Buyer
Guide Amy Smythe Harris Broker/Owner
713.503.2529 Cell • amy@urbanprovision.com www.urbanprovision.com www.realtor.com/bio/amyoutloud
Your guide to homeownership.
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urchasing a home is at once an exciting and fun experience and also a time of major decision making. Buying a home is the single largest financial decision most people make in their lives. It is not surprising then that a tremendous amount of anxiety and stress is generated. It is a time when moving might be complicated by a new job, relocation to a new area and perhaps a time when you are moving away from friends and/or family.
Selecting Your Realtor. Efficient, quality service and a willingness to go the extra mile are a must in a real estate transaction. Prompt followup and attention to detail are important factors to look for in a REALTOR. There are sometimes hundreds of people involved in a single home purchase and your REALTOR should be a coordinator of all those events and details. Look for a knowledgeable individual with a willingness to listen and understand your needs combined with a work ethic that will serve you well during the process of locating the home of your choice. From the initial home-search through the offer and contract, on to closing and beyond, you will want someone to be with you every step of the way.
Information About Brokerage Services. Before working with a real estate broker, you should know that the duties of a broker depend on whom the broker represents. If you are a prospective seller or landlord (owner) or a prospective buyer or tenant (buyer), you should know that the broker who lists the property for sale or lease is the owner’s agent. A broker who acts as a subagent represents the owner in transaction. A broker who acts as a buyer’s agent represents the buyer. A broker may act as an intermediary between the parties if the parties consent in writing. A broker can assist you in locating a property, preparing a contract or lease, or obtaining financing without representing you. A broker is obligated by law to treat you honestly.
you are working. Texas law requires all real estate licensees to give the Information About Brokerage Services to prospective buyers, tenants, sellers and landlords.
Establishing Your Needs. Determining some of the basic absolutes you would like to have in the home you purchase, combined with some of your “wish list items,” is a major first step in the house-hunting process. Consider such basics as distance from work, new construction vs. resale, single family vs. townhome and numerous other influences that are important to you. The “House Hunting Priorities” page is a general guideline to help you organize some of these details.
Loan Pre-Qualifying. An important tool to utilize in your home purchase process is to obtain a “pre-approval” from a mortgage lender. It will simplify your house-hunting by giving you financing options, information about possible down-payments, price ranges, terms, and funds necessary for closing. Pre-qualifying with a loan officer will also give you a distinct advantage in getting your offer accepted by a seller when you are able to provide a “pre-approval” letter from your lender.
Selecting Your Home. Review your priorities and focus your home search in areas and price ranges that meet the particular needs you have established. Discuss options, likes and dislikes, needs and wants with the Realtor working with you and the hunt for your new home has well and truly begun.
A copy of Information About Brokerage Services should be furnished to you by any Realtor with whom
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Buying Your Home Loan Application. Comparing types of loans
Deposit of Earnest Money. The Realtor
and then making a loan application are important steps in the home buying process. At the time of loan application, the lender typically charges an application fee. This fee tends to cover the lender’s cost of pulling your credit report and the cost of a professional appraisal on your property. Once these loan application tasks have begun, the fee is not refundable.
you are working with will follow up to see that title is opened on the property you are purchasing. At this point, the earnest money will be deposited with the Title Company. This will typically happen within 24 to 48 hours of the final signing of the contract. When the Title Company opens title on a property, their “plant” will research the history of the property and issue a title commitment. This commitment will detail items that might need to be cleared before issuing a title policy.
Making an Offer. When you have found the home of your choice it is time to write an offer. The offer is usually written on a contract form promulgated for Realtors by the Texas Real Estate Commission. When buying new construction, however, the builder might require his or her own contract form. The contract form details the many aspects of your transaction and upon acceptance serves as an instruction booklet to the Title Company and others involved in the transaction. Decisions need to be made at the time of the offer regarding such items as the closing date, terms, conditions, possession, sales price, down-payment, an option time and fee, a request for repairs or inspections or an offer without a repair request. Your Realtor will work through the many details with you. When you start your home search it’s a really good idea to ask your Realtor for a sample copy of the forms…and don’t hesitate to ask questions.
Negotiating to Contract. The market will give you many clues about the best way to begin negotiations with a seller. If it is a “seller’s market” and properties are selling quickly, perhaps with multiple offers, it would probably be best to make your very best offer initially or risk having the property go to someone else. The seller is not obligated to respond to an offer. If another offer is received which meets the seller’s needs, there might not be an opportunity for you to negotiate. However, if the market is soft and supply is great, the opportunity to negotiate the terms and conditions of your offer are much greater. When negotiations are complete and an offer is accepted and signed by the seller, it becomes a legal binding contract.
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Mortgage Details. During this time your loan officer is finalizing any items needed for your final loan approval and ordering an appraisal of the property. Loan approval details will vary depending on the type of loan you are obtaining. The lender will also order the survey.
Repairs. If repairs have been requested and agreed to by the seller they will typically be completed between loan approval and closing.
Closing and Funding. The lender will draw the papers needed to create your new loan and send them to the Title Company to be reviewed by the escrow officer. The final details such as home insurance, tax escrow, survey and funds necessary to close will come together at the Title Company. The escrow officer will complete a “HUD” Statement, which details all of the financial obligations for the buyer and the seller. Ask your Realtor to have the Title Company provide a copy of the “HUD” at least 24 hours prior to your closing. When you go to closing at the Title Company to sign loan papers it is necessary to bring “good funds” to cover your costs. Examples of “good funds” would be either a certified check or wired funds. If in doubt, check with your Realtor or the escrow officer at the Title Company.
Coordinator of Events. The Realtor with whom you are working is the Coordinator of events and will be with you every step of the way, helping to solve any difficulties or delays that might occur.
Up-front Costs Making an offer: Resale 1. $1000 or typically 1% of sales price made payable to Title Company for earnest money. This money will be credited back to you at closing if you move forward with contract. 2. The option money check will be made out to Sellers and cashed upon execution of contract New home 1. Typically 1% of sales price made payable to Title Company for earnest money. This money will be credited back to you at closing if you move forward with contract. 2. No option fee After execution of contract 1. Structural and Mechanical Inspections—$350-$425 2. Termite Inspection—$75-$125 3. Credit Application fee with lender—$65-$350 4. Appraisal fee—$350-$400
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The Hunt Begins Deciding where you want to live goes a long way in determining the type and style of house you’re likely to find. If you like inner-city life for instance, your search could include properties very different from those in some of Houston’s planned communities such as Greatwood, Cinco Ranch or The Woodlands. Whether new construction or old, inside or outside the Loop, one story or two, under $100,000 or over $1,000,000, Houston has something special to offer the first-time, move-up or move-down home buyer.
Narrowing the Search No doubt, a house has to feel right. But emotions can change quickly if a house doesn’t work right, too. Once a home makes it onto your “seriously considering” list, you want to make a good preliminary personal inspection. Scrutinize the house with an eye toward how well it will work for you. No house will be perfect. Your job is to make sure that you can live with any problems (or repair costs). Here are some of the things to look for:
Outside the Home
Are eating areas, including those outdoors, easily accessible from the kitchen?
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Does kitchen traffic flow outside the work area?
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Are the stove, sink, and refrigerator arranged in an efficient triangle?
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When appliance doors are open, do they block access to other appliances, cabinets, or doorways?
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Do bedrooms have two uninterrupted wall surfaces to make furniture arrangements easy?
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Are there enough baths for the size of your family? Is access convenient?
Inside the Home •
Are there signs of excessive dampness or flooding?
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Do exposed beams and joists appear to be in sound condition?
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Is the attic well-insulated? Any water damage from a leaky roof ?
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Are floors even and sturdy?
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Are walls free from large cracks?
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Do all windows and doors work smoothly?
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Are bathroom fixtures in good condition? Does the water flow remain steady when taps are on and toilets are flushed? Does water drain well?
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Do trees and shrubs appear healthy?
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Does the yard slope so that water will drain? Look for low spots near the house.
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Are sidewalks and driveways in good condition? Will water drain?
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Are the surface materials of the house in good repair?
Are there enough electrical outlets in all the rooms?
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Do windows, doors, and chimney sit plumb and square?
Is the capacity and recovery time of the water heater adequate for your family?
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Is the roof free from sags and dips? Are shingles in good repair?
Are kitchen appliances in good repair? Which ones come with the sale? Will your appliances fit if need be?
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Are gutters and downspouts in good shape?
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Check to see if weep holes are clear and above ground level.
Do the furnace and air conditioner appear to be well-serviced?
The Floor Plan
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Does the main entry lead you to the living room, or did you have to pause to figure out which way to go?
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Is the kitchen close to the garage or another entry for ease of unloading groceries?
When interest turns to decision-making and an offer is written, plan to bring in a professional inspector of your choice to help you determine if the property meets your needs and requirements. Several choices concerning repairs are built into the TREC contract.
House Hunting Priorities Getting Started. House hunting doesn’t have to be an agonizing process of elimination or a series of wild goose chases. Use this checklist to help you set priorities and determine exactly what you want in your home.
����� Number of baths
Location
����� Family/great-room
General location _______________________________________ Distance from work _______________________________________ Close to schools _______________________________________
����� Average-size kitchen ����� Extra-large kitchen ����� Eat-in/country kitchen ����� Office/den ����� In-house utility room ����� Formal living and dining rooms ����� Fireplace ����� Walk-in closets
Other location features _______________________________________ _______________________________________
Style & Decor
Overall Features
����� Brick exterior
����� One story
����� Wood exterior
����� 1.5 story
����� Formal or informal interior
����� Two story
����� Open floor plan
����� Single Family Home
����� Wood floors
����� Townhouse
����� Tile floors
����� Condominium
����� Fully carpeted
����� Average-size lot
����� Built-ins
����� Large lot
����� Exterior elevation: contemporary, traditional, colonial, other
����� Wooded lot
Great Extras ����� Pool
����� Patio
����� Greenhouse
����� Deck
����� Skylights
����� One/two/three car garage
����� Hot tub
����� New Construction
����� Exercise room
����� Pre-Owned (Age Range)
����� Media room
����� Other:
����� Wet bar
_______________________________________
����� Burglar-alarm system
_______________________________________
����� Quarters
Interior Features
����� Other:
����� Number of bedrooms
_______________________________________
����� Master bedroom suite
_______________________________________
����� MB Rm. up or down 5
Buying Your Home LOAN APPLICATION MAKING AN OFFER NEGOTIATING EXECUTED CONTRACT DEPOSIT OF EARNEST OPTION PERIOD INSPECTIONS APPRAISAL TITLE COMMITMENT LOAN APPROVAL REPAIRS/NEW CONSTRUCTION SURVEY—IF NEEDED CLOSING & FUNDING
MOVING DAY !!!!! 6
Mortgage Options & Info As a homebuyer, you have many kinds of mortgages from which to choose. Before you can start comparing rates and lenders, you’ll need to decide what type of home loan suits you best. 30-Year Fixed Mortgage. This is one of the most popular loan options with first-time homebuyers. Because of the longer term this mortgage offers one of the lowest possible fixed monthly payments. This long term also causes it to be more expensive over the length of the loan because the interest accrues for much longer. It is important to know however that extra principal payments can be made which would reduce the overall term of the loan and decrease the total interest paid. 15-Year Fixed Mortgage. For those looking to build equity quickly this loan is an excellent option. Interest rates are about a half percentage point lower than on a 30-year fixed note. A borrower will pay only about half as much interest over the life of a 15-year fixed loan vs. a 30-year fixed loan. Two-Step Mortgage. This is usually a 30-year loan with a rate that adjusts after seven years. The benefit is the low initial interest rate, but at the point of adjustment, the rate can climb several percentage points, often to just above the average interest rate for a 30-year fixed loan. This mortgage is an excellent option for those who plan to move within the seven-year period.
If you’ve ever shopped for a home loan, you have discovered that rates vary from lender to lender. The benefit of a low interest rate might be offset by higher lender costs. To help in comparing rates, lenders are required by law to divulge the Annual Percentage Rate (APR). The APR is the calculation that combines rates, points and related fees to more accurately reflect the costs of the loan. With the mortgage market constantly changing, it is imperative that you find a reputable lender. Also visit www.hud.gov for other financial questions. For most mortgages, paperwork is a basic necessity. Because missing paperwork can delay the process, it’s important to have the following documents in order as soon as possible: •
Earnings statements or proof of selfemployment (W-2 form, pay stubs and tax returns)
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Debt information, such as car notes and credit cards
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Bank statements for the most recent 2 months, all pages.
A wide variety of other types of loans are also available to the home-purchaser. Examples of some of these financing options are as follows: •
Jumbo Conventional Loans to 5 Million
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FHA Loan Programs
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VA Loans
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Portfolio Loans
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Construction Loans
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Mortgage Companies This list has been compiled as a service for the client. The client needs to feel no obligation to use any of the above lenders and may use any lender of their choice. ZEUS MORTGAGE Steve Kaufman skaufman@askzeus.com 713-275-7801 WOODFOREST Sue Izard sizard@woodforest.com 832-375-2647 office 832-257-2094 cell Jon Sanderson 281-296-9484 office 713-705-2420 cell jonsanderson@sbcgobal.net K & G CAPITAL MORTGAGE Stephanie Carlton 281-799-6601 stephanie@mamcusa.com PATRIOT MORTGAGE Al Saylor skysaylor@aol.com 281-435-8586
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Home Inspections A home inspection by a qualified inspector of the Buyer’s choice is a major component of most residential real estate transactions. The inspector should be a person who regularly provides such service and who is either licensed as an inspector by the Texas Real Estate Commission or otherwise permitted by law to perform inspections. Home inspections might include but are not limited to the following: •
Structural Systems foundation, roof, bracing-walls, framing, ceilings, floors, windows, screens, doors, water penetration, fireplace and chimney, stairs and landings, attached balconies-decks and porches
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Electrical main breaker box, attic wiring,
Plumbing water heater, tubs, showers, toilets, faucets, drains
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Other Systems swimming pool & equipment, spa, hot tub, sauna, lawn & garden, sprinkler system, alarm & fire detection equipment, gas lines, outdoor cooking equipment
Mechanical Systems heating system, cooling system, built-in equipment: range, oven, disposal, dishwasher, trash compactor, microwave, vent hood, exhaust fans
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Environmental lead based paint, asbestos, wetlands
switches, outlets, fixtures, circuit breakers, ceiling fans, G.F.C.I. test, aluminum wiring A typical home inspection might include structural, electrical, mechanical and plumbing inspections. It is important for you, the buyer, to call and interview the inspector to arrive at an understanding of what your inspection will cover. Pest control inspections should be made by a company licensed to do so in the State of Texas. Environmental inspections are generally made by specialists.
TEXAS INSPECTION PARTNERS Glenn Wharton Scheduling with Madonna– 877-233-0811 David Jesiolowski 281-904-3226
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Insuring Your New Home Asking key questions when shopping around for a policy can lead to less expensive rates.
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Ask about discounts for items like burglar alarms, smoke detectors, dead bolt locks, and fire extinguishers. Some companies offer discounts for an indoor sprinkler system or an alarm system that reports to a central office or police.
A basic policy may cover losses to home and property due to fire, windstorm, hail, theft, and vandalism. Damage from nuclear radiation, flood, and war is typically excluded. Be sure to compare what a policy does and does not cover.
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Shop around. Check with friends to see what kind of service they get when making claims, and read up on consumer publications.
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Ask about a non-smoker’s discount.
In the Houston area it is important to check into and consider the possibility of acquiring flood insurance. This is a separate insurance policy and on some homes may be a lender requirement.
Consider an umbrella policy that combines the home, other real estate, and vehicles all in one policy. Having one policy may save on your total insurance premium.
You may want to look for a policy that automatically increases coverage to match inflation. Review it each year. The added value that remodeling projects bring to your home is not covered automatically. If you think your house is overvalued and you are paying too much, ask an agent to do a cost estimate.
When shopping for home insurance - take care - if a policy seems too inexpensive to be true, it probably is. A low premium isn’t much of a consolation if you can’t get a claim paid.
How do you obtain a reasonably priced homeowner’s insurance policy without sacrificing protection?
Because you’ll need to prove that you have home insurance at the closing, the best time to shop for rates is after the offer has been accepted and you are waiting to close.
Money Saving Ideas •
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Raise the deductible. By raising the deductible from $500 to $1,000, you could save on the policy premium. Raising the deductible to $5,000 might net an even larger savings. This makes particular sense for high-value properties where the dollar savings are more significant. Inquire about loyal customer discounts. Studies show that customers who insure long term with the same company have fewer and lower claims.
Home Warranties You may also want to consider a home warranty program. Coverage typically includes such items as water heater, central air & heating systems, kitchen appliances, and some plumbing and electrical items. Optional coverage is also available for items such as garage door openers, pool/spa and whirlpool bath equipment and clothes washer and dryer. Review the policy carefully as the coverage, terms and conditions may vary based on the type of coverage requested or the company furnishing the warranty.
Insurance Companies ALLSTATE 281-363-2444 office 877-363-2444 toll free 2203 Timberloch, Suite 251 The Woodlands, TX 77381 GREATER HOUSTON FINANCIAL SERVICES Mitzi Fox 936-321-7500 XT. 163 office mitzis@ghfs.net 19075 I-45 South Shenandoah, TX 77385 NATIONWIDE Melissa Ray 281-364-9994 office 26607 Oak Ridge Drive Spring, TX 77380
Utility Providers ELECTRICITY Entergy: 1-800-368-3749 GAS Centerpoint/Entex: 1-800-752-8036 TELEPHONE Consolidated Communications: 936-539-7296 Southwestern Bell: 866-999-6181 TELEVISION-CABLE Time Warner Communications: 1-800-776-9993
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Making a Smooth Move Six to Eight Weeks Out:
Two to Four Weeks Out:
o Set up a calendar for your move.
o Service your car, especially if traveling a distance.
o Contact a moving company. o Decide what goes with you, what to sell or give away. Hold a garage sale. o Begin packing seldom-used articles. o Organize a list of individuals, companies and institutions for change-of-address notices.
o Dispose of flammable liquids such as spray paints, solvents, thinners and gas in lawn mowers. o Return/retrieve borrowed items. o Clear up outstanding accounts.
o Collect and keep important papers handy (medical, insurance, etc.).
o Transfer checking and savings accounts and contents of safe deposit box.
o Gather information on prescriptions.
o Help your children host their own going away party.
o Organize a list of important phone numbers. o Create a list of individuals, companies and institutions to notify of change-of-address.
o Have rugs and draperies cleaned. o Return library books.
o Order a telephone directory for your new area and inquire about phone connections.
o Begin serious packing of items you won’t need over the next few weeks.
o Find out how much advance notice is required to set up utilities.
One to Two Weeks Out:
o Choose a new bank. o Check school schedules and enrollment requirements. Transfer records. o If required, call the Department of Motor Vehicles for information on changing your drivers license. o Inquire about activities for your children. o Start collecting suitable containers and packing materials if you plan to do the packing yourself.
Four to Six Weeks Out:
o Organize packing and moving of special items such as: electronic equipment, lamps, china, crystal, fine furnishings. o Take pets to the veterinarian. Most states require health certificates and rabies inoculations. o Pack an “Instant Aid” box containing things you’ll need upon arrival: paper towels, powdered detergent, sponges, light bulbs, paper plates, toothpaste, trash bags, hand soap, hammer, and toilet paper.
One to Three Days Out: o Pack suitcases for the trip to your new home.
o Begin to use up supplies of canned goods, frozen foods and other household items. Buy only what you need.
o Empty the refrigerator and freezer so they can dry at least 24 hours.
o Alert the post office that you will be moving. Send out change of address cards.
o Keep information lists, moving details and phone #’s in an easy to find location.
o Visit some of the places that hold happy memories. o Hold an open house for friends to say goodbye. Keep it simple. o Arrange disconnect dates with local utilities. o Set up a moving expense log.
o Collect and organize items that should be packed together.
Moving Day: o Be on hand for the movers. Check and sign the inventory. o Keep a copy.
Each transaction is unique. The order of events may vary and the steps in one transaction may be very different from another. The information contained in this report was obtained from reliable sources.
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