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Buying A Home

Buying a Home 101 With Mona’s Buying a Home Tips

Mona LaCovey of RE/MAX Advantage Realty offers Buying a Home 101 tips

Twenty five years ago, when Mona LaCovey helped buyers purchase a home, it only required a 10 to 20 page contract. These days, a contract starts out at 50 pages and can go up to 80. So if you’re a first time home buyer or if you’ve bought several, there’s probably something here for you in Mona’s Buying a Home 101 Tips.

Buying a Home 101 Starters

Most don’t realize how much is involved in the home buying/selling process.  All our contracts these days average more than 50 pages (we’ve seen as many as 80) and few lawyers fully grasp the ramifications of all they contain.  So part of why it’s important to use a competent Realtor® is that they are trained to provide this understanding, giving you the best advice possible for your specific situation.

What we are providing here is a high level overview of the process, but keep in mind, there are variations on the theme to comply with your specific needs.  We provide this only to enlighten and prepare for what can typically happen when you buy homes inAnnapolisMD.

 First Things First

It’s Fun to Look but…

When most people start the home buying process, about 90% use the web to some degree.  The web provides lots of great information along with thousands of homes to look at.  From the outset it’s a fun process, but nothing can replace good planning.

Websites are not created equal.  There are lots of them and many provide poor information.  Not long ago, a buyer called us on a property and it took some time to understand what they were talking about. We finally determined the home had been sold a year ago.  The web site they used culls listings from legitimate websites in hopes of re-selling their inquiries back to the agents for a fee.  They don’t keep up with price changes or even if the home had been sold or withdrawn.

Use only quality websites like:

www.HomesDatabse.com – most direct from the multiple list but least easy to use and the least in other information.

www.Annapolis-Real-Estate.net – easy to use, continuously updated and the most local information

www.REMAX.com – continuously updated with the most listings of any site around the world.

www.Realtor.com – largest and most well know, continuously updated

Note that HomesDatabase.com is the official site of the local Multiple List Service so you can’t get information more directly or up-to-date that that.  However, it is not the easiest site to use, so we developed  www.AnnapolisHomeInfo.com and www.Annapolis-Real-Estate.net (the site you’re on now).  The updates are every 4 hours and has a lot more information like what you’re reading now.  The other sites are also very good and kept up to-date a minimum of once per day.

 Find a good Realtor®

 

First, why do you need to connect with a Realtor® now?  There are several good reasons and one of the most important is planning.  Avoiding early mistakes can get you more home with fewer hazels’ in the long run.   With the tightened economy impacting loan qualifying rules which seem to change daily, knowledge can be a powerful ally.

 

As in any industry, there is a wide range of lenders, both good and bad.  That was true before the economy went south, but the range is much greater now.  We know one major nationwide lender who has not met the settlement day for any buyer in the last year.  We know others who’s red tape and lack of cooperation is so bad, half ended up moving the loans to other companies.  Even more, all of this is pretty common knowledge within the industry.  If you have a good Realtor®, they will help you avoid these pit falls.

 

Picking Your Lender

If you use advice from your Realtor®, properly they should provide you with more than one choice to avoid collusion between the lender and the agent.  We provide our suggestions on our website.  If anyone we have recommended does not live up to the reputation that got them on our site in the first place, we remove them.  Take heart, WE HAVE removed some.  We see this is infringing on our reputation and will not recommend those who do not give our clients the best service possible.

Many suggest asking friends and relatives for suggestions.  This can be a good idea unless you fail to check them out first.  Some of the worse situations have been friends recommending a relative who just got into the business.  This is true for real estate agents too.  Beyond asking your real estate agent,  here’s way to find a good lender in your area:

From the phone book, call several title companies.  Be sure you’re not just talking to a receptionist, but a processor or one who actually does the settlements and tell them you’re new in town and wanted their recommendations.  Ask these questions:

  1. What lending companies are they owned by, have a financial relationship with?  (this is a conflict of interest spoiling an unbiased answer to the next question)
  2. Who are the top three lenders (people not companies) that do the best job of getting their clients and paperwork to the settlement table that are not part of any relationship mentioned above?  (note: asking for 3 gets them off a legal hook)
  3. Who do they believe are the best title companies in the area besides themselves?
  4. Repeat this process 3 times.  Take special note of any lender mentioned more than once.
  5. Now interview the best sounding lenders.

Interviewing Lenders

Lenders are a strange bunch.  The vast majority of them are extremely enthusiastic about the “PROGRAMS” they have to offer and virtually no one cares.  There’s not a week that goes by we don’t get some lender raving about their special programs as if they thought we would care.  The fact is, as Realtors®, we don’t judge a lending by their programs, but how well they take care of our clients.  More specifically, when confronted with a problem in the lending process, it’s how well they solve it that will impress us, and it should be the same for you.

Pre-Qualifying vs. Being Qualified

Your lender will check your credit and ask questions that will be put into a formula to determine for how much you can qualify, at what rate, under what circumstances.  This will result in a letter you can present to a seller showing you can afford their home.  They want to know this because once they accept a contract, the home is effectively off the market and then lose the opportunity to sell to other prospective qualified buyers.

There are two types of letters: a pre-qualifying letter and a qualifying letter.  The first is a result of a very cursory lender investigation into your credit.  Many will not accept this letter because without a thorough investigation, the seller is still taking a risk of losing a more qualified buyer.  The latter says you are qualified to buy the home pending verifications of things you’ve told them.  Knowing they’ll be found out, most people don’t lie about such matters and history shows most of these loans are given.

A good agent understands the entire process from beginning to end.  Having a good understanding of the law in your area regarding real estate is important in your decision making process.

So you’re learning a lot and finding some great homes and the urge to actually see them is really strong.  This leads us to two things to look at, finding a good Realtor® and a good lender.

Find a good lender.  Most people feel confident they know what they can afford and qualify for, only to be surprised later.  The credit report had something they didn’t know about, or the economy issues created rule tightening beyond what you’d expect.  You need to be sure your credit is in good shape first.  Many lose the home of their dreams finding out there are issues that can take months to clear up.

Checking with a good lender early gives you the time to address credit problems and allows you to know more factually what you can do.  They will give you a letter to prove it but be aware, there are two types of letters.  The “approval letter” is far more valuable to everyone you will work with than a “pre-approval” letter.  The “approval letter” has a much higher degree of financial inspection and says in effect, you’re approved for the loan pending finding a home in a certain price range and your submission of substantiating evidence you claimed on your loan paperwork.  This gives a seller a much higher degree of confidence they can remove their home from view from subsequent buyers while you go through the closing process that can take 30 to 60 days.

One more item you should cover up front.  Know what you want.  Making initial lists helps you to focus and cull through what’s available.  You should start figuring out:

When to Move

School dictates the when for many with children.  So much so that the real estate industry everywhere commonly has a “Spring Season” because people want to be fully moved in so they are ready to prepare the kids for the next school year.  But other factors can certainly be involved, so look at issues with family, job(s) and financial issues in the timing process.

Where to Move

School again often plays a big role here as parents want their children to be in the best schools possible.  So knowing where the school district lines are drawn is quite valuable to most parents. But again, other factors like proximity to other family, to work and fun are also factors to consider along with affordability.

 

How Much I want to pay

Above we talked about finding a goo lender, but lenders will only tell you “the most” you can afford.  They will not tell you how much “you” want to afford.  Many buyers these days often demand their payments not go above a certain level which restricts where they might be living.

 

Who Gets Involved

We will go over this in more detail later, but you should be aware of this list of people will probably need to get involved:

 

Your Realtor®

Lender

Title Company

Sellers

Listing Realtor®

Home Inspector

Termite Inspector

Well/Septic Inspector

Radon Inspector

Mold Inspector

Chimney Inspector

Appraiser

Insurance Company

Utility, phone, cable companies

 

Working With a Lender

 

What Companies to Consider

What Loan Officers to Use

Lender Plans and Scams

What You Should Get

 

Seriously Looking Process

 

Knowing the Law

Knowing How to Protect Yourself

What’s Buyer Agency?

 

3 Lists – Gotta – Like – NO

 

Gotta Have List

Price (payment) Range

Bedrooms / Baths

Proximity to – ??

Home Amenities

 

Like to Have List

Will Not Have List

Narrowing Down Process

 

Making Appointments

 

Creating a “Homes to See” List

Organizing and Setting Appointments

Focus on Your List, Not Decorating

New vs Existing Home Buying (Envisioning)

Finding the Right Home

 

Submitting the Contract

 

Options to Consider

Questions to Ask

Price to Offer

Buyer Help

Earnest Money

Settlement Date

Home Warranty

Inspections and Timing

 

Writing the Contract

What’s in a Contract

Who Gets a Copy

Both Agents/Offices

Buyer and Seller

Lender

Title Company/Lawyer

 

Negotiations

Ratifying the Contract

Discovery Addendums

Home Inspection

Other Inspections  – Timings

Termite

Radon

Well – Septic

Lead Paint

Mold

Water Intrusion

Chimney

Survey

Insurance – CLUE

Disclosures

HOA Documents

Appraisal

 

Before Settlement

 

Select Title Compay/Lawyer

Get Homeowners Insurance

Arrange for Movers

Provide Lender Final Info

Provide Title Company Info

Attend Home Inspection

Setup Utilities – Services

Electric

Gas – Oil

Phone

Cable

Comcast – Xfinity

Verizon FIOS

Newspaper

The Capitol

WashingtonPost

Baltimore Sun

Attend the Final Walk Thru

Post Office Address Change

 

Settlement

 

Preliminary Notices

The Walk Thru

What to Bring

All Buyers and Sellers on the Contract

(Exceptions)

Identification

Money

Other Documents

 

What You Get

Loan Papers

Other Settlement Paperwork

Keys to Your New Home

 

Post Settlement Process

Save Paperwork for Taxes

 

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