Welcome
Most buyers start the search for a home filled with excitement and a little nervousness. That's understandable, since buying a home is one of the biggest financial decisions you'll make in your lifetime.
I believe home ownership is something you can be proud of, and it's an honor to make the process as pleasant as possible. Whether this is your first home or your tenth, this guide is meant to help you find your way through it.
Let's get started on getting you the home you want.
Randy DeLaMare, REALTOR®
RealtyPath – Fidelity St. George
Reasons to Buy a Home
Quality of life
The place you live affects how you feel every day, and for many buyers ownership is part of a better quality of life.
Building equity
With a fixed-rate loan, part of each payment typically goes toward principal, which builds your ownership stake over time. Home values can also rise, though they can fall too.
Possible tax benefits
Mortgage interest and property taxes may be deductible if you itemize, and homeowners may exclude some gain when they sell a main home. The rules are specific, so check with a tax professional.
Independence
Own your space and make it yours: no landlord, and the freedom to paint, remodel, and plant what you like.
Predictable payments
A fixed-rate loan keeps your principal and interest payment the same for the life of the loan, while rent usually goes up.
You get to work with me
I'll be with you from the first search to the day you get your keys.
5 Buying Tips
1. Get pre-qualified
Before you seriously consider a home, find out how much you can afford. It can feel like the scariest step, and it's perfectly natural to be nervous. I can introduce you to lenders I trust.
2. Always think resale
Most people don't stay in a home forever, so consider how it will sell someday. Homes on busy streets or next to railroads, for example, often sell for less and take longer.
3. Aesthetics can be changed
Flooring, light fixtures, paint, and wallpaper can all be changed. Don't let lime green wallpaper talk you out of a home with great bones.
4. Don't wait too long
Buyers sometimes fall in love with a home, wait a few days because they're nervous, and find it has sold. If you love it, be ready to write an offer.
5. Compare sales
To judge a fair price, look at recent sales of similar homes, called comparable sales. They should be close in size, bedrooms and baths, garage, and lot. I'll put together this comparison for you.
10 Steps to Buying a Home
- Get pre-qualifiedTalk with a lending specialist about what you can afford.
- Shop for your dream homeWe'll search together based on your needs and budget.
- Choose a top twoNarrow your favorites so you can act quickly.
- Place an offer on your favoriteI'll help you write an offer that fits your goals.
- Be ready for a counterofferNegotiation is a normal part of the process.
- Sign the contractOnce both sides sign, you're under contract.
- Note your due diligence deadlineThis is the window to complete inspections and review the property and neighborhood.
- Order inspections and negotiate repairsChoose an inspector, review the report, and decide what to request.
- Move forward or cancelBased on your findings, proceed with the purchase or cancel within the terms of your contract.
- Close and get your keysAfter final loan approval, you sign at the title company and the home is yours.
Want to know what happens right after your offer is accepted? See Offer Accepted, Now What? And for local inspectors, see my Home Inspectors list.
Up-Front Costs
Besides your down payment, plan for these costs when you decide whether you have the cash reserves to get started:
- Earnest money: a deposit that shows you're serious, credited toward your purchase. The amount is negotiable and varies with the property.
- Home inspection: paid by the buyer. Prices vary with the size of the home and add-on tests like radon.
- Appraisal: ordered by your lender, normally paid by the buyer.
- Credit report fee: usually small and collected by the lender.
- Closing costs: fees for the loan, title, and settlement. Your lender will give you a written Loan Estimate showing these for your specific loan.
Ask me for current ranges when you're ready to budget, since prices change.
Pre-Qualification and Pre-Approval
The way to find out how much you can afford and whether you'll qualify is to work with a lending specialist.
Pre-qualification
An early estimate of what a lender may be willing to lend, based on what you tell them about your income, assets, and debts. It's usually quick and often done by phone. This is the first step.
Pre-approval
A more formal process. You complete a loan application, provide documents, and authorize a credit check. A pre-approval carries more weight with sellers, and I recommend having one before you write an offer.
What Can I Afford?
Three things shape what you can afford: your down payment, your ability to qualify for a loan, and your closing costs.
Down payment
Down payment requirements depend on the loan type. Some conventional loans allow as little as 3% down, FHA loans allow 3.5%, and VA and USDA loans can allow no down payment for eligible buyers. With a conventional loan, putting down 20% generally avoids private mortgage insurance.
Your monthly payment
Your payment to the lender typically includes four parts, known as PITI: principal, interest, property taxes, and homeowner's insurance. If you're in an HOA, those dues count too. Lenders look at how your housing payment and your total monthly debts compare with your gross monthly income. The limits depend on the loan type, your credit, and your lender.
The key factors for qualifying are credit, assets, income, and debt.
Estimate your principal and interest
This is only an estimate of principal and interest. It does not include property taxes, insurance, mortgage insurance, or HOA dues. Enter a current rate from your lender. For exact numbers, talk with a lending specialist.
Loan Application Checklist
Most lenders have you apply online, and documents are usually uploaded through a secure link. Here's what you'll typically need:
General
- Unexpired government ID and Social Security number
- Names and addresses for your past 2 years of residence
Income
- Employment history for the past 2 years
- Recent pay stubs and W-2s (past 2 years)
- Signed tax returns with all schedules (past 2 years)
- Proof of other income such as Social Security, pension, child support, or retirement
- Signed leases if you have rental income
Assets
- Bank statements for the past 2 months
- Statements for retirement accounts and CDs
- A gift letter if any funds are a gift
Debts
- Credit card balances and monthly payments
- Installment loans such as car and student loans
- Mortgage information for any property you own or sold in the past 2 years
Other, if it applies
- Divorce decrees and property settlements
- Bankruptcy discharge papers
- Letters of explanation for credit issues
- VA loans: Form DD214 and Certificate of Eligibility
10 Commandments When Applying for a Loan
Last but not least, these rules help keep your loan on track from application to closing.
- Thou shalt not change jobs, become self-employed, or quit your job.
- Thou shalt not buy a car, truck, or van.
- Thou shalt not use credit cards excessively or let accounts fall behind.
- Thou shalt not spend money you've set aside for closing.
- Thou shalt not leave debts or liabilities off your loan application.
- Thou shalt not buy furniture.
- Thou shalt not open new credit or run unnecessary credit inquiries.
- Thou shalt not make large deposits without first checking with your loan officer.
- Thou shalt not change bank accounts.
- Thou shalt not co-sign a loan for anyone.
If you're unsure whether something could affect your loan, ask your loan officer before you do it.
Ready When You Are
I hope you found this guide helpful. When you're ready to start, give me a call.
