Buyer's Real Estate Roadmap
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This document provides information for home buyers on the home buying process. It discusses reasons for buying a home, benefits of ownership, and outlines an 8-step roadmap for purchasing a home. The roadmap includes hiring an agent, getting preapproved for a loan, shopping for homes, making an offer, negotiating, inspections, closing on the property, and post-closing tasks. It also covers types of financing, distressed properties, and the roles of different industry professionals in the process.
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Buyer's Real Estate Roadmap
- 2. Interested in Buying? Why do you want to buy? Are you tired of paying rent Would you rather live in a different area Your parents & friends tell you to buy Feel like you’re throwing money away on rent You want a bigger yard Investment vs. personal •••Have a clear sense of your reasons for buying•••
- 3. Benefits of Home Ownership • Pride of Ownership • Appreciation • Mortgage Interest Deductions • Property Tax Deductions • Capital Gain Exclusion • Mortgage Reduction Builds Equity
- 4. Home Buying Roadmap Step 1: Hire a Buyer’s Agent A Buyer's Agent will represent only you and have a fiduciary responsibility to look out for your best interests. Find an agent you trust & feel comfortable with. Buyer's agents may ask you to sign a buyer’s Broker agreement, but it is the seller who pays the commission. A Realtor® can show you any home whether it is listed with an agency, a builder, or even a For Sale By Owner.
- 5. What is a Realtor ® ? A REALTOR is a real estate agent or broker who belongs to the National Association of REALTORS, or NAR. Members of the NAR subscribe to a strict Code of Ethics and belong to certain state and local trade associations. If you have any complaints regarding a REALTOR, you can file a complaint with the local NAR board.
- 6. Types of Agency Listing Agent / Seller’s Agent Represent the seller Buyer’s Agent / Selling Agent Responsible for protecting the interest of the buyer Intermediary Agent serves as a transaction agent. The agent does not represent either party. Legal in Texas
- 7. Home Buying Roadmap Step 2: Get Preapproved Estimate closing costs & down payment Shop around Lenders charge different fees Discuss different loan options Different areas may qualify for specific financing Estimate Monthly Payments Include Principle, Interest, Taxes & Insurance
- 8. Home Buying Roadmap Step 3: Start Shopping Discuss ‘must haves’ Consider resale value Ask agent for additional input on top properties Observe Open House Etiquette Consider all homes on the market, including fixer-uppers, REOs, foreclosures, short sales and those overpriced homes with longer DOM.
- 9. Distressed Properties: A SHORT SALE occurs when a homeowner sells their home for les than (short of) what they still owe on their mortgage, and their bank has agreed to accept the proceeds from the sale as payment in full of the loan balance. A FORECLOSURE occurs when a homeowner has defaulted on the mortgage, and lender initiates a foreclosure against the property. The property will eventually be put up for sale at auction. A REAL ESTATE OWNED (REO) occurs when the bank has successfully foreclosed on the property and the foreclosure auction did not result in a sale to an outside bidder. Thus the lender ends up as the new ‘owner’ of the home.
- 10. Home Buying Roadmap Step 4: Write a Purchase Offer Have your Agent compile an accurate CMA Review Sellers Disclosure Notice Sales Price & Sellers Concessions are negotiable: Title Policy, Survey, X amount of $ towards loan costs & down payment, residential service contract and more. Have your agent coordinate with loan officer Your offer should contain contingencies Inspection Period, Termite Inspection, Financing approval Submit prequalification letter with offer
- 11. Step 5: Finalize Negotiations Have all parties sign Get Option Fee to seller Not a contract unless $$$ changes hands Send executed contract to mortgage company Receipt earnest $$$ with the appropriate party Usually takes 30 – 45 days to close from executed date Home Buying Roadmap
- 12. Home Buying Roadmap Step 6: Home Inspection Hire a reputable inspector to evaluate the homes major systems. This is typically done during the option period Attend the home inspection Realize no home is perfect - and the inspector will find faults Negotiate Repairs
- 13. Home Buying Roadmap Step 6: Open Escrow / Order Title Title Company & Escrow Holder: Neutral third party holding all instruments necessary to the sale, including funds and deeds Order home owners insurance early. Sometimes previous claims by a home owner can make it difficult to get insurance
- 14. Home Buying Roadmap Step 7: Comply with Lender Requirements Order Appraisal If you receive a low appraisal, discuss options with your agent Ask for a copy of the appraisal Lenders may ask for additional information Do not alter your financial situation while in escrow!!! Such as new credit cards, furniture shopping, new car When the file is complete, the lender will submit it for final underwriter approval
- 15. Home Buying Roadmap Step 8: Close on Property Transfer Utilities & Services Final Walk-Through Be prepared to sign a lot of paperwork Example of HUD
- 16. Home Buying Roadmap Step 9: Post Closing You will receive the recorded deed in the mail about a week after closing Will receive letter from Tax Assessor Your mortgage will be do the following month
- 17. What we lend on: Credit: Your history of handling debt Income: Your past, present and future earnings Assets: Your money verified to close on the home Property: Is it a secure asset for a lender to lend on?
- 18. Types of Loans Conventional loans: 3% to 20% down Minimum credit of 640 to 720 depending on down payment Tougher standards FHA: 3.5% down Minimum credit of 640 Easier Standards Tougher on home quality
- 19. More loans VA: 0% down Better deals for Vets! 640 minimum credit USDA loans: 0% to 20% down Minimum credit of 640 Rural Property, approved upfront only!
- 20. Presented By: Mark Bower Mortgage Banker Waco, Texas Area Oak Mortgage Group, INC Email: Mark.Bower@oakmortgagegroup.com Marilee Kahler Real Estate Broker Waco, Texas Area RE/MAX Centex, Realtors Email: Marilee@254Realtor.com Web: 254Realtor.com
Editor's Notes
- It helps to have an expert on your side
- Waco association of Realtors has a key to every property on the MLS
- Answer: HUD homes can be a very good deal. When someone with a HUD insured mortgage can't meet the payments, the lender forecloses on the home; HUD pays the lender what is owed; and HUD takes ownership of the home. Then we sell it at market value as quickly as possible. Read all about buying a HUD home. Check our listings of HUD homes and homes being sold by other federal agencies.