Better Homes and Gardens Real Estate Life

Tag: buying process

  • Seven Ways to Simplify the Process of Buying a House

    Whether it’s your first house or what you hope will be your last, buying a house is often a very stressful process. Until the moment you take possession of your home, there’s always a chance something could go wrong. Here are seven ways to simplify the process of buying a house.

    1. Get your paperwork in order

    Start getting your paperwork in order before you even start looking at properties online. If you’re applying for a loan, you’ll need your last two years’ worth of tax returns, current pay stubs, bank statements for the last three months, cancelled rent checks, or copies of your lease. You may also need your divorce decree and bankruptcy paperwork if either of those situations apply. Remember that getting money out of a 401k or a trust for your down payment or outright purchase can take longer than you anticipate, so find out how long it’s going to take and what’s involved if that’s a route you’re considering.

    2. Find a real estate agent you can trust

    Before you start the mortgage or loan application process, finding out what’s going on in the market is vital. Interview at least three real estate agents, and listen to what they say about what you’re likely to get for the house you’re selling. In addition, speak with them about what you’ll likely pay for your new one.

    Once you’ve heard the same price ranges three times (assuming all the agents you meet with agree, which they should), choose the agent with the best track record of sales in your area, the best online or personal recommendations, and the one you like best. Staging, keeping a home show-ready, and listening to tactfully delivered feedback from people who’ve viewed your home means you’re going to be interacting with your agent a lot.

    3. Start researching banks, credit unions, and loan officers

    While it might seem simpler to use a bank or credit union that offers home buyers one-stop shopping, what the term really means is the bank has a vested interest in the sale through controlled business arrangements with realtors, attorneys, and possibly even home inspectors, and may receive a portion of the commissions. That’s no way to guarantee objectivity. To check a loan officer’s record, ask for their ID number and take a look at NMLS Consumer Access. If you’re using a mortgage broker, check their credentials with the Better Business Bureau.

    4. Get your financing in order

    Once you’ve chosen your loan officer, bank, credit union, or mortgage broker, get pre-approved for a loan or mortgage and get a pre-approval letter. This will not only help you figure out what you can afford before you start looking, it tells realtors and sellers you’re serious. Depending on how long your search takes, you may need to renew your pre-approval—they’re usually only valid for 60 to 90 days.

    5. Find a home inspector you can trust

    If you’re looking at older homes, a good home inspector will be able to warn you of areas where there are problems with termites, water seepage, or shoddy construction. Do your due diligence. One of the best ways to find a good home inspector is to talk to a tradesperson you’ve used in the past, one who takes pride in their work and wants everyone in the industry to do the same. Try to find a home inspector who’ll let you accompany them when they make their inspection so you can ask questions on the spot.

    6. Consider investing in title insurance

    While it may seem like an unnecessary expense, making sure there are no liens against the property you’re buying is important. The last thing anyone needs is to find out the home they just bought is owned by someone other than its previous occupant. It costs between $1,000 and $3,000 on average, or .05 percent of the purchase price. You can sometimes get a reissued title insurance policy if the seller went through this process. That can save you some money. Get your real estate agent to ask the seller’s realtor about this. Additionally, some banks may require you obtain title insurance if you’re getting a mortgage, so be sure to inquire with your lending officer.

    7. Get your tradespeople lined up

    If you’re already a homeowner and have been through renovations or repairs,  you may have a plumber, an electrician, a roofer, a flooring person and a general carpenter you know and trust. If you’re moving to a new city or you’re a first-time homebuyer, you’re going to have to rely on in-person and online recommendations.

    One of the best places to find good tradespeople is an independent home supplier. They know who’s sloppy and who’s not, and they’ll often have business cards for tradespeople behind the counter. Here’s hoping these seven ways to simplify the process of buying a house make the experience a little less stressful. Happy hunting!

  • Step 9. Closing on A Home

    Finally, the home stretch of the buying process: Closing! All inspections have been completed and the appraisal has been processed. This means the next steps for the buyers, sellers, agents and lenders is to work with the title company to become clear to close on the property. Closing is the formal process where a seller transfers ownership of the property to the buyers. After this final process, the buyer owns the home outright.

    On average, this process takes 30-45 days, but 60 day closings are not uncommon. The timeframe of this process is dependent on when the buyer wishes to gain possession, when the seller is willing to vacate and if there were any issues during the inspection period.

    Get an Updated Loan Estimate

    During the initial loan attainment, the lender likely provided a loan estimate (LE), which included the mortgage amount, monthly payments, insurance fees, and any additional fees associated with the closing including title insurance and closing fees. Be sure to attain an updated LE halfway through the buying process and compare numbers. Usually, about a week before the closing, the title company will provide a Closing Disclosure (CD) that breaks down the updated fees for the buyer and seller. If there are any questions or discrepancies, now is the time to ask/amend. Remember that a CD:

    • Is Required to be Provided to the Buyer & Seller at Least 3 Days Prior to Closing
    • Includes All Loan Terms, Projected Monthly Payments, Closing Costs & Fees

    Not sure what all the details are on the CD? Use this interactive closing disclosure explainer.

    What Is Title Insurance?

    The term “title” refers to the collected ownership records of a piece of real estate, including the transfer of any property rights, and any loans using the property as collateral. A clear line of title makes you much less vulnerable to ownership claims from other parties and to outstanding debts of previous property owners. This is part of the closing fees and essential to ensure no other person has claim to the property.

    *Note: The title company can be a separate entity from the settlement company, but is often the same organization.

    Where Is the Closing & What Happens?

    A closing typically occurs at a settlement agent’s office, which can be at the title company’s office or executed by a mobile notary as well. Typically, three documents are signed:

    • Deed of Trust: A deed is the records with the local Clerk of Courts of the transaction and the mortgage lien on the property now owned by the buyer.
    • Promissory Note: A legal agreement that the buyer will pay the lender for the mortgage principal, plus the agreed upon interest, as well as where fund are to be sent.
    • Closing Disclosure (CD): The itemized list of all debts and credits to complete the closing that are associated with the contract.

    If documentation of homeowners insurance has not already been provided, it must be provided at closing. If the down payment and funds for closing have yet to be received, this must be provided at closing as well. This is typically 2-5% of the home’s value and can include recording fees, loan origination fees, notary fees title insurance and homeowners insurance.

    Who Attends a Closing?

    • Buyer or Buyer Rep
    • Agents
    • Seller or Seller Rep
    • Lender Rep
    • Closing Agent
    • Notary Public

    Not all are required to attend and the selling party can sign in a different location than the buying party. This is very typical when one of the parties lives in a different state or during a VA loan closing.

    Closing on a Home
    Closing on a Home

  • Step 2. Lender Choice & Pre-Approval in The Buying Process

    The choice has been made; you’re buying a home! Congrats! Now, comes the “fun part”. Starting the home buying process continues with one of the more confusing parts of process for new buyers: lender choice & pre-approval. It is a standard in the real estate process for buyers to have a pre-qualification letter from a certified lender before any offer is taken seriously, so attaining this documentation is a must for a quick process. This approval process will include the vetting of sensitive information such as W2s, employment verification and bank accounts. Working with a trusted lender can make this process more streamlined and stress-free. Here are some tips for choosing the best lender for every situation and attaining a pre-approval letter.

    The Formula for Success

    The best formula for success includes three steps in the process:

    Trust + Service + Loan Estimate = Best Loan Choice 

    Trust

    Lenders and loan officers will be working side by side with the buyer throughout the entire home buying process and will be handling sensitive personal information about your family and financial wealth. No one wants to give this information to someone they do not completely trust. A good adage to choosing the best lender is to find someone with the heart of a teacher; someone that will work to ensure best program is available to the buyer and answer all questions. This lender should be someone that cares about your financial situation and works to be a cheerleader throughout the entire process. Find a lender that cares about buyer success and can answer the following questions accurately and with ease:

    • Howwillthelendercommunicatewithyou? Ideally the response will include 2-3 forms of communication: email, portals and phone communication.
    • What are the general lender fees?Some lenders will tact unforeseen charges onto the loan. Be vigilant and ensure that the lender is being transparent about all fees.
    • How many of the lender’s transactions close on time? A delayed closing can hurt the buyer and seller.
    • Are loan officers paid by salary or commission? Often, commission-based lenders will often provide better service because their income depends on receiving a quick and accurate closing. Your successful closing is their successful closing.
    • Can they provide a Loan Estimate? This is an important question in the process and will be discussed more at the end of this commentary. 

    Service

    Customer service should be the highest priority to any lender before their bottom line. Choose a lender that is accessible and available for you needs. A lender should be able to meet with the you within 48-72 hours of a requested meeting as well as available via phone, text and even after hours. The lender should be straightforward with the buyer throughout the process, even when the information is something the buyer does not want to hear. The lender should be able to articulate the entire buying process with ease to the buyer and work with the buyer to choose the best loan options in addition to pre-approval assistance.

    Loan Estimate

    Coming full circle to trust factor above, receiving an accurate and competitive loan estimate is a must from lenders. A loan estimate helps you know exactly how much your monthly payment is estimated to be within a variety of home price ranges. This is critical to a successful home search. An inaccurate loan estimate can have buyers searching for homes that are unattainable, leading to heartbreak or stretching families financially.

    At the end of the day, the lender any buyer deserves is one that is upfront, efficient and interested in a successful, on-time closing, not the rate of the loan. The lowest rate is not always the best loan option, so a trusted lender can assist buyers in weeding through the process of determining the best loan. Exceptional service from lenders can make the entire process a simple one for buyers.