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FIRST TIME HOMEBUYERS
Sugar Land Real Estate understands that buying a home is one of the most
important personal and financial decisions that you will make in your life. This
is why we are committed to guiding you step-by-step,
answering all your questions along the way, to ensure that your experience is as
pleasant and successful as possible. In the pages that follow you will find
information that will help you to better understand the real estate process.
This summary is intended as a general overview of a typical home purchase, and
to identify the typical procedures followed. Read on and you'll see that
realizing your dream of having your own home is easier than what you perhaps
imagine.
Preparing Yourself for the Buy
Information is Essential
Now that you've decided to investigate home ownership, the best way to approach
your purchase is as an educated consumer. It is very important to educate
yourself on the process and requirements before you begin looking for a home.
For example, many people believe that renting is cheaper than buying, or that
you have to be a Permanent Resident of the United States or have an exorbitant
down payment to buy a house. The reality is that you only need a work permit,
and in some cases, the starter costs of renting may almost be the same as that
of a down payment for a house. Stay informed by talking with people who have
already gone through the process, by attending home-buying seminars, and by
visiting Sugar Land Real Estate.
Your Real Estate Professional
Choosing to buy a home is one of the most important decisions of your life and
should not be taken lightly. That's why it is in your best interest to associate
yourself with a good real estate agent who has experience, who works in the area
where you would like to live, and with whom you feel comfortable. If you choose
Sugar Land Real Estate, rest assured that you will be dealing with a true
Professional who will provide you personalized service and answer any questions
or concerns you may have.
During your first meeting, Sugar Land Real Estate will typically talk to
you about the neighborhood where you want to live and the prices of the homes,
as well as the transportation, schools and surrounding areas. Your Professional
can also assist you in the process of talking with a mortgage representative to
potentially secure a
"mortgage pre-approval". It is helpful to get pre-approved for a mortgage
before looking for your home because you will know the amount of money you will
have to spend, and it will be easier for you to calculate how much you can
afford to pay monthly.
Your Savings
It is important to develop a financial plan so that you not only save money for
the down payment, but for other costs that will come along later like the credit
check, the mortgage application and the closing.
Your Credit
Having an established credit history is an important step in a smooth home
buying process. Build a good credit history by trying to diversify how you pay
for things and don't pay for everything in cash. Pay your bills on time, limit
your debt, reduce the amount of credit cards you have and use them responsibly.
It is also important to
review your
credit report - a record of past and current debt that states when, how and
if you paid. Make sure that the information contained in your credit report is
accurate. You will have the opportunity to correct any errors. Sugar Land Real Estate can provide you with assistance in securing a copy of your credit
report for review.
Your credit history is one document that gives the mortgage lender confidence
in you. The better your credit history, the better your credit score; and the
better your credit score, the higher the trust level of the lender, which may
translate into more mortgage options for you.
The best approach in buying a home is to gain an understanding of how a home
is financed, the process of obtaining financial assistance toward your home
ownership dream and the costs that you should be prepared for. There are crucial
elements to be aware of: (1) Mortgage Pre-approval, (2) the Down Payment, (3)
Mortgage Options and (4) Closing Costs.
Mortgage Pre-approval
A pre-approval is a simple calculation that tells you the amount you'll be
able to finance through a loan and what your monthly payment will be. A
pre-approval also provides the "seller" some comfort that you have the financial
means to purchase their home.
Once you know the amount of money the bank will lend you, you will need to
determine how much cash you should save for the down payment. This will help
define the types of homes that are within your budget. Bear in mind that your
monthly costs not only consist of mortgage payments, but will also include at a
minimum real estate taxes, homeowner's insurance and utilities.
The Down Payment
A down payment is generally the money you pay up front toward your new home.
Typically, the more cash you pay as a down payment, the less you will have to
pay each month on the mortgage, and the lower the interest costs will be over
the life of the mortgage. Many people make a down payment of 5, 10 or 20% of the
sales price of the home, but the right percentage for you depends on many
factors. There also are certain loans available for down payments of under 5%.
One thing that is certain is that saving the money for the down payment can be a
challenge. This is why there are so many mortgage options available and Sugar Land Real
Estate is a good resource to help you choose the one
that best corresponds to your personal situation.
The Mortgage
The types of home financing options available to you toward the attainment of
your new home are varied, depending on your personal financial situation and
unique needs. The best resource available to you in determining your financing
option is Sugar Land Real Estate. We can guide you through contacting a
financial lender and attaining a
Mortgage Pre-approval, to help you in gauging what you can afford to spend
on a home and financing available to you. As a general overview, here are some
typical financing examples:
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Adjustable Rate Mortgage (ARM): in general terms, this is a type of
mortgage in which the interest rate is tied to a certain economic index
and may adjust at certain times. Overall, your monthly payment may go up
or down at intervals specified in the disclosure associated with this
type of mortgage, depending on the current interest rate. |
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Fixed Rate Mortgage (FRM): in general terms, this is a type of
mortgage in which the interest rate does not change during the entire
term of the loan. This means that the monthly payments for principal and
interest are also fixed for the life of the loan. |
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Conventional mortgages: generally, mortgages that are not part of a
government-housing program, typically have a limit of $322,700, and are
not insured by the federal government. |
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Jumbo mortgages: generally, mortgages that typically exceed $322,700
and are not insured by the federal government. These loans usually
command higher interest rates. |
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Government backed loans: There are two types of government-backed
loans, the FHA and the VA. FHA loans are insured by HUD (the Department
of Housing and Urban Development of the United States) and VA loans are
insured by the Veterans Administration. |
Closing and other additional costs
Closing is when ownership of your new home is officially transferred from the
seller to you. Sometimes sellers will pay closing costs. If not, you need to be
prepared to pay this additional cost, which can range to be an additional two to
five percent of the home purchase price. These costs can vary from state to
state. Sugar Land Real Estate can assist you, and guide you in this step
towards achieving your homeownership dream.
Some other cost that you can gather more information on, as well as general
estimates, to prepare your personal finances, typically include:
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Good faith deposit: This deposit shows the sellers that you are
really interested in buying their home and that you are willing to make
them an offer. This deposit can vary between 1 and 10% of sales price
depending on the market and can be applied to the down payment. |
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Mortgage application and credit report fees. |
Securing your dream home
The Search
Narrowing your home search down with
knowledge about how much you can afford to spend is only one factor to consider,
having an idea of what specific features you want versus need in your new home,
can also help Sugar Land Real Estate in guiding you through the process to
a successful and happy outcome. With this information in hand, Sugar Land Real Estate can give you information on houses for sale and will take you to
see those that interest you. Sugar Land Real Estate will discuss with you
the pros and cons of each house. Don't be afraid to ask all the questions you
want. Remember that one of these houses could be your future home.
While searching for your new home, Sugar Land Real
Estate can assist
you in fine tuning your search criteria and find the home of your dreams by
visiting "Open Houses". Visiting an "Open House" will involve you personally
touring houses for sale and getting a first hand view of the home and property.
You may want to visit open houses on your own or you may want to go with your
Sugar Land Real Estate Agent so that you get a better feel for the market, the
neighborhood and the styles of houses available to you.
| It's always good to ask yourself the following
questions:
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What features are most important to me? Number of bedrooms? Number
of bathrooms? |
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Does it have special features like a garden, a fireplace, a yard or
a garage? |
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Do I want a newly constructed house or a house that has been lived
in before? |
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Is it most important that the house be near a specific school, my
job, or public transportation? |
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What is the school district like? |
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Are there kids in the neighborhood who are the same age as my own? |
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Does this house need a lot of repairs? |
The Offer
| When you find your perfect home you will need to make
the seller an offer in writing. Your offer is often the first step
toward negotiating a sales contract with the seller and is much more
complicated than simply determining a price. Because of the large amount
of money involved, both the buyer and the seller should protect their
investments and limit their risk. Therefore, when you make an offer,
typically you not only specify the price you are willing to pay, but
also the details of the purchase such as: |
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How you intend to finance the home
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Amount of the down payment |
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Who pays the closing costs |
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What inspections will be performed |
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Whether personal property is included in the purchase |
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Terms of cancellation |
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Any repairs you want done |
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Date you will take physical ownership and possession of the property |
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How to settle disputes should they occur |
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| Contingencies: |
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Contingencies generally allow you to anticipate potential
problems so that if something goes wrong, you can cancel the
contract without penalty. If you cancel a contract without
having agreed upon conditions and contingencies, you could find
yourself forfeiting your good faith deposit and the money you
spent to inspect the property, as well as other damages. For
this and other reasons, it is highly recommended that you retain
an attorney. Your attorney will advise you as to what you should
include in your offer to protect yourself.
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Before making an offer, thoroughly evaluate the property (including but not
limited to the following):
| Property Conditions |
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Sugar Land Real Estate can tell you how the property compares
with the rest of the neighborhood. |
| Home Improvements |
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Take note of what the previous owners have done to the house to
determine if these improvements warrant the asking price and/or were
done correctly. |
| Market Conditions |
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If the market is "hot" it is often considered a "seller's market".
This may give the buyer less room to negotiate his/her ideal price
because there may be other people willing to pay more for the home. |
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If the market is "slow" then it is considered a "buyer's market". In
times like these, houses often sit for longer periods of time without
receiving acceptable offers, so when reasonable offers do come in,
sellers may be more willing to negotiate. |
| Seller Motivation |
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If an individual needs to sell quickly due to their personal
situation, they may be more willing to negotiate. |
Once you have submitted your offer, you must await the response of the
seller. The seller could accept, reject or ponder your offer. Often, the seller
will counter your offer with higher amount. This begins the process of price
negotiation that may continue until both parties either agree on a price or
decide to go their separate ways.
The Good Faith Deposit
Along with your offer you must provide the amount of your "good faith" deposit
that is designed to, among other things, demonstrate to the seller the
seriousness of your offer. This is one of the additional costs mentioned
earlier. This money is only deposited once the offer has been negotiated and
accepted by both parties.
The Inspection
When there is a serious interest in a property and an offer has been made, an
inspection is often ordered. The seller should have the property available for
inspection by a professional.
In a typical inspection, experts examine the existing conditions of the
property. Inspections may be required by law, but the elements of an inspection
may vary according to region and state and/or your agreement.
The most common type of inspection is the General Home Inspection. A home
inspector can provide you with a complete service, which may cover many areas of
the home - from the basement to the attic, as well as the exterior of the home,
walls, chimneys, and fixed appliances such as refrigerators and stoves.
Other specific elements that can be included in an inspection are the following
(this is not a complete list):
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Termite inspection |
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Plumbing |
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Water Quality |
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Lead |
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Radon |
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Septic Tank |
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Asbestos |
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Electricity |
Indispensable Insurance
Before a mortgage company will approve your lending arrangement and allow you to
close on your new home, they will typically ask you to show proof of title,
title insurance, and homeowner's insurance. Sugar Land Real Estate or your
mortgage representative can help explain the details, and your real estate
attorney can provide counsel on title issues and title insurance.
The Final Visit (Walk-Though)
Before the closing takes place and the property is transferred, Sugar Land Real Estate may visit your future house with your family. The "walk-through"
provides a valuable opportunity to ensure that the house has been left in the
expected condition.
You should take this moment to make sure that all the items the owner agreed
to leave behind are still there, such as kitchen appliances, and even furniture
and accessories, depending on the details of the final sales contract. Discuss
any problem with your Sugar Land Real Estate agent and with your attorney. In
some cases, you "as the buyer" can ask for a discount or credit at the closing
to cover any missing item or last-minute damage to the property.
The Closing
Ask Sugar Land Real Estate and your attorney to go over the elements of
the "closing" so that you can be fully prepared. The closing process varies
according to the area of the country (and can even vary within the same state).
Generally, the seller is required to provide clean title to the property at
closing. Sugar Land Real Estate, mortgage lender representative and your
real estate attorney/legal counsel can best guide you through this process,
making sure that all documents are provided and steps followed
Making your dreams a reality!
Finding your new home can be a rewarding experience, especially when you have a
real estate professional at your side, working and negotiating on your behalf,
and guiding you throughout the real estate process. We know that you're looking
for more than just a roof over your head. You're looking for a home to express
your lifestyle and values, a place to spend time with family and friends, a
place to retreat at the end of the day and Sugar Land Real Estate can help
you achieve those dreams. Although the real estate process can be complex,
Sugar Land Real Estate wants to share their knowledge, experience and patience
with you in achieving those goals.
Your goal of having your own home is totally achievable.
Sugar Land Real Estate is here to help you.
None of the advice or suggestions offered in this summary is intended to
be representative of any or all of the circumstances you may encounter in
attempting to obtain a mortgage or to buy a home. You should consult an attorney
and a mortgage broker, both of whom can provide you with information specific to
your circumstances.
Mortgage loans are subject to qualification, receipt of satisfactory
appraisal, and verification of income, asset and debt information provided by
the customer.
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