It is never too early to contact your licensed agent to meet with you to discuss your home purchase. Having a buyer meeting with your agent beforehand will allow you to review the steps of buying, answer any questions you may have as well as review the type of home you are looking for. Whatever your reasons for buying, finding the right home, in the perfect neighborhood, and at a cost that is within your budget, is no small task. There are many benefits you receive from working with an experienced agent. 

To begin, you’ll first need to find out how much house you can afford. Your agent may provide you a referral list of reputable and knowledgeable lenders who can help you determine how much of a down payment you can afford, along with a monthly payment you qualify for.

Make a list of everything you want in a home. Is an owner suite important? How many bathrooms? What about closet space? Do you need a yard for the kids and pets to play in? How about a fireplace or a bay window? Do you prefer a rambler or multiple-story house? Are schools or access to transportation important? Separate your needs from wants and put them on a “must have” list. Prioritize the rest of the items into a second and third list in order of importance of your wants. We’ll then go over the list so that I’m very clear on what you want and need in your home.

Your agent should check with you regularly, even if you haven’t found a house that suits your needs yet. Keeping in contact with you allows them to establish a good rapport, and helps them to learn how to help you effectively. They should continue to be on the lookout for homes that suit your needs and share them with you promptly so you may see them in a timely fashion. This process should continue until the right property is found for you.

Before you start looking at homes, it’s a good idea to find a target price range that you are comfortable with.

A lender will want to make sure you can qualify for the down payment, plus a monthly mortgage payment made up of principal, interest, taxes and insurance (PITI). Interest rates and your personal finances will influence the amount of house you can afford.

Your agent should have reviewed this form with you before your home search so you are prepared for what to expect. Once you’ve found the home you want to buy, together we’ll complete a purchase and sale agreement.

This is the contract in which you and the seller outline the details of the property transfer. The purchase and sale agreement usually consists of the following pages:

• Residential purchase and sale agreement
• Financing addendum
• Inspection addendum
• Appraisal addendum
• Lead-based paint notification-when appropriate

• Agency disclosure
• Property disclosure form completed by the seller
• The legal description of your property
• Identification of utilities

When you’re under contract to purchase a home, your offer may be contingent on a professional inspection. Alternatively, you may have a pre-inspection completed on a home you’re looking to purchase prior to making your offer on that home. You’ll want to discuss with your agent the differences in an inspection contingency and pre-inspection to determine which will work best for you. Your agent also should be able to provide you a referral list of reputable local inspectors from which to choose. 

The home inspector looks beyond the cosmetics to make sure that the home’s general systems operate properly. The standard home inspector will review the conditions of the home’s heating and cooling systems; interior plumbing and electrical systems; the roof, attic and visible insulation; walls, ceilings, floors, windows and doors; foundation, basement and visible structure. During the inspection, the inspector will also look for cracks in cement walls, water stains that indicate leakage and any indication of wood rot. Based on the inspectors finding they will provide a report on the condition of the home and needed repairs.

A home inspection also points out the positive aspects of a home, as well as the maintenance that will be necessary to keep it in good shape. Remember, no home is perfect. If problems are found, your agent should help you negotiate through the process.

During the negotiation stage of the transaction, a mutually agreed-upon date for closing is determined. “Closing” is when you and the seller sign all the paperwork and pay your share of the settlement fees, and the documents are recorded.

Settlement obligations vary widely due to specific contract language, local laws and customs.

Prior to closing, the closing agent (usually a title & escrow company) will complete a detailed settlement statement for both buyer and seller.

THE BUYER PAYS:

• Earnest money deposit which goes towards your down payment
• One-half of the escrow fees paid to the escrow company for preparing the closing
• Document preparation fees
• Recording and notary fees
• Local transfer taxes
• Repairs or inspections the buyer has agreed to pay for if any
• Loan fees
• Appraisal fees
• Credit report fees
• Good news- you generally do not pay your agent for their services, the seller does!

A point is equal to one percent of the loan principal. Some lenders charge points, in addition to interest and fees, at closing. Ask your lender to learn more about this and receive your estimated loan costs.

Title insurance may protect against loss from defects in the legal title, liens against the property or other adverse claims. The lender usually requires title insurance.

• ADJUSTABLE-RATE MORTGAGE (ARM) interest rates on this type of mortgage are periodically adjusted up or down depending on a specified financial index
• AMORTIZATION is a method of equalizing the monthly mortgage payments over the life of the loan, even though the proportion of principal to interest changes over time. In the early part of the loan, the principal repayment is very low, while the interest payment is very high. At the end of the loan, the relationship is reversed
• ANNUAL PERCENTAGE RATE the actual finance charge for a loan, including points and fees, in addition to the stated interest rate
• APPRAISAL an expert opinion of the value or worth of a property
• ASSESSED VALUE the value placed on a property by a municipality for purposes of levying taxes. It may differ widely from appraised or market value
• BALLOON PAYMENT a large principal payment due all at once at the end of some loan terms
• CAP a limit on how much the interest rate can change in an adjustable-rate mortgage
• CERTIFICATE OF TITLE a document, signed by a title examiner, stating that a seller has an insurable title to the property
• CLOSING the deed to a property is legally transferred from seller to buyer, and documents are recorded
• CLOSING COSTS see “Settlement” or refer to “Settlement–who pays what” in this guide
• COMMISSION a fee (usually a percentage of the total transaction) paid to an agent or broker for services performed
• COMPARATIVE MARKET ANALYSIS (CMA) a survey of the attributes and selling process of comparable homes on the market or recently sold; used to help determine a correct pricing strategy for a seller’s property
• CONTRACT a binding legal agreement between two or more parties that outlines the conditions for the exchange of value (for example: money exchanged for title to property)
• DEED a legal document that formally conveys ownership of a property from seller to buyer
• DOWN PAYMENT a percentage of the purchase price that the buyer must pay in cash and may not borrow from the lender
• EQUITY the value of the homeowners interest in the property: the market value less the total of the mortgage owed and any property liens is the amount of equity a homeowner has
• FIXED-RATE MORTGAGE interest rates on this type of mortgage remain the same over the life of the loan. Compare to “adjustable-rate mortgage”
• FIXTURE a recognizable entity (such as a kitchen cabinet, drape or light fixture) that is permanently attached to a property and belongs to the property when it is sold
• HAZARD INSURANCE compensates for property damage from specified hazards such as fire and wind
• INTEREST the cost of borrowing money, usually expressed as a percentage rate
• LIEN a security claim on a property until a debt is satisfied
• MARKET PRICE the actual price at which a property sold
• MARKET VALUE the price that is established by present economic conditions, location and general trends
• MORTGAGE security claim by a lender against a property until the debt is paid
• MULTIPLE LISTING SERVICE (MLS) a system that provides to its members of real estate professionals detailed information about properties for sale
• ORIGINATION FEE an application fee(s) for processing a proposed mortgage loan
• PITI principal, interest, taxes and insurance, forming the basis for monthly mortgage payments
• PREPAYMENT PENALTY a fee paid by a borrower who pays off the loan before it is due
• PRINCIPAL one of the parties to a contract; or the amount of money borrowed, for which interest is charged
• PRORATE divide or assess proportionately
• PURCHASE & SALE AGREEMENT a contract between buyer and seller that outlines the details of the property transfer; or refer to “Purchase and sale agreement” in this guide
• SETTLEMENT all financial transactions required to make the contract final.
• TITLE a document that indicates ownership of a specific property
• TITLE SEARCH detailed examination of the entire document history of a property title to make sure there are no legal encumbrances
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