Ready to Buy?
Buying a home or investment property will be one of your most significant investments in life. Not only are you choosing your home or investment, you are, in most instances investing a substantial amount of your money and time. The more prepared you are at the outset, the less overwhelming and chaotic the buying process will be. A professional real estate Broker by your side can be a valuable tool to use during the process.
How the Magic Works! Let's start with an example of a typical purchase. This will give you an idea of how it's done and what to expect. Stepping into the unknown can be scary so, let's chase the "Buying a House Monster" away.
You Need Money. As the Buyer, you will need to get with your bank or a lender such as a loan broker. They will be able to analysis your financial condition to determine whether or not you are eligible for a loan and how much you can borrow. If you can borrow $400,000 that does not mean that is how much you need to spend. I recommend that if you are young and just starting a career then buy something using the maximum you can afford. If that means the amount you can borrow, then go for it and borrow it. If you are an older buyer then be conservative and only borrow and use an amount with a monthly payment you feel comfortable with. Remember, in addition to the Principle and Interest monthly payment you need to include a monthly payment for Real Estate Taxes and Insurance. The infamous PITI payment. (It's a pity you have to pay it)
The Search Begins. Once you know what you want to spend, you need to find the home you want. Look at schools, local towns or cities, crime in your neighborhood and everything else you can think of. Your Broker can help here. Having access to the internet, you can actively search at www.oldtrealty.com. If you find a home you like, let your Broker know right away. They can find additional information about the property that you do not have access to. They can arrange a viewing for you, too. You may find a home on the first day or it may take you 6 months. Patience does pay off.
Remember, DO NOT BUY anything on credit while searching. This can and has wrecked a persons ability to buy. One couple were within a couple of weeks to closing and they decided to buy some new furniture, on credit, for their new home. This purchase changed their allowed loan limit and they could not buy the home. Discouraging for all.
Time to Make the Offer. When you select a home, your Broker will write up the offer. They should go over every document they prepare with you. Be sure you understand them all. If you do not understand something then ASK for an explanation before you sign it. This is very important. Different types of homes will require different documents to make sure everyone understands all of the terms and conditions of the purchase. The offer, when accepted by both you, the Buyer, and the Seller will be directions to your lender and the Title/Escrow company on everything about the purchase.
Negotiate, Negotiate and then Negotiate. Be sure that everything you want at the price you want to pay is in the offer. Many Sellers will counter back with what they want. When they do this you are NOT in contract. If you do not like anything in their counter then, please, counter them back with what you want. Some Sellers become so attached to their home and what they think the value is they will be offended by a low offer or an off the wall requirement. No matter to you. Offer what YOU want. Again, your Broker will help you with this. Once all parties agree to all of the terms and conditions, you will have mutual acceptance and considered to be "in contract."
Onward Toward Closing. Your Broker will take care of setting up Escrow , ordering Title and getting the mutually agreed upon offer to your Lender. Be prepared to work closely with your Broker to make sure all of the terms and conditions of the agreement are met. Inspections are the primary concern. Your Lender may have more information needed from you at this time. The Lender will submit all of your financial information to "Underwriting" for final approval. Underwriting makes sure that the Lender meets all requirements needed to meet the lender, Freddie Mac and Fannie Mae guidelines. These guidelines need to be met so the lender can sell your loan on the secondary market. Your Broker should be able to explain all of this to you.
Closing. Ya Hoo! Once all the conditions of the contract are met and the anticipated closing date is coming near the Escrow Officer will contact you to set up a date to sign documents. There may be other small items that need to be addressed at this time, too. The Lender will be reviewing all of your loan docs and getting ready to send the money they agreed to loan you to Escrow. Once the closing documents are signed by you and the Seller and Escrow has received the money from the bank or lender they will record the Deed with the local County in which the property is located. Once recorded and a recording number is issued then Escrow will release the funds to the Seller and anyone else required to be paid. You will now own the property and can go dance in your new living room and eat off the floors, if you are so inclined.
More Info if You Want To Know More.
The information below should be helpful to you especially if you are first time home buyer or investor. Make an intelligent and informed decision. Remember, if you have any questions about the process, we're only a phone call or email away!
Inspections are designed to help you understand the overall condition of a property, potentially saving you considerable time with the purchase process and hundreds or thousands of dollars in repairs. OLD TOWNE STRONGLY SUGGESTS THAT ALL BUYERS HAVE A 3RD PARTY INSPECTION DONE PRIOR TO PURCHASING A PROPERTY. Some of the inspections which may be required or recommended by your real estate professional are:
Standard Home Inspection
The areas which may be covered include lot and grounds, roofs, exterior surfaces, garage/carport, structure, attic, basement, crawl space, electrical, heating and air conditioning systems, plumbing, fireplace/wood burning devices, and appliance condition. Remember that your inspection rights are clearly stated in the Contract For Sale and vary from jurisdiction to jurisdiction. In some cases homes can be sold "as-is" even though an inspection may take place.
Radon levels are detected and measured. The Environmental Protection Agency (EPA) estimates that between 15,000 - 22,000 deaths per year result from radon exposure, therefore they recommend that all homes be tested for radon. EPA recommends that homes containing 4.0 or more Pico Curies per liter be remedied.
A termite inspector will inspect the property for the presence of wood-destroying insects (WDI) or wood destroying organisms (WDO, i.e. fungus) and conducive conditions that exist. Inspection requirements vary by state.
Lab analysis will determine if asbestos fibers are present and evaluate their condition. If friable or non-friable conditions exist, buyers should seek professional assistance.
Composition Board Siding
The condition of the siding and any areas of high moisture are evaluated during this inspection. Typically, composition board siding is a paper-based product that is manufactured to replicate traditional wood siding at a fraction of the cost. Homeowners recently brought class action lawsuits against some of the larger manufacturers of this type of product. The homeowners claimed that the siding was susceptible to water penetration, which caused premature deterioration and rotting. According to the Environmental Protection Agency, some of the most commonly known manufacturers of composition board siding are Louisiana Pacific (LP), Georgia Pacific (GP), Masonite, and Weyerhaeuser.
Lead Paint Inspection
Painted surfaces of a home can be evaluated to determine the presence of lead paint. Homes that were constructed before 1978 may contain lead-based paint. Lead exposure can be harmful to young children and babies. Children with lead in their bodies can suffer from damage to the brain and nervous system, behavior and learning problems, slowed growth, hearing problems, and headaches.
On-Site Waste System Evaluation
An evaluation performed by an on-site waste management professional is required by many counties at the time of any property conveyance. In addition, a Property Reconveyance Inspection (PCI) is required. It involves accessing the cover of the septic tank to examine the fluid level inside the septic tank. The tank is then pumped to check the condition of the tank and its baffles. The leaching or drain field is probed to check the level of sub-surface liquid waste (effluent). This test alerts the buyer to a wide range of potentially costly septic system repairs or failures. This evaluation provides more reliable information of potential problems than a septic dye test.
Pool/Hot Tub Inspection
Determines the overall condition and operability of a pool and/or hot tub's equipment. Additionally, the condition of the pool deck will be inspected for deterioration and/or other noticeable defects.
Private Well Flow and Potability Inspection
Designed to determine whether or not a private well adequately supplies water to the house. Samples are sent to a lab for potability (drinkability) analysis. Again, well water testing and inspections are usually required by may municipalities prior to conveyance. OLD TOWN REALTY STRONGLY RECOMMENDS A TEST BE DONE PRIOR TO CLOSING.
Stucco Siding Inspection
Although stucco is not a popular exterior treatment to properties in the Pacific Northwest it can be found on a property. There are two types of stucco siding to be aware of: cement-based "traditional" stucco and synthetic stucco. An inspection of the siding's application according to manufacturer's installation specifications is recommended. Synthetic stucco siding is commonly referred to as Exterior Insulated Finish System (EIFS).
Underground Storage Tank (UST) Inspection
The most common methods for testing a UST, typically used to store oil for heating homes, are either the soil test or vacuum test. The soil test consists of random core samples taken around the location of the tank and submitting them for lab analysis. This will determine if any product has contaminated the soil at that particular area and to what extent. The vacuum test consists of having a technician seal off and place the tank under a vacuum. Readings are periodically taken to determine whether or not the tank is losing its vacuum. With this test immediate results are available for the buyers.
Obtaining the proper inspections for a home prior to purchase is one of the best ways to make a smart purchase decision and protect your investment.
As you start shopping for a home loan, your first question of each lender will probably be "What's your interest rate? How much are you charging?" Interest rates are usually expressed as an annual percentage of the amount borrowed. If you borrowed $120,000 at 10% interest, you'd owe interest of $12,000 for the first year. With most mortgage plans you'd pay it at the rate of $1,000 a month. You would also send in something each month to reduce the principal debt you owe - and the next month you'd owe a bit less interest.
When your grandparents bought their home (putting at least half the purchase price down, by the way), their interest rate was probably around 4 or 5%. Rates stayed the same for years at a time. Then in the years following World War II, things became more turbulent. As economic changes speeded up, rates began to change several times a year. By the l980s, lenders were setting new rates on mortgage loans as often as once a week - and they still do today. When inflation hit a high in the '80s, some mortgage loans carried interest rates as high as 17% - and those who absolutely needed to buy, paid that much.
Rates dropped gradually through the 1990s, and by 2000 had reached their lowest rates in decades. Continuing into the millennium, home buyers appear to have the most favorable conditions for mortgage borrowing since their grandparents' days - and without 50% down payments either.