Step 1 – Getting Started
Buyer Step 1 – Getting Started
Here is what you must have to get started looking for a home;
• A job, or income of some kind
• A Pre-Qualification Letter of approval from a bank or mortgage company - or provable cash on hand to pay cash for the property
• A credit score of at least 640 (check Credit Karma if you don't know)
• Cash for closing costs and down payment (unless you are using a zero down program)
• Earnest Money - at least $1000 or 1% of the purchase price. Earnest money is cash that you will deposit with the brokerage that writes the offer. They will put it in their trust account and it will be used at closing to offset either your down payment or closing costs, or will be refunded to you if you have 0 down, or closing costs paid by the seller
Click here to view a copy of the loan application.
It’s very important to get pre-qualified with a lender to make sure you are looking in the right price range for your new home. It’s quite disappointing to be sure that you can afford $400,000 and find out you only qualify for $140,000! We work with several lenders and have good relationships with our local banks, mortgage companies and several “on-line” lenders. Click here for a list of lenders who have a proven track record with us, but do this prequalification process first….it will help. (Link to Preferred Lender List)
Getting pre-qualified is easier than you think. In fact, you don’t even have to show up at the bank or mortgage company anymore. On Line applications are really easy. Most of the local lenders have on line applications. Check out these links below for some of my preferred lenders.
• Monica Barton NMLS#685973 - Canopy Mortgage, Wasilla, AK
• Ryan Berry NMLS#203379 - Amped Mortgage, Wasilla, AK
Many people prefer the one on one advantages of meeting with your loan officer, so making an appointment with any of our preferred lenders is always encouraged.
They will need pay stubs, last 2 years’ taxes and probably some bank statements. See? Not difficult at all! All things that are at your fingertips!
Your lender will pull your credit and you must have a credit score of 640 and above to qualify. There are some income based programs that will allow 620, but you would need to discuss this with the lender. A good place to “precheck” your credit score is CreditKarma it’s free and you can keep track of how your score changes. This is a little different than a mortgage credit score, but you can get an idea of where you’re at. This site also gives you ideas on how to increase your score – sometimes, it’s very simple.
Key Takeaways:
• Choose a lender
• Apply for a loan
• Get a preapproval letter or 90% letter
Step 2 - Preparing the home for sale
Buyer Step 2 – Setting out to find a home
Once you have pre-qualified, we will need to start looking for homes in your price range. Let’s get together at this point and talk. We can make an appointment or just email back and forth for a while. I understand that kids, dogs, parents everything can get in the way of an appointment, but we need to narrow down exactly what you are looking for. Here are some web sites that I have people use when looking for a home:
The last one is my preferred because it has the most timely and accurate information. The other sites are slow to update and sometimes, you may find what you believe is your perfect home, only to find out it is unavailable because it sold 2 days ago, or sometimes even 6 months ago!
Dos and Don’ts:
• Do! Stay within your price range - go no more than &5000 above. Any more than that and you're just setting yourself up for disappointment.
• Do! Set the app or web site to notify you when a new property comes on the market in your price range.
• Don't! Make any major purchases on credit until after you're finished with the home buying process i.e. recording on your home.
• Don't! Deplete you bank accounts. If you have cash in savings, keep it there! MONEY TALKS!
Key Takeaways:
• Use only up to date websites
• Pay attention to the Do’s and Don’ts
Step 3 – Setting up appointment
Buyer Step 3 – Setting up appointment
Once the search is complete, and the list of homes is ready to see, we suggest driving by the property before appointments are made because even though the house looks great, the neighborhood may not be where you want to live. There may be homes near-by that you don’t want to be next to and it may not have a park close enough for your needs. Also, go at different times of the day. Noon time in the neighborhood might be quiet when people are at work or school, but evening time may be a plethora of cars, and general busy-ness that is more that you bargained for.
When you have a list of homes you want to see, we will contact all the sellers or their agents, and make appointments. Most homes are going to be lived in – so we must be respectful to the seller and be on time, with as little disruption as possible. So wear shoes that slip on and off easily. If you bring kids with you, make sure they understand that they cannot explore the home on their own and of course, no pets while looking at homes.
You may have 10 homes on your list, but my suggestion is to only look at 5 or less at a time. They all start to “mush together” if you look at more than that in one day.
We will bring you all the particulars of each home and a form where you can rate the home right after we view it. Click on the House Hunting Checklist to view and download it. This way we have a clear picture of your thoughts when we get back to the office and look everything over. This also helps days later when you can’t remember “now, which one had the red carpeting?”
I like to map out our route so it’s most efficient. We can ride together, or you can follow. Sometimes, when we have car seats etc., it may be better if I ride with you! But if you and kids decide to ride with me…… “I have kid movies!”
Key Takeaways:
• Drive by the property
• We will plan a route
• Fill out a house hunting checklist
Step 4 - Narrowing your search
Buyer Step 4 - Narrowing your search
Once you have found the home or maybe 2 or three homes, it’s time to narrow the search. We provide a New Home Checklist to help organize your thoughts. Click on the Narrowing your search for the list. This will be your “must haves” and you can then go thru each house and see which one really meets those needs. I have discovered over the years, that sometimes, people have purchased homes that were nowhere near what they wanted when we first talked about their hopes for a home. Sometimes, there is just a feeling or a color or a nostalgia that comes over you when you walk through the home! It’s hard to explain, but I have walked into homes with people only to have us both say at the same time “THIS IS IT!”
But sometimes, that doesn’t happen and we have to be logical and practical about making offers. This is what you have me for! I can help keep you grounded while we are looking. I can help you understand the potential pit falls and issues that you might not see. Communication is key here; make sure you tell me all the reasons why you like or don’t like the house.
Key Takeaways:
- Use the New Home Checklist
- Know your "must haves"
Step 5 - Making the offer
Buyer Step 5 - Making the offer
Okay – we have decided upon a home and we are ready to write an offer. Remember the things we need:
• A pre-qualification letter
• The ability to write a check for earnest money
• No change in your job status
Click here for a link to a “mock” contract so you can see all the ins and outs of this document. I will go over it with you carefully, but this will get you a preview.
We can either meet at my office and go over the contract together, or we can do it all electronically. I can email you the contract to review, and we are able to have you sign documents “on line” without the need for printing and scanning.
Step 6 - Sellers review the contract
Step 6 - Sellers review the contract
The seller has now received the contract and usually has about 24 hours to review the contract and to make a decision. There are a few things that can happen though:
- Another offer could come in. If this happens, then all parties are notified that we are in competing offers and we must submit our highest and best offer. Hey, it happens!
- Sellers could be out of state, and sometimes, this makes it hard to get an answer back right away. It may take longer than 24 hours.
- There are other issues too, it might be an estate or probate or a divorce or a foreclosure– and other kids of legal matters. Patience, patience!
In a typical transaction, the seller only has three ways to respond:
- Accept the offer
- Counter the offer
- Reject the offer
That’s it – just three ways. If it’s accepted then yippee! Let’s move to the next step. If it’s countered, then we must weigh out the counter offer and see if it still meets your needs. If it’s rejected, we can try again – but something in the offer must have made them upset to where they don’t want to counter offer.
However, when the response comes back, we will have a set amount of time to respond.
Step 7 - Counter offers
Step 7 - Counter offers
So, counter offers are just a way of negotiating. Sometimes, they sound kind of demanding or even disrespectful, but it’s just the way contracts are written, so don’t get offended when you read it. We just take each issue and deal with it. Mostly, it will be price, closing cost, closing dates – things like that. Usually there are ways to make things work out and my team members usually know the other agent involved. That is helpful, as we have probably worked together before and this relationship can be very helpful to your offer. Be patient, we will do our best to work it all out, and you will be making all the final decisions.
Step 8 - Agreed offer & setting up the home inspection
Step 8 - Agreed offer & setting up the home inspection
So, you think the negotiations are done? Nope! Just the first part. The second part will come once the home inspection is done. There may be some repairs that you would like the seller to do. The inspection is an important part of your purchase. Your home inspector will walk thru the home with you testing outlets, looking through the crawl space, checking the roof and attic and many, many other aspects of your purchase. It’s important that you be there as they will be showing you how to maintain your new home, how to change the filters in the furnace, what to watch for around caulked areas – they are very informative! And they should be, these inspections costs from about $400 on up depending on the size of your new home.
Click here for a list of home inspectors in our area. Most have web sites and you can visit those sites and see who you might like to use. We will get the appointment all set up for you at a time that works best for all.
Here is what you should bring to your home inspection:
- Easy to slip on and off shoes
- A flashlight
- A note pad
- A camera or your cell phone camera
- A check for the inspectors' services (unless you have paid online)
Here is what you should NOT bring to your home inspection:
- Small children
- A large group of people
- A hammer (just kidding)
I am not present during home inspections, because this is between you and the home inspector you hire. It’s important that I don’t distract you, and that you are able to listen and share your concerns with the home inspector.
Once the inspection is over, the inspector will email me a copy of the report. Then you and I can discuss if there is anything that you want the sellers to repair or replace. This is done by amendment (a document that changes the contract) and all parties must sign. Click Here to view a sample repair amendment. We also share a copy of the home inspection. This is because the State of Alaska requires that any knowledge about the physical condition of the property must be disclosed to any potential buyers. Now, there may already be a home inspection. IF so, this could save you some cold hard cash! We would request a copy from the listing agent and review the document and then go thru the same steps as above. The only thing that you would have missed out on would be that you didn’t get the experience of going through the home with the inspector.
You also have the right to have your own inspector, at your cost of course.
Step 9 - How to read your Inspection Report
Buyer Step 9 - How to read your inspection report
Click Here to view a copy of a typical home inspection report. I have removed the true address and names from this document, so it’s no one you know!
This document can be very long, as these inspectors go over everything. The Summary sheet is where all the potential problems are listed out on just a few sheets. This is what you and I will use to write our amendment. The remainder of the document, the pictures, and more detailed comments, we use as back up.
The really nice thing about this is that most of the home inspectors are very practical people. When a seller or a contractor calls them to clarify what the inspector is asking for, those inspectors help them through it and explain what is needing to be repaired or replaced. It’s very nice to have such helpful people in the industry.
Step 10 - Negotiating Repairs
Buyer Step 10 - Negotiating Repairs
Repairs are where we do the second round of negotiations. As I am representing you, the buyer, I want to be able to get as much of this done for you as possible, without “souring” the deal with the seller. So, logic and reason are our friends!
Health and Safety issues are really the only things that are usually required to be fixed by the appraiser and/or lender, and this isn’t necessarily the sellers obligation. The seller can say: “I won’t pay for any repairs, but you have permission to have these repairs done before closing if they are called for by the appraiser”. Then you need to decide if you still want to purchase the house. You and I will discuss and make a decision based on all the facts. Remember you are not alone in this, you will be given ideas, advice and strategies to help you make a good solid decision.
Step 11 - In Contract
Buyer Step 11 - In contract
We are now fully in contract and there will be many things that the lender asks you for during this process. It seems like the stream of things needed will never end, but it will. It also seems like they, (meaning the mortgage company or bank) keeps asking for the dumbest things! But they really do have a method to their madness. If you need help with this part, let me know and I’ll see what I can do.
This is also the time, where we wait for that bank beloved item – the appraisal. In this market, the seller usually pays for the appraisal, but all of this is negotiable and would have been negotiated back during the writing of the contract. Sometimes, and I have done this myself, the earnest money is released for the seller to order the appraisal and reimbursed at closing.
Appraisals are good information, but they are for the purpose of showing value for the bank. So the bank knows that the value is there to lend on the property.
During this time, the sellers will also be working on any repairs, having the furnace cleaned, inspected etc. and of course, packing to move out.
It’s important to remember that signing closing documents will happen on one day, and official recording the next – you don’t get the keys to your home until RECORDING! So, if you are signing on a Friday, it’s not going to record until Monday. This can be a bone of contention between buyers and sellers, so make sure that if you want to move in over the weekend, you need to close on a Thursday and record on a Friday.
Step 12 - Approaching closing day
Buyer Step 12 - Approaching Closing Day
This is a very exciting time! Closing is fast approaching, and you will have been in touch with your lender. They will have explained that the “CD” will be sent out to you shortly. The CD stands for Certificate of Disclosure and it’s a complete summary of your loan. Once you receive this, you must sign that you received it. Usually the mortgage company sends it out via email. And you will sign for it via email. If you and your spouse are on the loan together, you must each sign for it. Click here for an idea off what the CD looks like. This CD lets us know when we can estimate closing, because buyers have a mandatory 3-day review period that they cannot waive. After this 3-day period closing can be scheduled.
As you approach your closing day there are things that you will need:
What title company are you closing with? We will send you an email with all the information for the title company. Click here to see the addresses of all the title companies in the area.
What is your appointment time? I will be calling you and setting up a closing time that works for both you and me. I will meet you at the title company for your closing appointment.
How much money (if any) do I need to bring to closing? I will be calling or emailing you and letting you know the exact amount you need to bring to closing. These funds can be in two forms:
A Cashier’s Check; MUST be DRAWN ON A LOCAL BANK. This cannot be a check that you bring from another state, must be local.
-OR-
Wire Transfer; but it’s important to know that new rules say that you must be present to wire transfer. So if you are here in Alaska and your bank is in Texas, you won’t be able to wire over the phone.
So, let’s talk about 10 days before closing and make sure we know where your funds for closing are at so we don’t run into a problem right before closing.
Utilities; Click here to see a list of utility companies for the local area. Most important, especially in winter, is the Gas and Electric. In the Valley, you must have your electrical meter number to sign up for electrical service. Usually I will have that filled in on the Utilities form, and will send it to you prior to closing.
Step 13 - The closing appointment
Buyer Step 13 - The closing appointment
Almost there! For your closing appointment, you will need to bring picture ID with you; a valid driver’s license, passport, military ID, or other government issued picture ID will work. Finalizing the process includes reviewing all closing documents and ensuring both parties have copies. We will be at closing with you to answer any questions that may come up. All parties on the contract must be present at closing unless you have a Power of Attorney (POA).
Step 14 – Recording
Buyer Step 14 - Recording
Okay, this is the day we have been waiting for! You now own a new home. Congratulations! I will call you as soon as the property records and let you know that it’s yours and you can pick up your keys either with me, or the title company. Sometimes, I will give you the key from the lock box and the other keys and garage door openers, will be inside the home – waiting for you! You will be given copies of all the paperwork you signed at closing, put them in a safe place, you will need them for your taxes. There are many benefit to homeownership – so ENJOY!
Step 15 - Keys & Recording
Step 15 - Keys & Recording
Key things to note:
- Leave all keys in the house or with the title company
- Leave all garage door openers in the home
- Leave any keys to pad locks, sheds etc in the home
- Leave any mail keys, or let us know how you receive mail
As the seller, you have the keys until recording. The best thing to do is to leave the keys with the title company when you go to closing. Your friendly and courteous closing agent will keep the keys until it records, then give them to the receptionist for the new buyers to stop by and pick them up. Any extra keys, shed keys, garage door openers, etc. can be left in the house on the kitchen counter. Many new home buyers change their locks, however it’s still important that you gather up all the keys and leave them with the new owners, and they will make that decision.
Recording occurs the next business day after you sign, and that is when your closing proceeds are made available to you. You can now close this chapter of your life and move onto the next!