Buying a Home
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Buying a Home - Illustrated Guide by Tom Glass Specific to South Carolina Real Estate
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Buying a Home
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Editor's Notes
- This presentation will provide the information to understand the process and to make wise decisionsDo research & be preparedSelect a Realtor and Lender with the experience to walk you through the maze of negotiations, forms, pricing, and financing options
- Do you need to buy a new home or is it optional?Do you know what you want?Are your finances in order?Do you know what you want?Do you have the money?Rent vs. Own?
- A Pre-Qualification is an informal determination of borrower eligibility (without pulling credit).A Pre-Approval is a commitment to lend to a potential borrower, as long as the borrower continues to meet the qualification requirements.Where do you stand financially (current income, debt and savings)? You’ll be able to determine:- The loan that is right for you!- What you can afford for purchase price and monthly payment. How much money you’ll need for the down payment. (the difference between the sales price and the amount of your mortgage)
- Buying real estate is a difficult process and a major investment!What service do they provide?A real estate agent consults the multiple listing directory to help narrow down the choice of homes, negotiates purchase price and contract, and provides information on local schools, employment, and amenities. Because all properties are unique, realtors can guide you through contract terms, financing options, inspection requirements, and closing costs. No two transactions are alike!
- Choose one real estate agent and work with that person until you find the home you would like to buy. You want to find someone who is experienced and familiar with your search area.
- Your offer home depends on:how much you have to spend.how badly you want the house.how many other buyers are interested.how motivated the seller is to sell.how much repair might need to be done on the house.how the property compares with other similar properties.Sellers typically require a pre-approval to be included with the offer
- An appraisal is an inspection of the property to receive an estimation of value. This is purchase by you and prepared for the lender by a professional appraiser.A home inspection is an examination of a property to determine the actual physical condition of the structure, construction and mechanical systems. This inspection should be completed by a professional home inspector. Home inspections are optional but highly recommended! You may also want to include a home inspection contingency in your contract. With this contingency, you have the right to withdraw your offer if the inspection reveals major problems; or use the inspection to request the seller make repairs.
- With a purchase contract in hand, the mortgage interest can be locked in for a certain amount of time. Locking is a protection from fluctuating rates in the marketplace, this will keep the interest rate and any points from changing during the lock period. Floating the rate involves starting the loan approval process waiting to lock the rate at a later point in the process.It’s typically advisable to lock as soon as possible! Should rates get better before you lock, a renegotiation or “float down” can take place to lower the rate. Should rates get worse a charge or “discount point” would be required to get a lower rate.
- Once you have a signed contract, the loan application and processing can start! The lender will verify all of the information you provided during the pre-approval by collecting documentation.You will need to sign the lender’s loan application & disclosures (required information you need to know regarding your loan) and go over the Good Faith Estimate.Documents needed at the time of application include: drivers license, social security car, recent pay stubs, recent bank statements (no online print-outs), rental checks, W-2s, and tax returns for the past two years.
- Documents needed at the time of application include: drivers license, social security car, recent pay stubs, recent bank statements (no online print-outs), rental checks, W-2s, and tax returns for the past two years.
- AppraisalThe Lender will order an appraisal to establish the value of the property.Credit ReportTo examine your credit history, your lender will order a credit report.Home Owners’ InsuranceOr Hazard Insurance protects your home against fire damage, theft, etc.Closing AttorneySouth Carolina requires an Attorney to be present at closing.These services are required to obtain final approval, the cost is included in your closing costs.
- Your lender creates a loan file with all required information and passes that file on to an underwriter. The underwriter makes sure all loan requirements are met by carefully reviewing the loan application, borrower’s documentation, appraisal and title.Typically underwriters will need additional documentation and/or explanations before the loan is approved; it is critical that you provide the additional information as quickly as possible in this situation.Once the review is completed, the file will have final approval, also called “clear-to-close.”
- Your home has been inspected. All contingencies have been met. Your mortgage has been approved. Your stars have come into alignment. All your ducks are in a row.What happens next? You close the deal!You settle all the financial details associated with the purchase and receive title to your new home.Enjoy your new home!