All About Real Estate…. Buying Your Home!
Part 1
This is one of my favorite subjects and one I’ve been looking forward to writing about for some time. There’s a great deal that goes into buying a home and so I have split it up into sections so you won’t get so overwhelmed. *Please Note*
if you do start to feel overwhelmed, please stop reading and pick up the phone
to call, text, or email me directly. The most important thing to me in
the world is helping you have the absolute best experience possible with your
real estate transactions. Why? Here’s a little bit of my “Big Why,” before we start.
Why I got into the business:
I left the safety and relative security of a very lucrative and successful sales career with a very prominent cable company to start all over as an independent contractor in real estate. People told me I was nuts, the HR lady even told me, to my face, that she thought I was making a bad business decision… silly woman. But I got into real estate because I wanted my life’s work to matter. I’m not
saying cable salesman’s lives don’t matter, but I wanted to do something that
yielded high earnings for my soul, not just my bank account. I felt I could
do that with real estate. To be there for my clients and not just during
the transaction, but long after as their trusted adviser and real estate
resource, really appealed to me. This blog helps me accomplish that goal
as well! Plus, I fell in love with this industry, I love the laws, the
rules, and even the paperwork! Gross! I know! But it gets me
up in the morning, and keeps me going well into the night most days because my
heart is in this. SO, that’s why, when I say I want you to have the best
possible experience with real estate, you can bet I mean it. Whether you
chose to go with me as your agent or find someone else you jive with that’s a
competent defender of your health, wealth, and happiness, I want you to feel
confident in the decisions you’re making. Ok, off my soap box, and on
with the post!
What you need to know first:
Before you start putting furniture on your Amazon wishlist for that house you’ve been drooling over on Zillow, there are some things we need to get clear on first. Let’s begin with the importance of the right people! No man is an island. Now, I know you are a very smart, capable person, and there are a lot of great tools on the internet to help you make educated decisions, BUT, you still need great people
in your corner to help you navigate the potential pitfalls of home buying.
Yes, I’m talking about a Realtor, but I am also talking about a good
lender, inspector, title company, home warranty company, and even good
contractors for later on down the road. A good Realtor can usually help
with all those connections.
“Why do I need a Realtor? My (cousin/uncle/friend/co-worker) just called the lady on the sign.”
I touched on the Laws of Agency in the previous blog post about Zillow & Trulia, but it’s so very important, I’ll say it again:
Just so you are aware, in the state of Texas, when I took classes
originally, agents and brokers were required to take a 30 hour course involving
the Laws of Agency prior to being able to take the licensing exam. That’s
a lot of hours but, I’m going to break this down for you really quickly, the
person with the sign in the yard, WORKS FOR THE SELLER. They may like
you, you may like them, but if they are the one you are calling, their only
obligation is to the SELLER. Anything you tell them, will go right back
to the seller, and they are legally obligated to keep their mouths shut about
the seller unless the seller allows them, in writing, to tell you something.
(Disclaimer, I am not a lawyer and cannot give legal advice.) Now, if you
call the number on an agent’s sign, and decide the house they have listed is
not for you, they can then work with you and REPRESENT you on any other
transaction so long as it’s not a house they have listed. They can then
become your BUYER’S AGENT.
originally, agents and brokers were required to take a 30 hour course involving
the Laws of Agency prior to being able to take the licensing exam. That’s
a lot of hours but, I’m going to break this down for you really quickly, the
person with the sign in the yard, WORKS FOR THE SELLER. They may like
you, you may like them, but if they are the one you are calling, their only
obligation is to the SELLER. Anything you tell them, will go right back
to the seller, and they are legally obligated to keep their mouths shut about
the seller unless the seller allows them, in writing, to tell you something.
(Disclaimer, I am not a lawyer and cannot give legal advice.) Now, if you
call the number on an agent’s sign, and decide the house they have listed is
not for you, they can then work with you and REPRESENT you on any other
transaction so long as it’s not a house they have listed. They can then
become your BUYER’S AGENT.
“What’s a buyer’s agent?”
A buyer’s agent is a real estate agent that works for the buyer exclusively in a transaction. They put that buyer’s best interest above everything else. They are your advocate, adviser, confidant, and keeper of secrets. They will point out
everything they can that will either help or hurt you and your negotiation
position. They will pull information on previously sold homes in the area
to help you decide if the price is right and advise on your next steps.
AND, they are often free to you as they will usually have a commission
split set up with the listing agent. NOT ALWAYS, but often.
In short, if you’re buying, you want a buyer’s agent.
“Ok, I get it, Emerald, I need a buyer’s agent to represent me! But
what else do I need?”
what else do I need?”
If you’ve read any of the other blogs, especially the one about Pre-Approvals, Pre-Qualifications and Proof of Funds letters, then you’re probably already ahead of the game here and are accurately predicting what I’m about to say. If you haven’t, don’t worry! You can always go back and read it by clicking here if
you want a deeper explanation of what I’m about to say.
The first question I will ask you when you call me and tell me you’re ready to
buy a house is “Do you have a lender you’re working with yet, or are you
paying cash?” While cash buyers are a lot more common than you
think, a fair amount of my clients and a great deal of my first time buyers are
going to go the financing route. If you don’t have a lender yet, I have
about 5 or so regulars that I work with and once we discuss some of the
specifics around your financial situation and timeline, I’ll know which ones to
recommend.
buy a house is “Do you have a lender you’re working with yet, or are you
paying cash?” While cash buyers are a lot more common than you
think, a fair amount of my clients and a great deal of my first time buyers are
going to go the financing route. If you don’t have a lender yet, I have
about 5 or so regulars that I work with and once we discuss some of the
specifics around your financial situation and timeline, I’ll know which ones to
recommend.
LOANS! MONEY! GRANTS! PROGRAMS!
Loans:
I’ll let you in on a funny little truth that I tell all my
clients. Qualifying for a home loan is the most invasive procedure you’re
likely to endure outside of applying for high level government clearances or
having extreme medical procedures. You think I ask a lot of questions?
You ain’t seen nothin’ yet! Lenders want to, and need to, know just about
EVERYTHING there is to know about you (well, the you on paper, anyway).
They will want your W2’s or 1099’s from the last 2 to 5 years, your
credit score, your employment records with verifications from the last 2 to 5
years, and bank statements from the last 6 months in some cases, just to name a
few! If you get a check or cash deposit in your bank account that’s not from
your regular sources (employers, child support, or alimony, for example) over
$200 while you are trying to close on the house, you will likely have to write
a letter to explain this new influx of money. Plus, they will run all
kinds of checks and verifications on the information you give them, even up to
hours before closing! I’m exhausted just thinking about it. BUT!
There’s a good reason! Think about it, you are asking for what will
likely be the largest loan you will ever seek… Would you hand a six or
seven-figure check to someone without checking them out first? The
correct answer should be, NO. Not only that, the banks, and financial
institutions that make these loans are highly scrutinized by the government.
Because of this, everything has to be done a certain way or they could
face hefty fines, loss of licenses, or even jail time. There are great
reasons for these regulations and verifications, not the least of
which you might find referenced in movies like “The Big Short,”
or a fabulous documentary on Netflix called “Boom, Bust, Boom.”
I got off track…I watch a lot of TV in my down time… The point here
is that you will need to talk to a lender and find out what documents you will
need to gather so they can tell you how much money you will be allowed to
borrow. Don’t have a lender? Don’t worry, I know 5 good ones right
off the top of my head, and I’ll be happy to get you in touch with the right
ones for you.*Small Side Note* A loan that’s right for your buddy, may not be right for you, and so it is perfectly acceptable, wise even, to shop for a mortgage.
I wouldn’t put in loan applications with more than 3 lenders in a 30day
period because those apps register as hard inquiries on your credit and could
hurt more than help, but, I say, shop none the less! Interest rate isn’t
everything, either! A low long term interest rate may come with higher
upfront costs that you can’t afford right now, so knowing what you can afford
today is just as important as what that will cost tomorrow.
clients. Qualifying for a home loan is the most invasive procedure you’re
likely to endure outside of applying for high level government clearances or
having extreme medical procedures. You think I ask a lot of questions?
You ain’t seen nothin’ yet! Lenders want to, and need to, know just about
EVERYTHING there is to know about you (well, the you on paper, anyway).
They will want your W2’s or 1099’s from the last 2 to 5 years, your
credit score, your employment records with verifications from the last 2 to 5
years, and bank statements from the last 6 months in some cases, just to name a
few! If you get a check or cash deposit in your bank account that’s not from
your regular sources (employers, child support, or alimony, for example) over
$200 while you are trying to close on the house, you will likely have to write
a letter to explain this new influx of money. Plus, they will run all
kinds of checks and verifications on the information you give them, even up to
hours before closing! I’m exhausted just thinking about it. BUT!
There’s a good reason! Think about it, you are asking for what will
likely be the largest loan you will ever seek… Would you hand a six or
seven-figure check to someone without checking them out first? The
correct answer should be, NO. Not only that, the banks, and financial
institutions that make these loans are highly scrutinized by the government.
Because of this, everything has to be done a certain way or they could
face hefty fines, loss of licenses, or even jail time. There are great
reasons for these regulations and verifications, not the least of
which you might find referenced in movies like “The Big Short,”
or a fabulous documentary on Netflix called “Boom, Bust, Boom.”
I got off track…I watch a lot of TV in my down time… The point here
is that you will need to talk to a lender and find out what documents you will
need to gather so they can tell you how much money you will be allowed to
borrow. Don’t have a lender? Don’t worry, I know 5 good ones right
off the top of my head, and I’ll be happy to get you in touch with the right
ones for you.*Small Side Note* A loan that’s right for your buddy, may not be right for you, and so it is perfectly acceptable, wise even, to shop for a mortgage.
I wouldn’t put in loan applications with more than 3 lenders in a 30day
period because those apps register as hard inquiries on your credit and could
hurt more than help, but, I say, shop none the less! Interest rate isn’t
everything, either! A low long term interest rate may come with higher
upfront costs that you can’t afford right now, so knowing what you can afford
today is just as important as what that will cost tomorrow.
Grants, & Assistance Programs:
A lot of people ask me about down payment assistance programs, and
many think that because they are first time home buyers, they automatically
qualify. Not true. “But, my buddy said it’s a thing, and he’s
never lied to me!” I don’t think your buddy believes he’s deceiving
you in any way, you have wonderful friends! He’s close, but he’s missing
some key details. Down payment assistance programs can be advertised in
all kinds of ways and they vary from state to state and sometimes even zip code
to zip code! The main ones I work with here in DFW have some very
specific criteria to qualify and even if you qualify, it may be wiser for you
to pass them by! “How can passing up free money be a good idea?!”
Because it’s not free money. Yes, it’s often a grant, and no, it
doesn’t have to be repaid, but it will still cost you. Because grants and
assistance programs change so frequently, I’ll explain in generalities. For
example, you apply for a down payment assistance program and you meet all the
pre-requisite qualifications. You make less than $55,000 per year, have
at least a 660 credit score, and the area you are looking in qualifies for the
program too! All seems right with the world, but, here’s what I want you
to know. Often, the interest rates, loan fees, and even appraisal fees
with these type of programs can be much higher than loans without these
programs attached. This could cost you thousands upfront and tens of
thousands over the life of the loan. Then, what’s a buyer short on excess
cash to do? Weigh your options, be smart, and even this can work out for
you. If you can, my advice is to wait until you have enough saved up for
your down payment, closing costs, and pre-paids so you can avoid the extra
fees. If you can’t, and you need to buy a house right now, qualify for
one of these programs, with thought in mind that you will likely refinance
later down the road. Re-financing costs money too but, if it’s part of
your long term plan, it might be a good way to get into your home today without
having to pay way more for it in the long run.
many think that because they are first time home buyers, they automatically
qualify. Not true. “But, my buddy said it’s a thing, and he’s
never lied to me!” I don’t think your buddy believes he’s deceiving
you in any way, you have wonderful friends! He’s close, but he’s missing
some key details. Down payment assistance programs can be advertised in
all kinds of ways and they vary from state to state and sometimes even zip code
to zip code! The main ones I work with here in DFW have some very
specific criteria to qualify and even if you qualify, it may be wiser for you
to pass them by! “How can passing up free money be a good idea?!”
Because it’s not free money. Yes, it’s often a grant, and no, it
doesn’t have to be repaid, but it will still cost you. Because grants and
assistance programs change so frequently, I’ll explain in generalities. For
example, you apply for a down payment assistance program and you meet all the
pre-requisite qualifications. You make less than $55,000 per year, have
at least a 660 credit score, and the area you are looking in qualifies for the
program too! All seems right with the world, but, here’s what I want you
to know. Often, the interest rates, loan fees, and even appraisal fees
with these type of programs can be much higher than loans without these
programs attached. This could cost you thousands upfront and tens of
thousands over the life of the loan. Then, what’s a buyer short on excess
cash to do? Weigh your options, be smart, and even this can work out for
you. If you can, my advice is to wait until you have enough saved up for
your down payment, closing costs, and pre-paids so you can avoid the extra
fees. If you can’t, and you need to buy a house right now, qualify for
one of these programs, with thought in mind that you will likely refinance
later down the road. Re-financing costs money too but, if it’s part of
your long term plan, it might be a good way to get into your home today without
having to pay way more for it in the long run.
Whew! That’s a lot to digest up front and we have just barely scratched the surface! Let’s pause here for now and pick up in the next installment.
The Take Away:
There’s a lot to know when you are getting ready to make a move, but the good news is, you don’t have to know it all, or any of it, before you start. I LOVE what I do and I LOVE talking about real estate, so if you have questions, please ask.
Questions give me purpose, and they give me more blog topics too!
Happy Hunting!
Emerald Scott, Realtor,
EXP Realty LLC, Dallas/Fort Worth, TX
EXP Realty LLC, Dallas/Fort Worth, TX
Emerald@emeraldsellshomes.com* 214-533-8191
** I am not an attorney and cannot give
legal advice. **
legal advice. **
(But I know some good ones if you want
recommendations)
recommendations)