Home Buyer's Guide

PRESENTED BY: VALOR HOMES TEAM

EXP Realty

2024

edition

Contents

03

steps 1-10 of the home buying process

14

timeline of events

15

upfront costs

16

earnest money deposit

closing costs

18

myth

19

Smooth closing checklist

20

What people are saying

21

STAY CONNECTED

Paperwork

They help with all disclosures & paperwork necessary in today’s heavily regulated environment.

Experience

They are well educated in and experienced with the entire sales process.

Negotiations

They act as a “buffer” in negotiations with all parties throughout the entire transaction.

Pricing

They help you understand today’s real estate values when setting the price of a listing or an offer to purchase.

Understanding of Current Market Conditions

They help with all disclosures & paperwork

necessary in today’s heavily regulated environment.

Very

Important!

step #2

Pre Approval

- I can provide you with my contacts for my preferred mortgage lenders.

- Recommend obtaining a pre-approval vs. pre-qualification letter.

- Required to provide documentation including letter of employment, pay stubs and past 2 year tax returns; credit report is conducted.

- Bring to the lenders attention any of your concerns about credit history, bankruptcies, etc. WILL SAVE YOU TIME & MONEY!!

- Ask lender about different loan programs that would best fit your needs.

- Ask about down payment assistance if this is something you may be interested in.

- Ask about Monthly Mortgage Amount with mortgage, taxes, mortgage insurance(if applicable), homeowners insurance, and possible HOA fees.

In many markets across the country, the number of buyers searching for their dream homes greatly exceeds the number of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search. Find a reputable lender to help you get preapproved! 

Freddie Mac lays out the advantages of pre-approval in the 'My Home' section of their website.

“It's highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.

One of the many advantages of working with a local real estate professional is that many have relationships with lenders who will be able to help you with this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.”

Freddie Mac describes the '4 Cs' that help determine the amount you will be qualified to borrow:

1. Capacity: Your current and future ability to make your payments

2. Capital or Cash Reserves: The money, savings, and investments you have that can be sold quickly for cash

3. Collateral: The home, or type of home, that you would like to purchase

4. Credit: Your history of paying bills and other debts on time

Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.

The bottom line is many potential homebuyers overestimate the down payment and credit scores needed to qualify for a mortgage today. If you are ready and willing to buy, you may be surprised at your ability to do so.

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Now the fun part!!

-We can figure our how much you are comfortable spending: Ensure you make a list of your fixed bills such as credit card bills,

student loans, car payments, your Netflix subscription and any other

monthly bills that you'll have after purchasing a home. Instead of looking at the "mortgage amount" set yourself a monthly max budget

so that you feel comfortable making the payment every month.

- We will discuss all the specifications you have in the home.

- Complete the perfect home questionnaire.

- We will work together to set you up to receive new listings from my MLS to be sent to your email with your personalized specifications (Note: Things like updated kitchens are not specified on MLS)

- We can also research For Sale By Owner

properties

- Time to view potential properties!

MLS definition: Multiple Listing Service is the most up to date way to receive new listings.

The MLS Updates every 15 minutes

page 06

Step #4:

Negotiating Your Terms With

Confidence

Multiple Offer Strategy

Making an Offer

Once we've found the house you wish to purchase, you'll need to determine what offer you are willing to make on the home. After all, you are the one making the payments!

* Sales price

* Comparative Market Analysis (comps)

* Earnest money

* Financing terms

* Inspection period

* Closing date

* Personal property

* Seller contribution to YOUR closing costs

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Very

Important!

If you are purchasing a resale property, we highly recommend that you have a professional home inspector conduct a thorough inspection. You need an inspector that is exceedingly thorough and detailed so as to minimize surprises for you. However, the inspection is not meant to be used to low ball the seller post-price negotiations, as all existing homes have minor imperfections.

The inspection is intended to report on major damage or serious problems that require repair. Your home cannot "pass or fail" an inspection. The inspector's job is to make you aware of repairs that are recommended or necessary.

THE INSPECTION WILL INCLUDE THE FOLLOWING

* Appliances

* Plumbing

* Electrical

* Air Conditioner

* Roof and Attic ( if accessible)

* General Structure

The seller may be willing to negotiate completion of repairs or you may decide that the home will take too much work and money and rescind the offer during the inspection period.

Your inspection is a contingency to the purchase and sale agreement and needs to be completed and repairs negotiated within the due diligence date on purchase agreement, usually a 7- 10 day period

**Not all items are not necessarily required. Speak to your realtor for more info.

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When you submit a loan to your lender, it's known as "going into underwriting".

The term "underwriting" refers to the process that leads to final loan approval or denial. A loan's approval status is made by a professional underwriter which

uses specialized software programs and number-crunching analysis.

Once an underwriter has reviewed all of a mortgage applicant's information and documentation, a decision will be made on the loan's status. There are a few possible outcomes at this point.

page 09

A real estate appraisal helps to establish a home's market value – the expected price it would fetch if offered in an open, competitive real estate market. Appraisals can help buyers ensure that they don’t overpay for a home.

By law, mortgage companies cannot complete their own appraisals so many hire an appraisal management company (AMC) to handle the work which, in turn, gives the work to a licensed professional appraiser.

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Step #8

Receive Loan Approval

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Homeowners Insurance

* Highly competitive rates

* Impacts your monthly payment

Title Company/Closing Attorney

* Quality management of process

* Manages all parties in transaction

* Leverage for getting problems solved

* Closing on time

* Protecting your interest

* Transferring ownership of property to you

The Final Details

* All documents to the lender in a timely manner

* Appraisal

* Lender repairs where applicable

* Closing & settlement review

* Potential deal killers

* Transfer of utilities

* Moving into your new home

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Step #10:

Closing Day!

Who will be there?

* You, the buyer(s)

* Seller(s)

* Buyer's agent

* Listing agent

* Closing attorney, the party representing the title company and responsible for ensuring the title is transferred to you

* Occasionally, your mortgage officer

What will you need?

* Bring a valid government-issued photo ID and a second form of ID showing your name.

* Bring cashier's check for your cash to close ( your mortgage officer will tell you this amount approximately 24 hours prior to closing. Your attorney may have you wire money. Avoid wire fraud and ensure you verify the account number with an attorney)

page 13

Timeline of Events

This is an estimate of timelines. Speak to your realtor about the timeline for your particular transaction.

page 14

Upfront Costs

Above is an estimate of upfront costs please speak to your lender or realtor about your particular upfront costs on your particular transaction.

page 15

The earnest money deposit is an important part of the home buying process. It tells the seller you’re a committed buyer.

Assuming that all goes well and your offer is accepted by the seller, the earnest money will go toward the purchase price. In many circumstances, you can get most of your deposit back if you discover something that you don’t like about the home.

Typically 1% of the purchase price of the home.

Must be turned in within 3 days

After turning over the deposit, the funds are held in an escrow account until the home sale is in the final stages. Once everything is ready, the funds are released from escrow and applied to your purchase price.

page 16

The down-payment amount is the difference between the selling price of the property and the amount of money borrowed to purchase the property. The deposit provided with the offer is deducted from the down payment. Example: The selling price is $300,000. The deposit with the offer is $10,000. A mortgage loan is for $270,000. The remaining down- payment will be $20,000.

Prepaid Utilities

The buyer is responsible for paying utilities as of the closing date and may also need to reimburse the seller for prepaid utilities.

Prepaid Property Taxes

Property taxes are calculated based on the value of the property. If the seller has prepaid property taxes, the buyer may be required to reimburse the seller.

Interest Adjustment

The interest adjustment is the amount of interest accrued between the closing day and the date of the first mortgage payment.

Legal Fees/Disbursements

Legal fees include conducting a title search on the property, putting title insurance in place, registering the home in the buyer’s name, and facilitating financial disbursements upon closing.

Transfer Taxes (Land, Estate, etc)

Lender Fees

These fees generally include Origination Fees, Appraisal, Credit reports, and Points. (Money you pay to get a lower rate)

Tax and Homeowners Insurance Escrow

Some lenders require prepaying taxes and one full year of homeowners insurance at closing and are placed in an escrow account so the money is always there when its needed. This account is maintained in monthly payments

page 17

According to the Realtors Confidence Index from the National Association of Realtors, 61% of first-time homebuyers purchased their homes with down payments below 6%.

Many potential homebuyers believe that a 20% down payment is necessary in order to buy a home and many have disqualified themselves without even trying, but in October, 74% of first-time buyers and 52% of all buyers put less than 20% down.

Elizabeth Mendenhall, President of NAR , recently shed light on why buyer demand has remained strong, “Despite first-time buyers struggling to achieve homeownership, Realtors® in most areas say demand is still the strongest at the entry-level segment of the market. For prospective first-timers looking to begin their home search, competition will remain swift. That is why it’s important to be fully prepared with a pre-approval from a lender, and to begin conversations with a Realtor® early about what you’re looking for and where.”

It’s no surprise that with rents rising, more and more first-time buyers are taking advantage of low-down-payment mortgage options to secure their monthly housing costs and finally attain their dream homes.

Bottom line, If you are one of the many first-time buyers unsure of whether or not you would qualify for a low-down-payment mortgage, let’s get together to set you on your path to homeownership!

page 18

Work with Realtor to schedule Inspections

Get the Lender all documents and info they need on time

Get Homeowners Insurance- Ensure you shop around! Most Insurance companies give you a discount for bundling Home and Auto!!

Provide Insurance to Lender

Preview Closing Disclosure Statement (Must be signed at least 3 days before closing)

Final Walk Through

Wire Down Payment and Closing Funds or Get Bank Check for these funds to bring to Closing (Check with the Lawyer for more info on what method they use)

(DO NOT WIRE ANYTHING WITHOUT GETTING DIRECT WIRING INFORMATION FROM THE ESCROW OFFICER, UNLESS YOU TALK TO THEM IN PERSON, CHECK WITH YOUR REALTOR FIRST)

Put Utilities in your name and turn on effect on the Closing Day

Bring your Drivers License or Passport to the Closing Table

Get the Keys

Move In!

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page 20

Hope to work

with you

Soon

859-248-1142

kymberly@vhthomes.com

www.valorhomesky.com

@kymberlyclem_realtor