The Process of Buying a Home – First Time Home Buyer Tips

Here’s an outline describing the process of buying a home with some first time home buyer tips.

First thing’s first, relax. I know how you feel. I bought 2 homes before I became a real estate agent. I look back and if I could say one thing to myself then, I would say, “Relax and enjoy this. Have fun!” So in the process of buying a home, remember, relaxing and taking things one day at a time is paramount!

Here’s the “nuts and bolts” of the process. Remember, first thing is…R E L A X. Now I will take you through the rest of the typical process. I’m going to just focus on when you make an offer and go from there. However, before any of this, you must do three things. One, determine how much you can afford on a monthly basis (write down your monthly income and write down your expenses, including some for savings), this will give you what you can afford to manage the home (Principal, Interest, Taxes, Insurance, Heat, Electric).

Two, meet with a mortgage professional and get pre-approved for a mortgage. Without this, you are driving blind, because you have no idea which direction you should be going. Without knowing what you’re qualified for, how do you know what price range you should be looking in? The mortgage pre-approval is the foundation of your entire search.

Three, discuss your needs and preferences for the home and neighborhood you’d like to buy. Be realistic. Remember, this is a starter home most likely and over 70% of home buyers move after 7.5 years. Things change, families grow, money is greater, etc, so people “upgrade” or just move to another area.

Okay so we’ve got those basic items out of the way. Now you find the home (easier said than done…make it easier!). You make an offer. Once the offer is accepted, your offer will most likely be contingent on an engineer inspection of the property. To this point, no money is put down and you are not in contract. The purpose of the engineer inspection is to allow you to have a professional look at the home before going into contract.

Normally, any issues that are noticed during the inspection, are discussed up front, before the seller’s attorney sends your attorney a contract of sale. This allows for a smooth transition for the lawyers to execute a contract.

Once the inspection process is completed and any issues are addressed, you will be meeting with your attorney to sign a contract. Just a few notes here are needed.

One, the purpose of an engineer inspection is not to renegotiate the offering price. During your time of viewing the home before the inspection and before the offer, it’s important to pre-inspect the property the best you can and make notes of any little items that may need attention such as a leaky faucet or old water heater that needs replacement. All this should be taken into account before you make your initial offer. The purpose of an engineer inspection is to review electrical, plumbing, heating, and foundation/structural components of the home and not for a running toilet or a sliding glass door that’s hard to close.

Secondly, understand that during this process where your offer has been accepted by the seller and you move to get an inspection and work things out with your contract, that the home could still be sold to another party. You are not in contract until you (the buyer) and the seller(s) have signed a complete contract that is agreeable to both parties. So moving somewhat swiftly is advisable.

In moving on, once you’re ready to sign the contract, your attorney will review items in the contract and protect you legally. Both the seller and you, the buyer, have to be represented equally. Things like certificate of occupancy, survey, title work, mortgage contingencies, etc. will all be worked out in this contract.

As a Licensed Real Estate Salesperson, I only show homes and help people buy and sell them. I do not render legal advise, so it’s important that you hire an attorney you are comfortable with, who can handle your legal representation to your satisfaction.

Once you’re in fully executed contract, where both you and the seller(s) have signed an agreeable contract, you will then move to acquire an appraisal of the home you’re purchasing. This is required by you bank, to establish the value of the home. The appraised value usually always comes in very close to the agreed upon sales price. However, with changes to Home Valuation Code of Conduct (HVCC’s), there has been an increasing number of homes that have received low appraisals (a symptom of the tightening in the industry). Something I am well aware (lucky for my clients).

Once you’ve gotten this completed, it’s very important that you follow up with your lender to assure that you receive your mortgage commitment in a timely fashion. It’s also very important that your attorney do his/her part in ordering the title work and seeing to it that it is acceptable and that there are no issues to be addressed in the last minute. Being prepared and on the ball is the key.

Last minute items that you will need to address will be your money at closing and your home insurance. You should get quotes from companies ahead of time, during the beginning stages of your contract period. This way, in the last two weeks before your closing, you know exactly who to contact to get your proof of insurance.

Things to prepare yourself for include the need for a new survey. Sometimes, a survey on a home can be old or not acceptable due to any number of issues. So at times, you will have to pay for a new survey or an updated one from the company that did the original survey (if they’re still in business). This can be an unexpected cost, but in my opinion, a good expense. I believe every buyer should pay for a brand new survey of their land. But that’s my opinion.

Now in a worst case scenario, your lender may be laxed in underwriting your loan. This is where things can get very uncomfortable and tense. It’s important that you not focus solely on the “best rate”, but rather focus on a the “best bank”. What do I mean by “best bank”, give me a call and we can discuss that further. But I’ll give you a hint, a bank that underwrites its own loans and has comprehensive services (not just basic qualification of your credit and work history) is the bank to seriously consider.

On the day of the closing, you will have hopefully gotten “the numbers” from your attorney and you will get any money you need for closing in a certified check from your personal bank. You will bring that along with your check book and some cash to the closing. The cash is for the title agent at the closing, as it is common to tip them.

It is an exciting experience and with a good team of professionals helping you (real estate agent, attorney, lending institution), the process of buying your first home should be both a little “terrifying” and mostly fun! Good luck!

Home Inspection Tip – Five Home Maintenance Areas That Can Snag the Sale of Your Home

The last thing you want when you’re selling your home is to discover problems that could jeopardize the sale. While a home inspection will reveal the condition of your home, you won’t have to be afraid of issues that come up if you’ve kept your home well maintained. With good home maintenance you can avoid some of the most common imperfections and problems found by home inspectors.

Home maintenance tasks are often put off for various reasons, such as lack of time, lack of money, or simply lack of interest. However, when it comes time to sell your home and you know buyers are looking, it’s time to take care of business.

The little things that nag you may be major issues to a prospective home buyer, and they could cost you the sale. You can eliminate the vast majority of problems and stress by checking on five important areas.

1. Dirty filter and coils in the furnace, air conditioning or heat pump system. Having your heating and cooling system serviced by a professional once a year should take care of this problem. You should also clean or replace filters every one to three months, depending on the requirements of your system. This is important for long life of your unit, efficiency, fuel savings, and the assurance you’ll have proper heating and cooling in your home.

2. Poor Caulking of Ceramic Tile in the Tub and Shower Area. It can cost thousands of dollars to repair or replace a rotted shower wall. You can avoid this by caulking tiled areas for a few dollars. If you can see a crack in the calk or grout, you know it’s large enough for water to get in.

3. Ground Fault Circuit Interrupters (GFCI) not Functioning properly. Those electrical outlets with the “Press” and “Test” buttons are GFCI’s. They’re very important in reducing or preventing the chance of electrocution. Push the “Test” button to see if the GFCI’s are working as they should. If not, they’re inexpensive to replace and should only take about fifteen minutes to install. If you have questions or concerns, call a professional electrician.

4. Wood rot. This is a big one, and it can snag the sale of your home. What inspector wouldn’t love to report that a home is free of wood rot and structural damage? Selling your home can be made simpler and more enjoyable if you are knowledgeable about preventative maintenance. For example, have a good moisture barrier under the crawl space. Keep an eye out for leaks around windows, doors and the roof.

5. Amateur Workmanship. Did you weekend handyman brother-in-law help you remodel the kitchen last year? When amateurs do home projects, often the materials used aren’t right for the intended purpose, or they’re of poor quality, or both. Inspections are seldom performed or permits obtained when such projects are done by amateurs. Unfortunately amateur work can complicate a closing.

Be sure to keep your home in good shape to make things go smoothly for your home inspector and for the selling process as a whole. You’ll be glad you did.

5 Home Inspection Tips For Spring

Ahhhh, the birds are chirping….flowers are starting to bloom…you actually think of putting your parka away (hey, I’m from WI what do you expect?)…but what’s that outside? A missing shingle? A crack in the foundation? Now what are you to do? Here’s some great tips from Dana Wilson of Safeguard Home Inspection, to get your home ready for the warm weather & to help you assess any damage done by Old Man Winter..

1) The effects of ice damming, if you had water penetration and what to look for inside and outside now that the snow has melted. Ice damming is actually the snow compacted against your roof that is melting due to the warmth coming from the house & the cold of the outside air/snow. This melting snow can get underneath the shingles (especially if damaged/missing), the roof paper or into your gutters and then back up. You MUST make sure gutters are sloped properly, clear & clog-free, no missing/broken shingles. If you have ice damming, there will be water marks on ceiling or walls of home, a “waterfall” of ice overflowing from a gutter that is clogged or damp walls even down to the basement!

Dana also stated that you need to be VERY CAREFUL when breaking off the icicles as the weight can pull down a gutter, smash a window (one of Dana’s clients!) or injure yourself!!

2) Spring is a good time to look for water penetration from basement to roof. Water will take the path of lesat resistance and work its way down from the roof to the basement. Dana used the example of an ant farm as an illustration…Check your foundation for water tracks or damp walls. If you have this, you want to make sure your yard is sloped away from the house foundation: 1-3″ sloped AWAY from the home at least 3′. You can use dirt or bark mulch…NO STONE unless you use it OVER dirt that is properly sloped. Proper home ventilation is key here as well-your home needs to breathe! (This will be a topic for an upcoming show). If you have concrete around the foundation of your home, no landscaping, Dana suggested sealing this with caulk to prevent water seepage.

3) Time to start thinking about air conditioning. Make sure the unit is LEVEL-unit should also be on a sturdy platform, such as a concrete/stone platform and not on dirt as this can cause unit to sink. Remove any/all debris that has accumulated around it. Turn unit on & let run for 30 minutes. When running, the unit should sound like any other household electrical appliance-no scraping or “funny” noises, if so, call an expert to check it out. After running for 30 minutes, take a thermometer and check air temp coming out of vent, it should be a nice cool temp (approx 55-60 degrees). Again, if any problems, call for a tune-up. You also need to check the foam insulation around the copper tubing that runs to the outside unit-make sure it’s still intact.

4) Insects that come out in the spring. Bees, carpenter ants, termites & other assorted pests start to “swarm” in spring to find new homes to nest in. They are attracted to damp environments, hence the importance of catching ANY water damage ASAP! If you have an insect problem, deal with immediately & then check for cause (ice damming, leaky roof…)

5) Punch list of things you wish you did before last winter hit so you budget throughout this year and be better prepared for next winter. Check your roof, any tree/branch overhangs, foundation “issues”, grading…all the good stuff to be better prepared for the coming year. Dana also suggested 2 things: ALWAYS get 3 estimates to “keep ’em honest” and for any project (especially the big, expensive ones) consider hiring an inspector to oversee the work to make sure corners aren’t being cut & that work is being done properly. This added cost will help to save you thousands of dollars & time & energy spent dealing with a major problem (i.e. not cleaning out gutters can cause you to have to pull out drywall, insulation & maybe repair your roof for not hiring someone to get up on your roof to clean a gutter and/or fix some shingles…). There are even companies that just do spring & fall maintenance work & take care of this for you. It can well be worth the couple hundred dollars to save your thousands down the road!

No get out there & clean those gutters!