Deciding to Buy
Purchasing a property is most likely the biggest financial decision you will ever make. Whether this is your first purchase or you are an experienced buyer, this decision must be made carefully.
Why Do You Want To Buy?
Are you tired of paying rent? Have you decided to pay your own mortgage and not your landlord’s? Have you outgrown your current home? Are you looking for an investment portfolio? Are you looking for a rental property? Would you like a larger yard? Would you rather live in a different area? Do you want to shorten your commute? Having a clear sense of your reasons for buying will help you choose the right property.
Has Your Income Grown?
Property ownership is an excellent investment; whether you are looking for your dream home, a rental property, or to expand your investment portfolio. Owning real estate is one of the least risky ways to build equity or to obtain a greater return on your initial investment.
Why Buy With Me?
Buying a new home is a serious venture. It can be an absolute pleasure or it can be an extremely stressful time. Read my steps below, and you will see how I can help walk you through the process!
First Time Home Buyer 101
The absolute first step in purchasing a home is to speak with a lender (please refer to my Preferred Vendors on my Community Links tab) if you need help getting the ball rolling).
Consulting with a lender is free of charge and a relatively pain free process. Typically you will speak with your lender on the phone for about 15 minutes and he will ask you a series of questions to pre qualify you. You will want to have the following handy before you speak: last years tax returns, social security number, driver’s license number, credit references (credit cards, auto loans, etc), and bank account information. Once he gathers all of your information, he will then run your credit to determine your FICO score.
Your FICO score is the number that reflects your credit worthiness. Typically a FICO of 720+ will make you a prime candidate for a loan. The lender will use a combination of your FICO, job history, and financial information to determine how much of a home loan you qualify for. He can also advise you on property taxes (about 1.25%) and whether or not you want those taxes rolled into your monthly mortgage. Once you know how much you can spend, you are ready to start your house hunt! Not quite ready to be pre approved by a lender, but are curious to know what your FICO score is?
Check it out for free: www.myfreecreditreport.com
One common theme I see amongst many of my younger clients and friends is that they are not always the most realistic about what they can afford. Sometimes it can be discouraging when you don’t find the perfect place right off the bat. Just because you can’t afford the perfect house in the most fabulous area of town, doesn’t mean it can’t happen in a few years. Start by looking at places that you can comfortably afford and that are not a stretch. In the heat of the moment it can be easy to say that you’ll only eat romen for the next 6 years and make every night a Blockbuster night; in reality it’s not worth the sacrifice! As your agent, I’ll make sure to only show you properties that fit your budget so there isn’t the temptation to overspend!
The next step in your home buying process is to decide where you would like to live. Ideally you want to be in a neighborhood that is close to where you work and close to the amenities you like. I always advise my clients to purchase the worst house on the best street vs. the biggest house in a less desirable neighborhood. That way, if you decide to make any upgrades to the house, you will be able to get more of a return on your investment.
Now that you’ve been pre qualified by a lender, decided on a great location, and have carefully evaluated what you can comfortably afford, it’s time to start looking at properties! The MLS (multiple listing service) is the tool I use to help find you the perfect home. After we’ve met and determined your “must haves”, I plug that criteria into the MLS and it sends you daily updates.
From there, you can scan through the listings, viewing interior and exterior pictures, and all the details of the property. You let me know which homes you’d like to see and then we set up a time to take a look together. You might be wondering at this point who pays for my services in helping you purchase a home. When I represent you as a buyer, the seller pays my commission and the seller also pays the commission to their agent.
This is my favorite part of the buying process. After we’ve decided what homes work best for your needs and budget, we meet to take a look at them. Usually, we will look at 3-5 houses at a time. Any more than that, and you start to forget which house had what!
You’ve found the perfect home and you are ready to make an offer – now what? The first thing I do is pull the most recent comparable sales in the neighborhood. I present these “comps” to help guide you in what to offer. We also want to look at how long the home has been on the market, any recent upgrades on the property, interest level of other buyers, and overall condition (is it a fixer, move in ready, etc). Once we’ve determined the offer price, I prepare the Residential Purchase Agreement for your signature. I will review this in detail with you, so you know exactly what you are signing.
Once the agreement is signed, I present the offer to the listing agent along with a copy of the earnest money and option period check. I will also include a copy of your Pre approval letter. When you have been pre approved (see section #1) the lender will provide you with a letter stating the amount you are qualified to purchase.
It’s rare that the seller is going to accept your first offer. Typically they are going to counter back to us with another price and it is up you as to whether to accept it or not. This process can go back and forth, but ultimately you need to decide what your best and final offer is. We can strategize together as to how to maximize that final bid and have the seller accept.
Once both parties have signed off on the contract, your option period begins. In the sate of Texas, this is usually a 7-10 day period that will cost you $100. At this time, I can set up a home inspection and a termite inspection. I will help you review the inspection reports and also help you with an estimate on the cost to repair what was found. I have referrals for companies that will review your entire inspection report and give you an estimate.
Should you decide to move forward with the house, I will stay in contact with your lender, helping them with any issues that may arise.
The day before we close, I will schedule a time for us to do a final walk through on the property.
I will schedule a time with the Title Company for us to attend closing. Typically, if you have financed part of the property, closings take about 30 minutes. This is will you will sign all your loan documents and remaining paperwork. After closing and funding, you can pick up your keys from the title company!
*At closing, you will sign your loan documents and remaining closing paperwork.
*Your loan will officially fund and a check will be cut to the seller.
*Your deed will record with the county. When this happens, you are officially the owner and can move in!!