Buying a house...it's not as bad as you think...1/28/2014
Being a "younger" real estate agent, I tend to get a lot of first-time home buyers. Some have tons of questions, WHICH I LOVE, because I'd rather you be completely in "the know" when you are going through the experience of buying your first home - NO SURPRISES! Nothing is worse than sitting in a closing and the buyer gets SHOCKED by something that the attorney or other Realtor says...AWKWARDDDD!! If you are someone who is scared to buy a home just because you don't know what to expect, well, I'm here to tell you it's not as bad as you think!! Here are some things that an inexperienced home buyer should know:
1) The first thing you should do is go to your bank and get preapproved. The reason it is good to do this is because, first of all, with the rates low, you may can afford more house than you think! Or on the other end, as a Real Estate Agent, I sure wouldn't want to get your heart set on a home that you can't afford! ALSO, different types of loans (FHA, USDA/Rural Development, VA, Conventional, In-House) all have different sets of guidelines or requirements for their loans. For example, with an USDA Loan, AKA a Rural Development loan, it only covers certain "rural" areas. Now, this doesn't always mean exactly what it sounds like. The entire county of Jones County, Mississippi is covered under USDA, even in the city of Laurel, which of course is not very "rural". If this is the type of loan that you get approved for, your Real Estate Agent will know which homes that he/she can show you to be able to be covered under this type of loan. If you love to "online shop" and sent your agent homes that you find and you have this loan already reapproved, then you can look at this site and enter the address of the property that you are interested in and learn if this home is in an area allowed by USDA.
Another example of where your loan type is important is with a fixer-upper, which is typically most ALL of your foreclosures (with very few exceptions). These homes won't typically go with a regular mortgage. These types of homes can SOMETIMES go conventional depending on the extent of the repairs needed, but most of the time they will probably only go "in-house". In-House loans are loans done by your local bank by the loan officers that also do your car loans, etc. Both conventional and In-House loans typically require a higher down payment - up to 20%. This is just something to keep in consideration when thinking of buying a distressed property. THERE REALLY AREN'T ANY FIRT TIME HOME BUYER LOANS anymore. There are limited grants that you might can find. The Tax Credit expired in 2009 and the USDA loan, which is a $0 down loan, can be used for first time home buyers, 2nd, 3rd, etc., as long as you qualify. Typically if you can't qualify for USDA, it's typically because of income limits around 75K, then the next best option is FHA. FHAis a 3.5% down and has no income limits. FHA does however have caps on how much they lend.In Mississippi, this limit is $271,050. All of these loans have minimum credit score requirements; however, each bank will vary with this a little bit. Most local banks tend to want a 640 credit score, but there are some banks that will take a slightly lower score.
2) Find a Real Estate Agent who you believe that you will work well with, and STICK WITH THEM. Don't call different agents at various offices that have different properties listed, call YOUR agent. All agents can show you all homes listed by all of the other real estate agents. So creating a relationship with one agent is best. We spend a lot of time for you behind the scenes and, of course, showing you homes. If an agent finds out that you are calling multiple agents, their dedication to you will typically dwindle. Keeping good communication with ONE agent will allow you to see new properties as they come on the market immediately. Great homes and great deals GO FAST! You want an agent loyal to you and WATCHING for them to come on the market, so be LOYAL to them and you are likely to find the home of your dreams.
3) It takes typically 4-6 weeks from the time you go under contract until your closing date. Sometimes you can do something a little quicker, and sometimes circumstances make things DRAG OUT longer than we all would like. But in most instances, 4-6 weeks is what it takes. The reason it takes this much time is because of the different steps the buyer and bank go through. There is typically and "order of events" basically, and here is a short run-down of this: a) First off, after going under contract, the buyer should order a HOME INSPECTION. Real Estate agents can give you cards of several home inspectors, but it is ultimately your choice who you use. Home inspectors are paid to find things wrong with the home. They will "pick the house to death". What I mean by this is they will typically list every little minor chip in the tile. It's what they do. When you receive your report, you should go over it with your agent, so he/she can try to explain all the findings and educate you on which is more serious and which ones will cause you any problems with your loan that you have in place. DON'T LET THE HOME INSPECTION SCARE YOU INTO BACKING OUT. When going over the report with your agent, together you will make a list of repairs to request the seller to fix in order for you to remain under contract with them. Most times, if the requests are within reason, the seller will agree to fix them. b) Once all items are repaired, the bank will order the appraisal. The appraiser will compare the property under contract to similar homes that have sold within the last 6-12 months or less. The home must appraise for AT LEAST the contract price. In the event that it appraises for less, then the buyer and seller will typically go into a re-negotiation. This is rare event, a good listing agent will already have the home listed where it needs to be so that this issue does not arise. c) Once all is cleared with the appraisal, the bank will send the file into underwriting. The underwriter makes sure that the loan officer followed all guidelines for the loan and checks that "all T's are crossed". Depending on the bank and how backed up the bank is, this can take a couple of days to a week or longer. d) Once the underwriting gives a "clear to close," the bank will send the file to the attorney's office or closing company. This office/company will do a title search on the property to make sure that the buyer is getting a clear title. Once they verify this, they will prepare the deed and hold the closing when it is scheduled. Once the closing is over, the title company will file your new deed at the courthouse to insure the possession of the property is properly changed over to the new buyer.
NOT THAT BAD, right?! Every real estate transaction is different, so there's no way to tell you absolutely everything that COULD happen, but this list will at least give you the basic knowledge to give you the confidence that you need to TAKE THE LEAP!! Interest rates are still at record lows making it a good time to buy! Don't miss your opportunity to owning your own piece of this Earth. If you have any more questions, please feel free to call/text/email me anytime and remember that there is NEVER a stupid question! You are not expected to know everything, and I will never make you feel dumb for trying to learn this process. Contact me at the ways below with any questions that you may ever have and let's leap together!
-Christy Cell 601.344.9083/601.425.0955