable during this process.
Step 1: Choose Your REALTOR®
Lots of people think of a REALTOR® as a salesperson. While that is true by the basic definition, a good REALTOR® is far from the "salesperson" image you may have pictured in your mind! As an experienced agent, I pride myself on the service I provide to my clients from the day they contact me about purchasing a home forward. I provide a wide range of services for my clients and I am involved in every aspect of the home purchase process. My staff is highly trained to make the process seamless from start to finish.
Step 2: Decide How Much Home You Can Afford
Figuring out how much home you can afford is more than asking the mortgage company. The mortgage company is a great resource for qualification, but at the same time, they can only run the numbers on paper. There is no way for a mortgage company to get inside your head and understand what makes you tick. Maybe you want to spend less because you love to take three vacations a year. Maybe your life is too busy to cook so you need extra budget for eating out. Just because you can afford it on paper doesn't necessarily mean you have to spend it! However, the first step to deciding how much you can afford is getting pre-approved. You can go to the Buyer Center and click the Get Pre-Approved link to get started. Once you fill out the form, my preferred lender will be in touch within 24 hours. You can also use the mortgage calculator to get a general idea about the monthly principal and interest payment.
Don't forget to include your property taxes, insurance and PMI in the payment. To calculate your monthly property taxes, you can use the following general rule: multiply the property price by 2.75% and divide the answer by 12. REMEMBER, this is a general rule. Most combined tax rates (county, city and school) in the DFW metroplex are 2.75% or less, however, there are always exceptions. To calculate your homeowner's insurance cost, just call any local insurance agent, preferably the agent that currently has your auto business. There are discounts if you use the same company for all your insurance needs. Lastly, you will need to include PMI if you plan to put less than 20% down. Because PMI can vary from borrower to borrower, it is best to contact the lender to estimate this amount for you.
There are also costs associated with purchasing a home. These costs, known as "closing costs", must be taken into account when figuring how much you will need to save in order to purchase your home. Closing costs usually run 3-4% of the purchase price, depending on which loan program you choose. These costs include mortgage origination, processing, underwriting, document fees, title company fees, tax certifications, filing fees, etc. Your first year of homeowner's insurance is also included in the closing costs. Your mortgage company will also set up an escrow account on your behalf in order to collect and pay your property taxes and homeowner's insurance on an annual basis. The escrow account will be established and the mortgage company will collect two to three months worth of taxes and insurance as a cushion (in case the cost of taxes and insurance ever fluctuates). This cushion will be collected at closing as part of your closing costs, as well. Remember, when you sell your home, you will get the "cushion" back in the form of a refund so it is best to consider the cost of the escrow account as "prepaids" not fees.
Step 3: Decide What You Need/Want!
This is a fun step in the process. You get to sit down and figure what you need and want in a house. To make the process easier for you and ultimately, for me, I have created a "needs/wants/wishes" section on this site to help. Go to the Buyer Center and click on the New Home Essentials link. There, you will find a chart that you can fill in to determine your needs. Remember, the more "needs" you have, the fewer houses you will have to choose from. It is smart to weigh out the real importance of each need or want so you can make a good decision once we are out looking at homes. You don't want to purchase a house that is missing lots of your needs, but it does help to get your priorities in order up front!
Oh yeah, don't forget that age old saying, "location, location, location". You are going to need to include where you want to live on the list!
Step 4: Touring Property
Once the lender pre-approves you for a mortgage and you figure out what you are looking for, it is time to start touring property. I will be heavily involved in this stage of your home search and every stage hereafter. Once you determine your price range and needs, we will set up a customized search for homes. With that search, you will be able to look at homes online, automatically, as they are listed. As soon as you make your first selections, we will set an appointment to meet and get started. After our first meeting, I will have a good grasp on your tastes and what you are looking for in a home. Touring property is lots of fun and really exciting when you find what you are looking for!
Step 5: Making the Offer
After we locate the property, I will run comps. "Comps" is short for "comparables", which are other homes in the area that have sold in the past six months that are comparable to the home you are looking to purchase. We want to make sure the property you are considering is priced right so we know what price to offer. I will walk you through the offer process from start to finish and you will understand everything that we are offering before we submit it to the seller. I will also prepare a list of closing costs so you can feel comfortable that there won't be any surprises at closing.
Step 6: Inspections and Appraisal
When you go under contract to purchase a property, you will have a set amount of days (negotiated as part of the offer) in which to inspect the property. The inspector will go to the house for several hours and will check each component of the property for defects. All property inspectors are licensed by the Texas Real Estate Commission, a Government body that oversees Realtors, Inspectors and Appraisers. You are welcome to choose your own inspector or I have a list for you to choose from. After the inspection, we will receive a report and we will determine what items need to be repaired and what items you can live with. Remember, unless you are purchasing a brand new home, there will be little "honey do's"…there is no way around that! But, we will ensure that the major systems (ie. HVAC, electric, plumbing, foundation and drainage) are in working condition. After the inspection, the bank will order an appraisal to determine whether the home is worth what we are paying. By using my services, you will avoid appraisal problems, for the most part, because of my comprehensive analysis of the home prior to making the offer.
Step 7: Odds and Ends
After inspections and appraisals, you will have very few worries, which is a good thing because you will need all the time you can get to pack and get ready to move! During this time, my staff will communicate with you to guide you through setting up your utilities, homeowner's insurance and the closing date and time. Just follow our instructions and nothing will slip through the cracks.
Step 8: Closing and Possession
The moment you have been waiting for: Closing and Moving In! A couple days before closing, my staff will contact you with a closing date, time and amount needed. This amount will need to be secured in the form of a cashier's check or a bank wire. We will guide you through that process when the time comes. After you sign on the dotted line, the bank will double check the paperwork for accuracy, then they will "fund" the deal. Once we are funded, you are free to get the keys and get to moving!
To get started, give me a call at 972.965.8673. I look forward to working with you soon!
