BUYER AWARENESS CHECK OFF LIST For Clients of Christian Bielstein © A HOME FOR THE HEART REALTY Dear Buyer and Friend, this list holds a huge wealth of information and is intended to prepare you for the amazing journey we have ahead of us ... as you seek to aquire your new home. Please check off as you read every bullet and sub-point carefully. Please do not be intimidated by anything here. If there is anything you do not understand, just circle the box and we will discuss it when we meet next. * □ First of all: PLEASE! From this point forward … allow no large/major expenses or cash withdrawals to be put on any of your credit cards until close!!!! This can prevent you from obtaining your home at close, as your credit will be run prior to your underwriter issuing you a check. TIP: Try to limit the running of your credit report as much as possible. Always ask if your credit report is being run! Also, please check your credit cards and verify that your credit limit has not been recently reduced without your knowledge! This event has happened to a large number of people and can seriously affect your credit score! * □ Determine how much home can you reasonably afford. Lenders (Mortgage Companies) will evaluate your finances to help you determine this with 2 qualifying guidelines: Your monthly housing expenses—mortgage payment, property taxes, insurance, etc. These should not total more than 28% of your monthly gross income. Your monthly living expenses and any long-term debts—utilities, car and school loans, child support, health and car insurance, etc. should not total more than 36% * □ If you finance a transaction yourself, you are considered a CASH BUYER. If you did not finance the transaction yourself, you are considered to be under CONVENTIONAL financing. Always seek to speak to your mortgage professional about optional, creative financing ideas. * □ Please indicate to us whether you are: Engaged, Married, Separated or Divorced. If you are married please provide us a copy of your Marriage Certificate. If you are Divorced, please provide a copy of the Divorce Degree. If you are Engaged, please state the date you plan to be married. * □ If you are Separated, please realize the signature of your spouse will be required on all documents on any purchase you make. * □ If you are partnered or unmarried, please specify and decide who will hold Title to the home. And if Title is to be shared, decide whether you would like that to be a Joint Tenancy or a Tenancy in Common situation. Joint Tenancy always overrides a will and automatically passes to the other person on the Title should one of the principles die. A Tenancy in Common situation passes that principle’s share of the home to an individual named in their will. * □ Please indicate whether or not you are currently a home owner or deed holder to another property, and please disclose if there are any serious issues which might pertain to these properties such as foreclosure, flooding, insurance issues, crime, etc. * □ Please make us aware of all bankruptcy issues you might be facing or have faced in the past! * □ Please supply us with a photo copy of your driver’s license and social security card(s). Before we begin searching for and looking at houses... □ # 1: We MUST get your financing in order by finding a mortgage broker. **It is vital to get this part of the transaction in order as soon as you know you are seriously ready to start looking for a home!** If you are to be a CASH buyer, we must secure a letter from your banking institution □ # 2 We MUST have ALL State required documents fully signed and acknowledged by all parties involved! (This will usually take about an hour.) □ #3 Buyer(s) should deliver a good faith check (of good funds) made out to Christian Bielstein (your principal real estate agent) in the amount of $300.00 in order to establish and retain services. **Please be advised that should our home search exceed 6 weeks from start date … an additional good faith check may be necessary in order to accommodate realtor expenses.** □ #4 Buyer(s) should fill out, sign and return the buyer client sheet, specifying the area(s) they are interested searching for their new home. If you have not received this form yet, please send an e-mail requesting the buyer client sheet now at: AHomeForTheHeart@aol.com □ When getting your financing situated, you will want to know the difference between being pre-qualified or pre-approved for a home. Pre-approval always moves you to the front of the line. * □ Please be advised: Many agents and home owners will not allow you to make an appointment to see or make an offer on a home without a valid and readily available pre-approval letter! - So you know: the necessary credit score needed for a conventional loan starts at 620 and it can take a mortgage broker up to 2 weeks to put together the necessary pre-approval letter that will grant us the ability to put a home under contract.
- Anything under 620 to 680 is considered very low and may take many weeks to resolve.
- A credit score of 700 and above creates the fastest turn around and approval. (Also keep in mind that when working under a FHA based loan, the turn around can take as long as 55 days once a contract has been accepted and fully executed.)
* □ Please be advised (unless you are attending an open house) all homes require a prearranged appointment before you tour the home. In some cases, (especially for more expensive/high profile homes) appointments must be made at least 24 hours in advance and be accompanied by the listing/showing agent. The standard is usually 1-2 hours of lead time. * □ When shopping for new home construction: Please, never tour any of the builder’s model homes, pre-built homes or neighborhoods without your agent before hand!! Doing so will end up being quite costly for you. Should you desire to see or preview a new construction home, call us before hand so we can register you BEFORE you walk thru the door. This is very important as this can cause huge contractual issues for you, us and the builder! * □ As you tour any home (should the seller or seller’s agent be near) please be VERY discrete in mentioning ANY of your personal details. This can and will work against you when it comes time to negotiate an offer. It is very exciting when you find the right home, however, please keep your enthusiasm to yourself and wait to express it once you are away from sight and ear shot. - Please keep in mind that there could be hidden cameras and recorders! So do or say nothing you would not want seen or heard.
* □ Always bring your check book with you (when you tour a home) should you desire to secure the home immediately by putting down Option and/or Earnest money. An Option Period usually lasts 5, 7 or 10 days and gives you an oppurtunity to get out of your contract should you change your mind. Usually the option amount put down is $100 per $100,000. You can think of OPTION MONEY as RENT for the use of and hold on you have just put on someone else’s home. You will absolutely want to put down OPTION money in order to get your home inspections done. * □ You will need to be prepared to put at least 1% of Earnest money down (based on the sales price of the home) once you are ready to make an offer. If you want your contract to appear more attractive, a good idea is to offer even more money to be put down after the option period is over. DO NOT WORRY! All Earnest money eventually goes toward the prepayment of your future house, unless you default on the contract. All checks in regard to Earnest money are always made out to the Title company. * □ The more you put down (and have a lower % rate) on the loan ... the better looking your deal will appear to the Seller and their agent. We want strong financing if we can get it! With excellent credit, in this market, under 6% is best. * □ Prior to contacting a lender, please consider any lender recommendations we might make to you. In today’s market place, it is very important for both the lender and the real estate agent to have a strong working relationship with one another so that your future home transaction is timely, accurate and closes successfully. * □ From your lender: You will receive what is known as, "A Truth in Lending Statement" which will summarize the terms of your mortgage loan, including the annual percentage rate. Always ask for this from your mortgage broker/lender if it is not given to you within 3 days. - Understand that most mortgage brokers/lenders work on a "points system" which will depend on the type of loan you require. The more difficult the loan is to achieve, the more points will be required. A single point is typically 1% of the loan amount.
- Realtors earn their funds on a percentage system, as paid by the seller. This usually ranges between 6% to 7% of the final sales price, and this amount is then typically split between the buyer’s agent and the seller’s agent. A buyer should be prepared to make up the difference should their agent’s commission so happen to fall below 3%.
* □ When sending us Home choices you have found from HAR.com, please send us the MLS # (number) via e-mail. In a separate portion of your e-mail, you can write out the street address just to make sure. But please, to make data entry of your searches as easy for us as possible, please just give us the MLS numbers – making sure they are separated by comas ... along with the other properties you think might suit your needs. Example: 5001831, 4565993, 4983030 * □ Please be advised that in the State of Texas you can only put in for ONE contract for a home at a time. You cannot make multiple offers on multiple homes – UNLESS the property you are bidding on is to be used as investment property and not destined to be the actual residence you plan on residing in. (Be aware that your tax value will be higher on an investment property vs. homestead.) * □ Once a contract is executed on a home, we will deliver it to the chosen Title company and your lender will then begin to work in conjunction with that Title company. Together they will arrange to send an appraiser out to evaluate the property. Please be advised that especially on FHA based loans, sometimes the appraiser shows up at the last minute, so you might want to keep up to date with your mortgage broker about this! * □ Be prepared to have a few hundred dollars ($400-$500) available so that you can purchase an appraisal for the home you are putting an offer on. In most cases, the lender will require it in order to justify the loan. If the appraiser approves and validates the value of the property, the lender will finalize and prepare the loan. If the home does not appraise (for the full asking price) the seller will either have to reduce the asking amount to the set appraisal amount … or the buyer will be expected to make up the difference in cash. * □ You want to stay in consistent (weekly) contact with your mortgage broker once your contract has been underwritten, as he or she will be a major player in your home buying transaction until the final close. * □ PMI (Primary Mortgage Insurance) is typically deferred (in all conventional loans) by you putting at least 20% put down toward the homes final sales price. Should you put down less earnest money, you will be expected to pay PMI until 20% to 22% of your mortgage has been paid. * □ Your lender will require you to take out what is known as, “a mortgagee’s policy” which usually is slightly below 1% of the loan amount. * □ Understand: P.I.T.I. = Principle, Interest, Taxes and Insurance. Normally a Title company will offer to take care of these items for you (by receiving your monthly mortgage payment from you directly) … or your lender may insist if you do not put enough cash down toward the sales price (such as 20%), otherwise known as: your paid down principle. * □ Be prepared to bring at least a few thousand dollars (in addition to the final sales price) to your close! Closing costs for a buyer tend to be somewhere around 2% to 3% of final home sales price. For a $160,000 home (where the seller paid for the Survey and Title policy) the amount can average around $3,000 to $3,500. The Title company will give you an exact run down of expected amounts within a few weeks of the transaction. * □ Be advised that should you receive closing assistance or contribution from the seller or anyone else, (in most cases) the law will not allow anyone (other than buyer themselves) to contribute more than 3% toward the close. * □ Check TSARP.org to see if the home you are interested in is in a flood plain. * □ Understand the difference between an offer, a counter offer and rejection. An offer is when you send a contract to a seller to either approve or reject. If they approve the offer, the contract becomes binding. When a seller counters an offer, they just rejected your offer and bought their house back! Now you are off the hook, unless you respond with another offer. Final Acceptance is where the last party signs the contract and an effective date is set in motion, which strictly times and enforces the contract and binds all parties to it. * □ Be aware that monthly or annual HOA (Home Owner Association) fees and sale transfer fees may be involved with your home's purchase. * □ Closing for the home is usually best done in the middle of week. Close no later than Friday morning, as wired money may not be available till Monday. Tip: Try to close at the end of the month ... the less interest and taxes you have to pay. * □ Seller traditionally pays for Title policy. (As Seller tends to pick Title co.) * □ Be aware we will need at least 30 to 45 days before we close, as it can take the Title company and Mortgage broker a fair amount of time to set everything in motion. Plus we want to be prepared to have the sellers do repairs for the home before we actually buy it, just in case we get a troubling inspection report. Tip: Be prepared to pay for an extra month of rent if necessary or ask your manager if they will prorate it for you week to week. - Unless your contract states otherwise, be sure to remember to put in a 60 day written notice with your apartment manager once you know it is time to move out.
* □ Buyer always pays for the inspection of the home they are buying. AC/HEAT, WDIR (Wood Destroying Insect Report), General Inspection & Pool Specialist. A plumber is who checks for gas leaks. * □ Please remember, you will need to provide an Option check of (at least) $150-$300 (MADE OUT TO THE SELLER) to hold about a week's worth of inspections. Once the option period is done you will be fully under contract! Before that, you can "walk away for pay." ; ) * □ Make sure seller has a Survey and Sellers Disclosure for you to review ... also look for a MUD report, if it is called for and the home of your interest sits in a Municipal Utility District. You want to look these documents over carefully. We must sign and return ASAP. We are also looking for community papers to arrive... Note: A new home construction or a home in foreclosure will rarely have a Seller's Disclosure. In the case that there is a Seller’s Disclosure you will always be required to sign, verifying that you have seen it. * □ Agent Note: Install a drop dead date (time demanding offer/deadline to return a fast response from seller) in regard to the contract you initially submit. (This means we will be giving the seller a deadline to get back to us.) * □ Once BOTH parties (Seller and Buyer) sign the contract, it is then considered Executed and legally binding! No marks or changes can be made on a contract after this point. Agent Note: Verify EXECTUTED contract with printed original. * □ You will need to make sure you have home owners insurance in line as soon as contact is Executed! (Be sure to ask your insurance agent about what things you can do to bring greater discounts off the regular price (or Premium), such as an activated burglar alarm or dead-bolt locks.) * □ Flood insurance (check with your insurance agent on amounts for that area) and plan to engage that as soon as the home you are purchasing goes under contract and has passed inspection. * □ You will need to schedule inspections the same day as you execute the contract during OPTION PENDING, so call around and interview inspectors from your own list or one we give you. * □ Agent/Buyer Note: Whenever possible, try to take pictures of all fixtures that are to remain in seller’s house once the home is purchased. Keep watch for these items up to the final walk-thru. Be advised that a "fixture" is anything that is permanently affixed to the wall of the home that has not been excluded in the contract or MLS and transfers upon the sale of the home. * □ On all non-excluded/Bill of Sale items that go with the home (such as fridge or washer/dryer) always write down the brand/serial/model number and have your inspector inspect the items, as they may be tied in with the sales price of the home. * □ Agent Note: Keep watch for Lead Paint Issues in homes built before 1978. (Will have pamphlet made for buyer.) - Also keep watch of the roofing, moisture issues, foundation, evidence of WDI (Wood destroying insects.), hot water heater, landscaping drainage level, etc.
* □ Keep watch for seller’s back taxes, liens, encroachments, build-outs (with no permits or new survey provided.) This info is normally provided in section C of the Title Commitment - due 20 days after the executed contract and sent to you at your current residence or thru us. * □ You will want to schedule a transfer of all utilities (electric, gas, cable and telephone) at least 7 before the actual closing. * □ We will be scheduling something called, “a walk-through” (buyer's final home inspection) either the day before or the day of close. So be prepared to do this. If things are not to your liking, be aware that the home's closing may be delayed. * □ You will get a complete run down of all the charges for the house and the transaction in what is called a HUD-1 statement or otherwise called, “the HUD”. The HUD usually comes a few days or week before the close. Sometimes (at worst case scenario) the HUD can come a day before the close during a Title company's busy periods. The HUD will give you a final amounts due (final Home Sales amount, HOA fees, Doc Fees, Attorney Fees, Title Company Fees, Agent Commissions, Loan Fees, Hazard Insurance, Prepayment of Taxes, Escrow, etc ... and you will (of course) be expected to bring one check containing good funds to the closing. Tip: Be sure to keep your HUD statement after the close as it will be valuable to us (your realtor) when we sell your home. Plus keep in mind you will be able to take any lenders points (disclosed on the HUD) off your income tax. Also be aware that you will be able to take any PMI you have paid off on your taxes as well. * □ Be sure to bring 2 forms of photo I.D. to the close. Such as: a drivers license and a passport. * □ When you bring the final check to the Title company, this will need to be in the form of a Cashiers Check only! A good tip is to have this check made out to you and once you get to the Title company, sign the check over to them. This way if you lose the check before hand, you can get a replacement immediately! * □ At the close you will be given a Deed (signed by the Seller), which transfers ownership over to you. * □ Agent/Buyer Note: Make sure all names and legal property descriptions are spelled correctly on all documents and all amounts are accurate. * □ Repair negotiations require give and take by both parties. As mentioned …as an added precaution, always have a professional inspector evaluate the house for potential problems. You may have overlooked issues during your initial tour. Some repairs the seller may be willing to fix, but at least you will be aware of any problems with your professional inspection report. * □ While your contract contains a closing date, always plan for the possibility of a delay! Unexpected occurrences can happen like lender documents, appraisals or surveys arriving late; or the seller has not yet completed agreed upon repairs. Rescheduling movers, utility connections, school enrollment, etc. can be stressful, but you must have contingency plans. The title company will try to accommodate everyone’s schedule after reviewing docs and preparing the settlement statement. * □ At the close, you will be expected to sign many forms, including a Mortgage/Note, which will spell out all the legal terms of your obligation and agreed upon repayment terms. * □ All Keys tend to come at close or a few hours after ... once your Cashiers Check has been fully verified. In some cases, if the close is done late in the day, Keys might not come until the following day. If close was done on a Friday afternoon, Keys might not come until the following Monday. * □ Keys are never placed in the buyers hand until all documents are signed and full funding occurs. Of course there is so much more involved with this process, but hopefully this list will give you a good idea of the journey we have in front of us. It is our hope to help make everything as easy and painless on you as possible! Thank you for choosing us to work with you. You have honored us greatly! ☺ Your’s in Home and Heart, A Home For The Heart Realty Team Brokered by Trend Setter Realty Please contact us at: AHomeForTheHeart@aol.com All parties involved with the future transaction, please acknowledge that you have read and understood the above list and bring all pages of this form with you at our next meeting. Thank You! Date ___________________________ |