Home Buying Guidebook

Transcription

1 Home Buying Guidebook

2 Our Misson Our mission, desire, and goal is to assist all parties in accomplishing their goals and obtain a satisfied conclusion to the purchase or sale of their real estate. We make a positive difference in our clients lives and are committed to our clients having The best real estate experience they have ever had. This is Our Promise to You. The Glaser Group Alex Glaser Alex@AlexSellsRichmond.com 9701 Gayton Road, Richmond, VA

3 Preparing for the LEnder Quick List of Items Needed For Loan Application... Copy of Driver s License for each applicant Most recent 30 days of consecutive paystubs for each applicant Most recent Checking/ Savings Account Statements for the past 2 months. Must include all pages and document all deposits other than normal paycheck deposits with written explanation and source. Most recent IRA, ROTH, Stock, Bonds, etc Statement- ALL PAGES even if the last page is completely blank except a number you must provide it 2011 & 2012 Federal Tax returns- ALL SCHEDULES and be certain that your tax returns are signed 2011 & 2012 W-2 s/ 1099s for each applicant/ each employment Divorce Decree/Child Support Documentation if applicable Residential, employment history for 2 years Military only- Child Care information Mortgage % FINANCING: VA (veterans only); VHDA (First Time Homebuyers Only); RD (homes in qualifying rural areas only) 3.5% DOWNPAYMENT: FHA loans ALL buyers who qualify 3% DOWNPAYMENT: Conventional loans ALL buyers who qualify; will have Mtg Insurance 3% DOWNPAYMENT: VHDA loans ALL buyers who qualify; NO Mtg Insurance Gift Funds are allowed on ALL FHA loans from an immediate family member OR a personal friend, where a close relationship can be proven. Gift Funds are allowed on conventional loans from an immediate family member. Some restrictions may apply depending on downpayment. Mtg Insurance is required on ALL loans with less than 20% downpayment (except the VHDA NO MI program). Mtg Insurance can be paid monthly OR one time upfront. Seller paid closing costs. CAN pay for the one time upfront MI.

4 Preparing for the LEnder continued... If a borrower has a new job, then we need a 30 day paystub from the new employer. However, if the borrower has a non-contingent offer letter, we may be able to close before the borrower receives a paystub. Deferred student loan payments do not have to calculated in Debt to Income Ratios for FHA loans if student loans are deferred for 12+ months from the closing date. Deferred student loan payments ARE calculated in Debt to Income Ratios for conventional loans, regardless of time period of deferment. Revolving and Installment debt may be paid off to qualify, however the accounts must be closed at closing. Seller paid closing costs can cover closing costs, prepaids and points. FHA allows up to 6%. Conventional loans allow 3-6% seller paid closing cost, depending on downpayment amount. Any repairs listed on the contract or addendum will have to be fixed prior to closing and will need a contractor s letter stating they are repaired OR the appraiser will have to go back to the property to confirm repairs are completed. Any personal property listed on the contract that is not affixed to the home will need to be on a bill of sale and not listed in purchase contract. During the process be prepared to provide... Personal Information Full names of all purchasers as they are to appear on title. Social security numbers of all purchasers. Present residence address for all purchasers. Previous address for all purchasers going back two years if they have not resided in the present home for two years. Home, office, cell phone numbers. Employment Information Present Employer: Name, address and a contact person to send employment verification form. Explanation for any gap during 2 year history.

5 Preparing for the LEnder continued... Relocation letter for any transferees giving date, salary, new location, and any relocation benefits. Previous Employer: Name, address, and a contact person, going back 2 years if not in present job 2 full years. Present Salary: Year to date pay stub and last 2 years W-2s If any variable income, commission, part-time income, bonus, overtime, interest income, etc., is being used to qualify: 2 years signed federal tax returns and W-2s and/or 1099s. If self-employed: 2 years signed federal individual and corporate returns (if applicable). Also a profit and loss statement and balance sheet. Diploma or transcript if student during 2 year period. Other Income Rental Income: Copy of lease which is current and at least one year in length. Alimony and Child Support (only if used for qualification): Copy of divorce decree and property settlement (ratified) setting out terms. Proof of payment will also be requested at application. Income From Notes Held: A copy of the ratified note. Retirement, Social Security and Disability Income: Copy of award letter and latest check showing amount of present payment. Copy of end of year statement if applicable. Assets Bank Accounts: Name of bank, address, account numbers, types of accounts, and present balances. With checking, use average balances. Copy of two most recent statements of all accounts. Stocks and Bonds: Copy of certificates or copy of recent (within 30 days) broker statement listing the holdings. Life Insurance: Cash value, only if being used for down payment. Vehicles: Year, make, and value. Copy of title if under 4 years old with no outstanding lien. Real Estate: Address and market value. If free and clear, deed of release, deed or mortgage payoff.

6 Preparing for the LEnder continued... Present Home: Copy of sales contract, settlement sheet and/or lease. Gift Letter: Form will be provided by financial representative. Donor Capacity must be verified.breceipt of funds must be shown in account. Liabilities Credit Cards: Account numbers and outstanding balances. Loans (Auto, Mortgage, Personal, Student, etc.): Name of institution, address, account numbers, outstanding balances, monthly payments, months left on loan. Copy of next payment coupon. 12months statements or canceled checks for present mortgage. Alimony and Child Support: Copy of Ratified Decree and property settlement setting out terms. VA Loans Certificate of Eligibility: To obtain certificate, you will need a DD-214 (Separation of Service) or if in the Service, you will need a Statement of Service signed by Commanding Officer of Personnel Officer (certificate must be updated prior to application). If in service, you will need Authorization to Live Off Base (DD-1717 from Housing Office) andtransfer Orders (if applicable).

7 Do s & Don ts During the Loan Process There are certain Do s and Don ts which may affect the outcome of your loan request. These remain in effect before, during and after loan approval up until the time of settlement when your loan is funded and recorded. Many times credit, income, and assets are verified the hour before you have signed your final loan documents. Here is a list that you should comply with: MAKE SURE THAT YOU DO NOT do any of the things that may alter your credit and may risk you obtaining your loan. Also, these things may put you in default of your Sales Contract, may put your Earnest Money deposit at risk. DO NOT quit your job or change jobs. If this is likely, consult with your loan officer and call this office should this occur. DO NOT allow anyone to make an inquiry on your credit report except your lender. DO NOT apply for credit anywhere else except with your lender. This causes more hits on your credit rating which can reduce your credit score. DO NOT change bank accounts or transfer money within your existing accounts. DO NOT co-sign for anyone, for any reason, for anything. DO NOT purchase or attempt to purchase anything else on credit such as another car, truck, boat, furniture or other real estate. DO NOT charge any abnormal amounts to your current credit cards or credit lines. DO NOT send in late payments, or incur late fees for anything. DO NOT wait longer than the time frame given per your contract to provide all necessary paperwork and information to your lender when requested. MAKE SURE THAT YOU: DO keep all accounts current, including mortgages, car loans, credit cards, etc. DO contact both your lender and your sales associates anytime a question may arise. DO make all payments on or before due dates on all accounts, even if the account is being paid off with your new loan. DO have any lender-required money/funds to your loan officer within 72 hours after home inspection is complete. DO return phone calls from your agent, loan officer,

8 Will Mortgage Pre-Approvals Hurt My Credit Score? This is a very common Myth buyers have regarding getting preapproved. Getting preapproved is 100% a benefit to you as the buyer because it will give you confidence to write offers and prevent any heart ache down the road. In a competitive market like ours a good agent and a smart seller will not even consider looking at a financed offer without a preapproval letter. Credit Bureau Scoring Credit bureaus use a subtle formula that they don t publicize how they crunch your credit history down into a single credit score. One of the things that can cost you points on your credit score is to have a bunch of inquiries coming in very close to each other. So, should you worry about what mortgage pre-approvals will do to your credit reports? Probably not. The Ding for One Inquiry is Very Small. The most a single inquiry on your credit report will cost you is five points. Often, your score, which can range from 300 to 850, will suffer even less than that. Unless you are seeking a new mortgage and are right on the cusp between a good credit score and a fair credit score, five points shouldn t make any difference in your loan terms. Making the Mortgage Process Easier All of the credit bureaus understand the complex timing of getting a mortgage. Therefore, they have instituted measures to avoid reflecting pre-approval inquiries on credit reports. For instance, if you are shopping around for the best rate, and several mortgage companies make credit inquiries about you within 45 days of each other, all of those inquiries will be bundled into a single event with a miniscule effect on your credit report. Your credit report also does not include any credit inquiries made within 30 days prior to your loan application. It is, therefore, nearly impossible that the mortgage process of pre-approval will cause enough damage to your credit score to hurt your mortgage terms, so don t worry if your real estate agent asks to see your letter of pre-approval. Getting preapproved for the mortgage you want won t hurt you.

9 Getting a Mortgage is Simple An Overview of the Loan Process Organize Your Documents 1. If you are a W2 employee, please provide two years W-2 s and one month of paystubs. If you are self-employed, please provide two years business tax returns and a YTD profit and loss statement. 2. Please provide 2 years personal full federal tax returns. 3. If you own rental property, please provide rental agreements. 4. Please provide two months bank statements for each bank, stock, and/or mutual fund account. 5. If you are requesting a cash out refinance, please provide a letter explaining what you plan to do with the proceeds. 6. Please provide a copy of divorce decree and/or separation agreement if applicable. 7. Please provide a copy of your Driver s License. If you are NOT a U.S. citizen, provide us with a copy of your green card (front & back), or if you are NOT a permanent resident provide us with your H-1 or L-1 visa. Get Qualified Getting qualified before you apply for a loan can help you understand how much you can borrow. When buying a house, you may get pre-qualified or pre-approved. You can typically get pre-qualified over the phone or on the Internet in a few minutes. A pre-qualification is not as beneficial as a pre-approval where you have to go through a more rigorous process which includes verification of your credit, income, assets, and liabilities. It is highly recommended that you get pre-approved before you start looking for a house. This will help you: 1. Find out the maximum house you can buy, so you don t waste time looking for properties you cannot afford. 2. Puts you in a stronger position when you are negotiating. The seller knows that your loan is already approved. 3. Helps you close quickly, since your loan is already approved.

10 Getting a Mortgage continued... To find the best loan you will need to: 1. Think about how long you plan to keep the loan. If you plan to sell the house in a few years, you may want to consider an adjustable or balloon loan. On the other hand, if you plan to keep the house for a longer time, you may want to look at fixed loans. 2. Understand the relationship between rates and points. Points are considered to be prepaid interest and are tax deductible. Each point is equal to one percent of the loan. For example, 1 point on a $150,000 loan is $1,500. The more points you pay, the lower the rate you will get. 3. Compare different programs. Deciding on a loan program can be difficult. With so many programs to choose from, each of which has different rates, points, and fees, it s hard to figure out which program is best for you. That s where an experienced Loan Officer can advise and help you make a decision that s best for you. Obtain Loan Approval Once your loan application has been received, we will start the loan approval process immediately. This involves verifying your: 1. Credit history 2. Employment history 3. Assets including your bank accounts, stocks, mutual fund and retirement accounts 4. Property value Based on your specific situation, additional documents or verifications may be required. To improve your chances of getting a loan approval: Fill out the loan application completely. We can do it for you on the phone, in person, or online. Respond promptly to any requests for additional documents. This is especially critical if your rate is locked or if you plan to close by a certain date. Do not make any major purchases. Do not buy a car, furniture, or another house until your loan is closed. Anything that causes your debts to increase might have an adverse effect on your current application. Do not move money into your bank accounts unless it can be traced.

11 Getting a Mortgage continued... Close the Loan After your loan is approved, you will be required to sign the final loan documents. This will normally take place in front of a notary public. Be prepared to: Bring a cashiers check for your down payment and closing costs if required. Personal checks are normally not accepted. Bring your Driver s License. Review the final loan documents. Make sure that the interest rate and loan terms are correct. Also, verify that the name and address on the loan documents are accurate. Sign the loan documents. Your loan will record shortly after you have signed the loan documents. On refinance and home equity loan transactions federal law requires that you have 3 days to review the documents before your loan transaction can record. On Purchase transactions, your loan should be recorded the same day or the following day.

12 What Happens if Rates go Up? Loan Amount Rate P & I Monthly Yearly Over 10 Difference Difference Years $100,000 5% $ % $ $62.73 $ $7, % $ $ $ $15, $200,000 5% $ % $ $ $ $15, % $ $ $ $30, $300,000 5% $ % $ $ $ $22, % $ $ $ $46, $400,000 5% $ % $ $ $ $30, % $ $ $ $61, $500,000 5% $ % $ $ $ $37, % $ $ $ $77,088.00

13 Buyer s Closing Cost Breakdown Closing cost usually runs around 3% of purchase price Lender Fees 1. Appraisal - $450** 2. Credit Report - $20** 3. Points to buy down your interest rate (optional) You can write off points on your taxes 4. Origination fee fee that some lenders charge to process the loan 5. Underwriting, admin fee, doc prep Attorney/ Settlement/ Third party Fees 1. Closing/settlement fee a. Courier fees b. Doc prep fees 2. Title insurance 3. Recording Fees a. Loan amount X b. Sales price or tax assessment ( whichever is higher) X Escrows 1. Property Taxes 2. Homeowners Insurance 3. Per diem interest- Interest paid from closing till end of month (If you close the 20th, you would pay 11 days on per diem interest at closing) Misc 1. Inspections- Pay before About $300** (price based on sqft) 2. Survey - $300 (optional) **paid before closing All figures are estimates

14 Home Buying Plan of Action In today s market, it takes a proactive and aggressive approach to find you the best home at the best price. Every buyer has access to the homes for sale in the Multiple Listing Service through various free websites such as Zillow or Trulia. The reason why more buyers choose to work with us than any other agent is because we go above and beyond the multiple listing service to find our clients the best deals. Door Knocking One of the best ways we find great homes not yet on the market is by constantly door knocking through different neigherboods all over town. We come across potential sellers this way or a neighbor who knows of someone that would like to sell their home. Telemarket Similar to door knocking, we constantly are calling through different neighborhoods looking for potential sellers who are not yet on the market. Expired, Cancelled, Withdrawn Listings These are homes that were on the market at some point in the last of couple years and, for whatever reason, did not sell. We consistantly reach out to these homeowners and see if they would still like to sell their home. Database We have a large database who we actively keep in communication with and have many clients who, with the right buyer, would be happy to sell their home. Steps We Take to Help You Buy a Home - The Proactive Approach: 1. Review the Home Buying Process - We will provide you with detailed information covering the entire home buying process, answer any questions you may have about it, and guide you through every step along the way. 2. Financial Pre-qualification - We will arrange a pre-qualification / preapproval appointment with a reputable local lender to identify your range of affordability and to increase your negotiating strength. 3. Home Criteria Questionnaire - We will review with you a home buying criteria questionnaire to help figure out your wants, needs and goals to

15 Home Buying Plan of Action set up your unique property search. 4. Buyer Agency - We will discuss buyer agency representation, buyer brokerage agreements, seller agency, designated agency, and dual agency. 5. Coldwell Banker Home Search - We will present your property search criteria to our office during sales meetings. Our goal is to present you, when possible, with properties as they debut or before they appear on the open market. 6. Proactive Home Search -Call and door knock neighborhoods in specific areas if you are having trouble finding a home you like, as well as stay in contact with other top agents in town so we are one of the first to know about upcoming properties. 7. Property Showing - We will schedule and show you properties that meet the criteria you have selected. 8. Property Evaluation - We will discuss features of a property that may affect its value and future resale, as well as work up a market analysis for you to help in deciding on the terms for your purchase contract. 9. Estimate of Funds Required - We will aid in having your lender provide you with a preliminary estimate of closing costs and down payment requirement anticipated in the transaction. 10. Home Warranty - We will explain to you the benefits of a home warranty plan to reduce your risk of repair costs when purchasing a property. 11. Residential Property Disclosure - We will review the Residential Property Disclosure and what it means to you as the buyer. 12. Purchase Contract Preparation - We will prepare a written purchase contract on the property you choose to buy, with terms and conditions approved by you. 13. Purchase Contract Presentation - We will highlight the attractive terms of your purchase contract to the listing agent. 14. Negotiation Strategy - A key role in any purchase, we re effective negotiators who will work hard to develop a strategy to deliver terms and conditions acceptable to you. 15. Property Inspections - We recommend that you obtain a professional property inspection and can recommend inspectors for you as well. 16. Property Inspection Remedies - If needed, we will request an addendum to the contract asking that the seller remedy defects you specify after

16 Home Buying Plan of Action your review of the property inspection reports. 17. Lender and Closing Company Follow Up - We will keep in touch with your lender and your closing company to ensure everything is moving smoothly. 18. Final Walk-Through -We will accompany you on a walk-through of the property before closing, and we will assist you in dealing with any problems, if one is discovered, during the walk-through. 19. Closing The Sale - We will monitor and inform you of the progress of the purchase agreement, including the satisfaction of all contingencies and conditions during the entire transaction. 20. After-Sale Service - Our services do not stop after closing. After Closing We Will: A. Contact you to follow up on remaining details or service needs. B. Offer a ribbon cutting with pictures and/or video for your memories (optional). C. Be your source for any highly recommend professional or needed services, housing and otherwise.- i.e. contractors, lawn services, interior decorators, tree work, ect... D. Provide you with access to The Glaser Group Fan Club including great benefits like 10% off Lowes coupons, borrowing household tools, plus much much more. Check out our website for full details. You will find the Fan Club tab under the About Us section. E. Keep you up to date with monthly s of the homes in your neighborhood newly listed for sale, as well as let you know which ones recently sold. F. Provide you with a monthly newsletter on the local real estate market. G. Keep in touch by calling several times a year to say Hi, check in on you and the house, give updates on the real estate market, and see if you have any friends or family that may need our services.

17 Buyer Broker Agreement Buyer Broker

18 What to Expect When Writing an Offer Here are some things to consider to help your offer get accepted: What type of Sale is it? Foreclosure, Short Sale, Traditional Sale Is it priced right for the market? What is the buyer activity? Are there offers on the home? What other homes are for sale in the neighborhood? What has sold recently in the area? How long has it been on the market? What is the seller s motivation? Are they price driven or are there other terms that are important to them How long of an escrow are they looking for? Do you need concessions for closings costs? Closing costs such as title, escrow, and lender fees usually cost between 1-3% of the sales price. Are there multiple offers on the property? This is not uncommon for homes priced right for the market and in great condition. Often times the seller will ask for your highest & best offer. In other words, what is the highest price you will offer so that if another buyer offered more you would not have any regrets becuase you gave it your best shot?

19 Home Warranties The last thing a home buyer wants to worry about after closing is what could possibly break or malfunction in her new home. Since that can cover a multitude of items and systems, for peace of mind, it s a good idea to get a home protection plan. If a home system or appliance breaks or stops working, the home owner calls the home warranty company. The home warranty company calls a provider with which it has a business arrangement. The specific provider calls the home owner to make an appointment to fix the problem. The home owner will a small detuctable service fee typically around $75

20 Helpful Websites About Richmond Census Data City Statistics School Info Crime Data

21 Buyer References Mark & Lauren (804) Beau (276) Damon & Stephanie (612) Kerby & Spencer (804) Seth & Becky (804) Kyle & Jessica (804) Feel free to contact one or all of these people Any of these people will be glad to talk about the quality of the service they received. You can view video testimonials at: and you can find over 130+ written reviews on Zillow.com and Trulia.com.

22 Contact The Glaser Group Alex Glaser Gayton Road, Richmond, VA