Your Home Buying Packet
Welcome!
You are about to embark on the exciting journey of finding your home. Purchasing a home is a huge decision and a big undertaking in your life. I am here to make sure that you are well equipped and armed with up-to-date information for your big decision. I am even prepared to guide you through every phase of the home-buying process.
Whether it is your very first home or your tenth home, a retirement home, or an investment property, I am here your make your home-buying experience both successful and and exciting. I can help you find the perfect home with the least amount of hassle. I am devoted to using my expertise and the full resources of my office to achieve these results!
This packet provides you with helpful information during and after your transaction.
PAGE 1 Jenni Cole REALTOR®
CALIBER REAL ESTATE GROUP
TABLE OF
Contents
Part
1
Part
2
tHE HOME BUYING PROCESS
PRE-QUALIFICATION & PRE-APPROVAL
Part
3
MAKING AN OFFER
Part
4
Part
5
WHO PAYS WHAT?
HOME BUYING vocabulary / commonly ASKED QUESTIONS
PAGE 2 Jenni Cole REALTOR®
CALIBER REAL ESTATE GROUP
It's all about YOU!
Your Needs
Your Dreams
Your Finances
Your Concerns
Your Questions
Your Time
Your Life
Your new home
PAGE 3 Jenni Cole REALTOR®
CALIBER REAL ESTATE GROUP
GENERAL TIMELINE
tHE HOME BUYING PROCESS
- Find a Realtor You Trust
- Analyze Your Needs with an Agent Consultation
- Obtain Financial Pre-Approval From Lender
- Select Properties & View Properties
- Write an offer to Purchase & Negotiate
- Get Offer Accepted & Accept the Contract
- Open Escrow
- Earnest deposit Due To Escrow
- Schedule Home Inspection
- Negotiate Request for Repairs (if applicable)
- Appraisal Ordered By Lender
- Loan Approval By Lender
- Secure Underwriting
- Remove Contingencies
- Final Amount Needed For Closing
- Sign Loan Documents
- Final Walk Through
- Close on the Property
- Take possession of your New Home!
Money Up Front:
- Earnest Money
- Inspection Fee
- Appraisal
- Credit Report
PAGE 3 Jenni Cole REALTOR®
CALIBER REAL ESTATE GROUP
Home Buying Packet
PRE-QUALIFICATION & PRE-APPROVAL
Many buyers apply for a loan and obtain approval before they find the home they want to buy. Why?
Pre-qualifying will help you in the following ways:
1. Typically, interest rates are locked in for a set period of time. You will know in advance exactly what your payments will be on offers you choose to make.
2. You won’t waste time considering homes you cannot afford.
Pre-approval will help you in the following ways:
1. A seller may choose to make concessions if they know that your financing is secured. You are like a cash buyer, and this may make your offer more competitive.
2. You can select the best loan package without being under pressure.
HOW MUCH CAN YOU AFFORD?
There are three key factors to consider:
1. The down payment
2. Your ability to qualify for a mortgage
3. The closing costs associated with your transaction.
PAGE 5 Jenni Cole REALTOR®
CALIBER REAL ESTATE GROUP
Home Buying Packet
FINANCING
DOWN PAYMENT REQUIREMENTS:
Most loans today require a minimum down payment of 3.5 - 5.0% depending on the type and terms of the loan.
CLOSING COSTS:
You will be required to pay fees for loan processing and other closing costs. These fees must be paid in full at the final settlement, unless you are able to include them in your financing. Typically, total closing costs will range between 2-5% of your mortgage loan.
QUALIFYING FOR THE MORTGAGE:
Most lenders require that your monthly payment range between 25-28% of your gross monthly income. Your mortgage payment to the lender includes the following items:
- The principal on the loan (P)
- The interest on the loan (I)
- Property taxes (T),
- The homeowner’s insurance (I).
Your total monthly PITI and all debts (from installments to revolving charge accounts) should range between 33-38% of your gross monthly income. These key factors determine your ability to secure a home loan: Credit Report, Assets, Income, and Property Value.
PAGE 6 Jenni Cole REALTOR®
CALIBER REAL ESTATE GROUP
Jenni Cole REALTOR®
CALIBER REAL ESTATE GROUP
Once you have found the home you wish to purchase, you will need to determine what offer you are willing to make for the home. It is important to remember that the more competition there is for the home, the higher the offer should be – sometimes even exceeding the asking price. Remember, be realistic. Make offers you want the other party to accept!
After we present your offer to the listing agent it will either be accepted, rejected, or the seller will make a counter-offer.
A counter-offer. is when we will negotiate terms of the contract if necessary.
In these case of a counteroffer, we will negotiate terms of the contract if necessary. My experience and negotiating skills will represent your best interests. When a counteroffer is presented, you and I will work together to review each specific area of it, making sure that we move forward with your goals in mind and ensuring that we negotiate the best possible price and terms on your behalf.
When the seller accepts an offer it becomes a valid, legal contract. For this reason, it is important to understand what is written on the contract offer.When you write an offer you should be prepared to pay an earnest money deposit.
MAKING AN OFFER
PAGE 11 Jenni Cole REALTOR®
CALIBER REAL ESTATE GROUP
WHO PAYS WHAT?
Below are some examples of typical closing costs
B U Y E R
- Appraisal: one-time fee for new loan
- Credit Report: for loan applications
- Homeowners Insurance: paid by buyer for fire/hazard insurance
- Home Inspection: paid by buyer prior to inspection
- Loan Fees: origination & processing fees charged my lender
- Prepaid Interest: prorated depending on the time of month the loan closes
- PMI*: some lenders and loan programs require Private Mortgage Insurance
- Lender's Title Insurance: paid by buyer for inspection
B O T H
- Title Fee: buyer & seller each pay their own
- Notary Fees: buyer & seller will choose which party will pay
- Recording Fees: to file legal documents with County Recorder
- Property Taxes*: Origination & processing fees charged by lender Documentation Preparation: for deed(s) & other legal documents requires to consummate the transaction
S E L L E R
- Real Estate Commission
- Disclosure Reports: Natural Hazard report
- Home Warranty,Existing Encumbrances
- Homeowners Association (HOA) Dues & Transfer Fees
- Transfer Tax: city/county conveyance tax
- Owner's Title Insurance Premium
PAGE 9 Jenni Cole REALTOR®
CALIBER REAL ESTATE GROUP
THE TRANSACTION PROCESS
Once your offer get accepted my transaction team will be in touch with you via email with an Intro to Escrow email from our Transaction Coordinator, pertaining all the important details / timeline of the transaction.
Good Faith Deposit
- Agreed upon deposit to be sent to escrow (typically via wire)
Inspections
- Home Inspection, Termite & others as desired/needed
- Negotiate for repairs or credit as needed
Disclosures
- Seller Disclosures
- HOA disclosures (if applicable)
- Disclosures and Reports from Escrow
- Escrow Instructions
Contingency Removals (as written into the offer)
- Inspection
- Disclosures
- Loan
Loan Approval to Funding
- Lender provides formal Loan Approval
- Loan Documents sent to Escrow
- Buyer signs Loan Documents
- Loan funds
- Record Property
- Take possession as agreed in the Purchase Agreement
ONCE YOUR OFFER IS ACCEPTED
PAGE 10 Jenni Cole REALTOR®
CALIBER REAL ESTATE GROUP
The inspection is NOT designed to criticize every minor problem or defect in the home. It is intended to report on major damage or serious problems that require repairs. The inspector’s job is to make you aware of repairs that are recommended or necessary. Should serious problems be indicated, the inspector will recommend that a structural engineer or other trade specific inspectors as well.
In California all properties are sold "as is". The seller may be willing to negotiate completion of repairs or a credit in lieu of repairs, but it should be noted they are not required. A professional inspection will help you make a clear-headed decision.
I recommend being present at the end of the inspection. This is to your advantage. You will be able to clearly understand the inspection report, and know exactly which areas need attention. Plus, you can get answers to many questions, tips for maintenance, and a lot of general information that will help you once you move into your new home. Most important, you will see the home through the eyes of an objective third party.
HOME INSPECTION
If you are purchasing a resale property, we highly recommend that you have a professional home inspector conduct a thorough inspection. The inspection will include the following:
- Appliances
- Plumbing
- Electrical
- Air conditioning and heating
- Ventilation
- Roof and Attic
- Foundation
- General Structure
PAGE 12 Jenni Cole REALTOR®
CALIBER REAL ESTATE GROUP
APPRAISAL
Getting Your Appraisal Done
A housing appraisal finds the exact value that a property has in the market. This is mainly for lenders, so they can create a mortgage that fits the value of the home for the buyer.
Buyers will have to pay for third-party companies (ordered by whoever is lending the money to you) to evaluate the property based on factors like:
- Size
- Location
- Condition
- Amenities
- Upgrades
Once the appraisal is finished, the finish line will be within touching distance!
PAGE 12 Jenni Cole REALTOR®
CALIBER REAL ESTATE GROUP
HOW TO PREPARE FOR CLOSING
What to Expect One Week Before Closing
There are a couple of tasks that you need to take care of prior to the closing date:
- Set-up a time to sign loan docs with escrow (you will need a valid ID).
- Make sure your Homeowner’s Insurance is established.
- Set up wire for final amount of money needed to close.
- Set up utilities in your name.
Day Before Closing on House
3-5 days before could we will conduct a final walkthrough with your agent before the close arrives. This serves as the last opportunity to ensure the home is still in the same condition, no new damage has been done, and all fixtures included in the sale are still present.
Be sure to check things like lighting, water flow, appliances and previous requests to repair stuff are complete. Keep a sharp eye!
PAGE 7 Jenni Cole REALTOR®
CALIBER REAL ESTATE GROUP
AVOID CHANGING JOBS
A job change may result in your loan being denied, particularly if you are taking a lower-paying position or moving into a different field. Don't think you're safe because you received approval earlier in the process, as the lender may call your employer to re-verify your employment just prior to funding the loan.
AVOID SWITCHING BANKS OR MOVING MONEY TO ANOTHER INSTITUTION
After the lender has verified your funds at one or more institutions, the money should remain there until needed for the purchase.
AVOID PAYING OFF EXISTING ACCOUNT UNLESS YOUR LENDER REQUESTS IT
If your loan officer advises you to pay off certain bills in order to qualify for the loan, follow that advice. Otherwise, leave your accounts as they are until your transaction closes.
AVOID ANY LARGE PURCHASES
A major purchase that requires a withdrawal from your verified funds or increases your debt can result in your not qualifying for the loan. A lender may check your credit or re-verify funds at the last minute, so avoid purchases that could impact your loan approval. Don't purchase furniture on a new store credit card either!
WHAT TO AVOID
DURING CLOSING
PAGE 12 Jenni Cole REALTOR®
CALIBER REAL ESTATE GROUP
AFTER THE CLOSING
You will receive all records pertaining to your home for easy reference.
HOME WARRANTY
If you have a warranty plan, please call them with your warranty number available.
RECORDED DEED
The County Recorder will mail your original deed to your home (usually within 4-6 weeks).
PROPERTY TAXES
Add a You may not receive a tax statement for the current year on the home you buy: however it is your obligation to make sure the taxes are paid when due. Check with you mortgage company to find out if taxes are included with your payment. Visit your County Auditor/Controller's website for more information on your property taxes.
TITLE INSURANCE POLICY
Your title company will mail your policy to you (usually within 2-3 weeks).
Your home buying packet
HOME BUYING vocabulary
There are a lot of acronyms and mortgage-specific terms that will come up as you purchase a home. Knowing what these words mean can protect you!
Mortgage Vocabulary:
Down Payment: Money paid by the buyer toward a home before funding a loan. If a buyer makes a down payment of $10K towards a $180K home, the loan amount will be $170K.
Debt-to-Income Ratio: A ratio measuring total debt burden. It’s calculated by dividing monthly debt payments by gross monthly income.
Interest: The amount of money paid for the ability to borrow money.
Loan Officer: This is the person responsible for finding the best mortgage option for you and getting your mortgage to close on time.
Loan-to-Value (LTV): The ratio of a loan amount to the total value of an asset purchased. The borrower’s down payment amount affects this ratio.
Mortgage: Also called a “home loan.” An agreement where a lender lends money to a homebuyer for the purchase of the home, while charging interest.
Pre-Qualification: An informal, often verbal, assessment of how much money a person could potentially borrow from a lender. This is often the first step during the mortgage process.
Pre-Approval: A formal declaration from the mortgage lender indicating that a buyer qualifies for a mortgage of a specific amount.
Primary Residence: The place you live most of the year. Some loan programs will only allow you to purchase a primary residence, and not a second home or investment property.
Private Mortgage Insurance (PMI): A form of insurance paid by homeowners which protects lenders from the possibility of the homeowner defaulting on their loan. In general, you’ll have to pay PMI if you use a conventional loan and make a down payment of less than 20%.
PAGE 15 Jenni Cole REALTOR®
CALIBER REAL ESTATE GROUP
Your home buying packet
HOME BUYING vocabulary
Making An Offer:
Agent: An agent (or “real estate agent” or “realtor”) is a person who helps homebuyers find and negotiate the sale of a property. They also help sellers find buyers and negotiate their end of the deal.
Appraisal: A professional estimate of the market value of a property based on local market data and the recent sale prices of similar properties.
Counter-offer: An offer made in response to a previous offer. It may reject all or part of the original offer. Negotiations may be made to continue towards a mutually-acceptable contract.
Earnest Money: A sum of money from buyer to seller at the time of entering a contract. If the property sale is closed, the money goes toward the purchase. If not, the money may be forfeited.
Home Warranty: A policy that will repair or replace major components such as HVAC, plumbing, and electrical, as well as appliances such as stoves and refrigerators, for an annual premium that you pay upfront.
Inspections: An in-depth check-up on all accessible parts of your home. Inspections inform you of any problems before you make the decision to purchase. Example: Home Inspection
Multiple Listing Service (MLS): A group of online databases that provide real estate brokers with a look at the available housing in a particular market.
After An Offer Is Accepted:
Closing: Also referred to as a settlement, closing encompasses the final steps in the transfer of property ownership. The buyer signs all final documents and the seller receives funds.
Closing Costs: The costs to complete a real estate transaction in addition to the price of the home may include points, taxes, title insurance, appraisal fees, and legal fees.
Disclosures: Documents that tell you about the costs of your mortgage.
Escrow: Funds held by a neutral third party (the escrow agent) until certain conditions of a contract are met and the funds can be paid out. Escrow accounts are also used by loan servicers to pay property taxes and homeowner’s insurance on behalf of the homeowner
Underwriting: The process a lender uses to determine if the risk of offering a mortgage loan to a particular borrower under certain parameters is acceptable.
PAGE 16 Jenni Cole REALTOR®
CALIBER REAL ESTATE GROUP
Your home buying packet
Commonly asked questions:
1
How much are closing costs?
Typically, total closing costs will range between 2-5% of your mortgage loal.
2
3
4
How much does home inspection typically cost?
Home inspection cost varies depending on how long it takes the licenced inspector to investigate the home. The estimated cost of a home inspection could be $300 – $650 - give or take.
When am I at risk of loosing my earnest money deposit?
There are times when homebuyers lose their earnest money after a broken deal. Two scenarios that may lead to the forfeiture of your good faith deposit are:
- Waiving your contingencies. Financing and inspection contingencies protect your earnest money if your mortgage doesn't go through or the house is beyond repair. However, if you waive either contingency, you forfeit your good faith deposit if the house does not go to sale.
- Ignoring contract timelines. Home purchase contracts often have timelines within which the buyer should complete the purchase process. Failure to close the transaction on the agreed date means you have breached the contract. You may have to forfeit your good faith deposit.
When is the earnest money deposit due?
After you offer is accepted you will have 3 days to transfer the EMD to escrow
PAGE 14 Jenni Cole REALTOR®
CALIBER REAL ESTATE GROUP