The Buying Process
Qualifying For The Mortgage
When we’re ready to look in earnest it’s a good idea to have a pre-approval letter from the lender in hand. This strengthens your position when putting in an offer, therefore it’s important to start this process first. A second benefit is that you will know beforehand exactly what you are qualified to buy, what issues might need to be addressed, items that might be needed when applying for the loan, etc.
When you’re ready we can put you in the hands of a local mortgage broker with access to many programs, which can counsel and guide you as to the most advantageous and appropriate one for your needs. Also, you’ll learn what documentation will be needed for your particular loan.
The mortgage broker will give you a good faith estimate of the closing costs involved with the financing. There are recurring costs that you pay and are included in the monthly payment, such as homeowner’s insurance and property taxes (the monthly payment consists of principal, interest, taxes and insurance and is referred to as PITI).
The one-time closing costs are the origination fee, usually one percent of the loan amount and discount points (we do not recommend that you pay this). The appraisal fee, credit report, and other lender fees, such as document preparation, underwriting fee, and other one-time closing fees.
Plan On Our First Face To Face Visit
I’d like to meet with you at a local restaurant to give you an overview of what’s out here in the Austin area - This is an important visit for several reasons. It helps you to get familiar with the area, personality, amenities, etc. and where things are located in relation to your work.
I will go over the role of a Buyer’s Agent, and the representation in detail.
Why do I need a Buyer’s Agent? Click here.
Then we’ll talk about exactly the kind of home you are looking for and where we’ll be likely to find it. We will email you all the available homes that meet your criteria and we can then refine the search further as to get it as close as possible to your wants and needs.
After we’ve refined the search, the appointments are made! Very easy to do. 90% of the homes have lockboxes, and sellers are very accommodating.
We will also be looking at new homes (if you’d like) since builders cooperate with realtors (we sell 70% of their homes). It’s important, though, that we are with the you at the initial visit.
We will also go over what it takes to present an offer, such as having a pre-qualification letter to accompany it, what our offer consists of, and the other “steps to your Dream Home”. Even if you are a seasoned purchaser, having bought or sold multiple properties in the past, it is important that you have representation. The market can change rapidly and what was true last year or even six months ago may not be true today.
Usually, you will know (and so will we) what you like and don’t like after just 3-4 properties. Should that change, we’ll make adjustments as we go!
Making an Offer
Well, we’ve found just the right house (sometimes compromises have to be made), and you are ready to make the offer. It shouldn’t be a scary consideration because by this time we have done all our homework.
The first thing we are going to do; is to check the comparable home sales in that subdivision to see if this home is priced fairly, and how it relates to others similar properties that have sold in the last six months. This CMA (comparable market analysis) tells us the price range of the sold properties in the area, the average time properties are on the market, and the average sales price per square foot.
In some cases, there may not have been many that have sold in the area. In that case we will find out how long the property has been on the market or if there have been any reductions in the market value during the listing period, if there have been any other offers on the property, and what the motivation of the seller might be.
When we’re comfortable with what we will be offering, we will do all the paperwork involved in making an offer. These are promulgated forms produced by TREC (Texas Real Estate Commission). We go over this very carefully and completely, so that each paragraph is understood. It includes the legal description of the property and an extensive paragraph outlining what stays with the house. The majority of homes here are sold without the refrigerator, washer or dryer, but the built in stove, dishwasher, and microwave usually stay with the property. Window coverings, fountains, pool equipment, lighting, screens, etc. are also examples of what typically stays, unless specifically exempted by the Seller Disclosure Notice.
Next are the terms of the offering price, including which method of financing. Then we fill in the closing date desired. This is the day that all the forms are signed, money changes hands and the keys are passed to the buyer, when the mortgage company funds (pays) the seller.
We then choose the title company you wish to use and discuss what their role is during the closing process.
Next we address the disclosures. You will be pleased to know that Texas has many provisions for disclosures! An important one is from the seller, known as Seller’s Disclosure Notice; it is provided to the buyer. If the home was built before 1978, a lead-based paint disclosure is also necessary.
There are provisions for a Home Inspection, Home Warranty (we recommend both) and any other inspections that you may elect to have.
The day before closing, there is a final walk-though to make sure all is as it was when inspected, or if any repairs that were requested have been completed.
This is a synopsis of the terms of the contract. The legalese contained brings this contract to 8 pages! Fortunately, it is in plain language and easily understood.
Okay, now what? As your agent, we present the offer to the seller’s agent, who in turn presents it to the seller. From there the negotiating begins! We will definitely be working on your behalf during this stage. You can count on it.
There may be multiple offers, there may be counter offers. Time is of the essence as the offer states. A fair offer usually generates a fair response. There will be no stone left unturned to get you the best possible outcome.
Now, we have an accepted offer. What’s next? We have 10 days in which to do a Home Inspection. We both attend because you will learn much about the mechanisms of the home. Should you be out-of-area, we will attend. You will receive a full report listing every detail of the home, including the roof, plumbing, electrical, and if all the appliances are working properly. Any repairs will be requested in writing immediately, and we will allow the seller 3 days in which to respond.
What Happens Before Closing?
This is the time to be in touch with the lender to provide whatever is necessary for the final loan documents, for the seller to take care of any requested repairs, and for the lender to go through the underwriting process.
As a buyer, you will want to arrange for the utilities to be turned on before you move-in. Don’t forget to have the phone company ready to turn on your new service as well. Make sure all magazines, creditors, family and friends, have your new address! Anything related to school registration should also be done well in advance. Moving preparations should be made as soon as you know the offer is approved.
At the Closing
The closing is almost always done at the title company (an exception could be an out-of-state or out-of-country buyer, in which case documents are sent over night and need to be notarized). Buyer and seller close at the title company separately, and the keys are not given to the buyer until the funding, which may be that day, or the next morning. The funding, which is when the mortgage company transfers the money, is when the keys change hands, so time your movers accordingly.
We will be given a Uniform Settlement Statement showing the closing costs beforehand, so there are no surprises, and we will know exactly how much you need to bring to the closing in the form of a cashier's check. We will go over the whole closing statement with you before closing to insure that you know what you are paying and to answer any of your questions.
Other closing costs will consist of the title company’s processing fee (escrow settlement fee), recording of the deed, pre-paid interest*, homeowner’s insurance, homeowner’s insurance impounds, property tax impounds, and a notary fee.
*Pre-paid interest
Since mortgage loans are due on the first day of the month, and properties can close any day of the month, the interest will be collected from the day of closing until the first of the next month. You first payment will be on the first of the following month.
Your first year’s homeowner’s insurance premium is paid at the time of closing. However, since the mortgage company will be paying the continuing payments, they will divide the annual premium by twelve to get an estimated monthly amount and will be collecting 2 additional months at closing to be held in your escrow account.
The same is true of the property tax. Property taxes are prorated at the closing and you are responsible for the taxes from the closing date only to the end of the year. The seller will pay you the amount of the taxes from the first of the year through the day of closing. Taxes are divided by twelve and 3 additional months are deposited in your escrow account.
Moving Day
One thing we suggest is that ALL the papers involved with your move be kept in one place. All receipts, important papers, and the settlement papers, etc. may be needed for your income tax preparation, or for reference. The title company will be giving you a folder for the settlement papers, but receipts and moving papers are important, too.
If you have school children, you can feel comfortable knowing that Central Texas is a place where everyone is from someplace else! Teachers are trained to welcome new children, and you’ll find children here friendlier because of their own transitions.
What we want to emphasize here is that the “closing” is not the end of our relationship. We would like you to feel as if we are your “Personal Realtors”. If you have any questions in the future or your needs change, please feel free to call us at any time!
And please don’t forget us! We are here to help. We would appreciate your telling your friends and family about us and our website. We would love to help them, too!
Thanking you in advance for choosing Spencer Properties as your Realtor!
Bill Spencer/Agent
