1. Down Payment/ Closing Cost
In order to purchase a home, majority buyers will require a downpayment and closing cost. Majority lenders require a 3.5% to 5% (of purchase price) down payment. Buyers will also be required to pay closing cost in most situations. Closing cost can range from 3 to 4% of purchase price. Pre-paid closing cost will consist of earnest money, due diligence fee, inspections, and appraisal. Earnest money and due diligence fees are both credited back to the buyer at closing. Funds can be saved by buyer or gifted to buyer depending on lender requirements. There are loan products that offer 100% financing and even ways to have seller pay all of your closing cost. Be sure to contact Drew Eddison Realty for more details.
2. Pre-Approved Or Pre-Qualified
The pre-qualification process is one in which a mortgage company interviews the home buyer and asks questions about the individuals finances, including debts. Banker will then be able to determine how much the buyer can afford. Pre-Approval is a more reliable determination of buyers eligibility. Banker will conduct a credit check and verify amount available for down payment. The lender also looks at any owed debt and even if the person is a first-time homebuyer.. A pre-approved is typically favored over pre-qualification. Rule of thumb: ​Most banks will only allow up to 42% of borrower gross income toward debt. (ex.) If buyer makes $1000 monthly gross income, $420 can be used toward debt which includes any recurring debt such as car payments, credit card payments, student loans, child support, etc. Add up the monthly debt payments and subtract from 42% of your income. This will give an estimate on what the bank will allow for your monthly mortgage payments.
3. Location
Often people choose a location-based off of factors such as church, family, work, and/or school. A person should visit potential locations keeping in mind his or her family’s or ones lifestyle and commute.
4. Decide On A Type Of Home To Buy
The type of home that a person prefers is another factor to take into consideration when determining where to live. Things to consider include buying new construction versus a resale home. Home types include single-family detached homes, duplex, town homes, or even condos. Another important factor may be ranch level, 2 story home or split level home. Buyer want to also include amount of bedrooms, baths and square footage.
5. Visit Available Properties
Now that you have determined the type of home you are most interested in and location, it is time to view available homes in the area. Drew Eddison Realty will set up a date and time to visit potential homes. During this time you will not feel pressured into making any decisions. We will supply you with the information needed and leave it up to you and your family to make a decision,
6. Making The Offer
Once the buyer have found the perfect home, it is time to make an offer on the property. Drew Eddison Realty will provide comparable homes that have recently sold in the area. This will help determine the right offer. After seller and buyer agree to terms, the due diligence period will begin.
7. Due Diligence Period
This is the period where the buyer and seller have agreed to terms and offer have been accepted, The buyer will be given a due diligence period to inspect the home and gain full loan bank approval. During this time repairs may be negotiated. The bank will also hire an appraiser. The appraiser will determine if the market value is equal to or above purchase price.
8. Close on your New Property
On closing date, closing costs and fees outside of prepaid items will be paid. Buyer will meet with the closing attorney and sign documents securing their new home and gain keys after the deed have been recorded by attorney.