BUYING YOUR HOME W I T H C O L D W E L L B A N K E R TO M L I N S O N
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HOME-BUYING PROCESS ORIENTATION During the initial interview, you’ll share your expectations and learn about the process of buying a home. You’ll obtain valuable market knowledge about areas, prices, financing, your qualifications, and normal procedures. Taking into consideration all your wants, abilities, and needs, you decide on price, size, style, and area. At this point, we will begin the search to find your new home. FINANCING A strategy for a successful purchase is to apply for pre-approval prior to finding a home. Negotiating a contract with a loan commitment can be advantageous to you. There are specific things necessary to make a loan application and assembling them can take some time. It is recommended to use the enclosed list. FORMULATING AN OFFER When you find the right home, you will want to make an offer to purchase it. This is done in writing specifying every detail that is part of the agreement. There are standard forms that your Realtor® can provide you. The last step is to assemble all of the loan papers at the settlement. You will need to pay the balance of your down payment and your closing costs at this time. Usually, a cashier’s check is required for these funds. EARNEST MONEY Unless otherwise stated, an earnest money check, cash, or note shall be provided when an offer is made. Earnest money is simply a form of deposit. It shows your good faith, or intentions to buy the property. Typically, earnest money should be about 1 to 2% of the sale price and is deposited within 48-hours of your offer being accepted. Once the transaction gets to closing, the earnest money will be applied to your closing costs.
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HOME-BUYING PROCESS
Buyer considers purchasing a home.
Schedule and tour homes with Realtor®.
Select home and write an offer to purchase.
Accept inspection results or counter for repair remedy. Seller may reject.
Mortgage appraisal and mortgage approval.
Receive keys! Welcome home!
Buyer meets with Coldwell Banker Tomlinson Realtor®.
Discuss financial aspects and buyer needs.
Contract negotiations.
Arrange for home inspections.
Final walk-through.
Sign documents.
Home-buying process review with Realtor®.
Apply for mortgage pre-approval.
Offer accepted and earnest money deposited.
Formal applications for loan and insurance.
Closing disclosure received three days prior to signing.
Review closing statement.
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P O I N T S TO P O N D E R 1. Pride of ownership is a key reason for wanting your own home. Decorate it to your own taste and enjoy all of the benefits while making a great investment. 2. Building Equity: Real estate over time has been considered a good investment because most of it has appreciated. The effects of leverage can multiply the increase when borrowed funds are used to purchase the home. Many times, the largest investment a person owns is their home. Homes have been a good hedge against inflation. Homeowners build equity and can borrow against that equity for a variety of reasons that could include college, medical, or to start a business. 3. Qualified mortgage interest and home equity loans are deductible for Income Tax purposes. 4. Property taxes on a first or second home are deductible for Income Tax purposes. 5. A homeowner can exclude up to $500,000 of capital gain if married, filing jointly or up to $250,000 if single or filing separately for homes that have been the taxpayer’s principal residence for the previous two years. There is no age requirement for taking the capital gains exclusion like the “over 55” rule in the past. It is not necessary to purchase a replacement home more expensive than the one sold. Homeowners can buy a more or less expensive home with no tax consequences assuming their gain is less than the allowable amounts. 6. Preferential tax treatment on gains that have been made from capital assets held more than one year are permitted by IRS. This is especially important for homeowners with gains in excess of the allowable exclusion. 7. Mortgage payments include the interest for the time that the money has been used and principal to retire the debt over a period of time. Each month part of the payment is for principal accumulation. 8. You won’t be helping make your landlords’ mortgage payment.
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TRUST The Coldwell Banker brand is one of the world’s best-known and trusted names in real estate. In our increasingly mobile world, the strength of our name and our 100+ year-old history gives our clients peace of mind and the assurance that we do things right. ®
EDUCATION & EXPERIENCE Your Coldwell Banker REALTOR® is the best trained in the industry. Regular in-house classes, national speakers, and consistent continuing education keep our agents at the top of the industry.
COLLABORATION Locally, nationally, globally – Coldwell Banker’s worldwide network of more than 92,000 REALTORS® creates a resource like no other, so whether you are moving across town or across the country, your Coldwell Banker REALTOR® is best equipped to help you in your home search.
NEIGHBORHOOD KNOWLEDGE
COMMUNITY We’re not only REALTORS®, we’re your neighbors. We believe that being truly successful means playing an active role in making our communities better.
We make it our goal to know more about our neighborhoods than anyone else in the industry.
CBx Our proprietary technology suite helps us access big data and turn it into usable market intelligence, such as an analysis of consumer, demographic, and economic information, which can help us identify homes you might be interested in that may not even be on the market yet.
PHILOSOPHY It is our mission to consistently provide the highest quality, most innovative, and exceptional real estate service available anywhere. Our clients’ needs come first. Always.
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EXPERT GUIDANCE Let’s face it. Sometimes the home-buying process is hard. Market conditions, pricing, interest rates, and other variables can change daily. To navigate this sea of information, you want someone who will give you the straight scoop, attend to details, and strive to help you meet your real estate goals.
UNDERSTANDING Deciding to buy a home is a big deal. We get it. For most of us, purchasing a home will be the biggest financial decision we’ll ever make. You want someone in your corner to listen to your wants and needs, and who will then work hard to find the home that fits those desires – and your budget.
CLIENT CONNECT
The first client care service in real estate. With Client Connect you can take comfort in knowing that you will be assisted when you reach out for help, whether it’s before the house hunting fun or long after we give you the keys to your new home. It’s our philosophy that our clients get the care they deserve.
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YOUR DREAM HOME CRITERIA How many bedrooms? _____________________________________________________________ How many baths? ________________________________________________________________ How many living areas? ___________________________________________________________ What size garage? _______________________________________________________________ What area do you want to live? _____________________________________________________ What style home do you like? ______________________________________________________ When do you want to occupy? _____________________________________________________ What is most important to you in a home? ___________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ Are schools important? Yes or No If yes, which ones and why: __________________________ ________________________________________________________________________________ ________________________________________________________________________________ Where do you work? ______________________________________________________________ When is the best time to look? _____________________________________________________ If we found the right home for you today, is there be any reason that could keep you from buying it? _______________________________________________________________________ Does anyone else have to approve of your purchase? __________________________________
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F I N A N C I A L I N F O R M AT I O N Better decisions are made when they are based on good financial information. Knowing there are alternatives helps to determine the right choices. ESTIMATED PURCHASE COSTS It is important to know how much you’ll need to buy a home not only for the down payment but for all of the fees that are charged in connection with getting the loan and conveying title. MORTGAGE QUALIFICATION Discover what size mortgage you can qualify for using the same guidelines that a mortgage company uses. ALTERNATE FINANCING PLANS Choices will help you to make a better decision as to how to finance your new home. You deserve to know what options are available and that is exactly what you’ll get. MORTGAGE ACCELERATOR Discover the advantage of adding an additional amount of principal to your fixed rate mortgage on a regular basis to shorten the term and save tens of thousands of dollars in interest.
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P R E - A P P R O VA L A D VA N TA G E Applying for a loan and obtaining approval before a buyer finds a home they want to buy can be a distinct advantage. Making a loan application is going to need to be necessary eventually anyway unless they are going to pay cash for the home. PRE-QUALIFICATION Pre-qualification is a procedure where you get an opinion from a mortgage officer about how much you qualify for. In the process, any obvious difficulties that might cause problems might be discovered. This process is always recommended but it doesn’t have the advantages of a pre-approval. PRE-APPROVAL Pre-approval requires a complete application with credit reports and verifications. The Mortgage Company will issue a commitment subject to a specific interest rate and points and a satisfactory appraisal when the property is identified. Time limits are usually placed on pre-approval commitments. It is recommended to be ready to look at homes and make a decision after you receive your pre-approval commitment. THE ADVANTAGES OF BEING PRE-APPROVED ARE: 1. Looking at the right-priced homes. 2. Avoiding disappointment in deciding on a home that you can’t afford. 3. Saving money with a seller who is confident about taking their home off the market with buyers who have a definite loan commitment. 4. One less contingency that the seller will be concerned with to get their home sold. 5. Closing more quickly the lengthiest contingency is usually the mortgage approval. 6. The appraisal can be done quickly. 7. Minimizing the anxiety of not knowing whether or not you qualify.
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M O R T G A G E P R E PA R AT I O N EMPLOYMENT Names and addresses for two full years Gross monthly income W-2s for two years, if available Year to date pay stub Proof of income from rentals, investments, etc Proof of retirement, disability or Social Security Proof of child support or alimony paid/received If self-employed: Two years Federal Income Tax Returns Current year profit and loss statement CREDITORS Each creditor’s name addresses and type of account Account numbers for each Monthly payments and approximate balances Amounts of child care expenses BANKING Names and addresses of banking institutions Account numbers for all accounts Type of accounts and present balances MISCELLANEOUS List of assets in stocks, bonds, and property Life insurance cash value (documented if used as cash down payment) If applicant is selling a home, a copy of sales contracts Social Security numbers for all parties Veterans - Certificate of Eligibility & DD-214 Cash or check to pay for application fee PROPERTY Copy of sales agreement Copy of listing on property
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F I N A N C I A L D ATA Having this information available ahead of time will help a mortgage lender determine what loan type and how much is best for your circumstances. What size monthly payments do you want: $________ What price range are you looking: $________ How much cash is available? $________ Does this include closing costs? Yes / No Do you currently own? Yes / No Do you need to sell before buying? Yes / No How much do you think your home is worth? $________ What is the unpaid balance? $__________ Interest rate _____% term ________yrs. dated ___/___/___ type of loan ______________________________ Monthly payment $________ If renting, how much is your rent? $________ List your regular monthly payments (installment debt, revolving charges, student loan, etc.) Description Amount _________________________________________________ $________ _________________________________________________ $________ _________________________________________________ $________ Are all debts current? Yes / No Is there any problem with your credit? Yes / No What is your monthly income? $________ Your spouse’s monthly income? $________ Do you have any other monthly income? Yes / No If yes, how much? $________ Where are you employed? ________________________________________________ How long have you been employed there? __________________________________ Have you or your spouse ever taken bankruptcy? Yes / No If yes, explain: ___________________________________________________ Have you or your spouse had a home foreclosure? Yes / No If yes, explain: ___________________________________________________
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HOW I CAN HELP YOU REALTOR® A real estate agent is a Realtor® when he or she becomes a member of the National Association of Realtors®, The Voice for Real Estate®, the world’s largest professional association. The term “REALTOR®” is a registered collective membership mark that identifies a real estate professional who is a member of the National Association of Realtors® and abides by its strict Code of Ethics*. MLS MEMBERSHIP As a member of the Multiple Listing Service, I can show you any property. If you should see an ad in the paper or a sign in a yard, call me to find out the information. If you want to see it, I’ll show it to you. FOR SALE BY OWNER Many times a homeowner will work with an agent, even though the home is not listed with a real estate broker. It is necessary for the agent to introduce the buyer to the property. A homeowner trying to sell his home himself is usually doing so in hopes of saving the commission. Coincidentally, this is the reason a buyer wants to deal directly with a homeowner. If you want to see a home offered by the owner and want the advantages of our services, please let me contact the owner and set the appointment. BUILDER’S HOMES Most builders are more than willing to work with agents who accompany the buyer to the property on the initial visit. And can get all the information you need to make any decisions. By working through me with builders, you get all the services offered by me in addition to those offered by the builder. You’ll get more, but you won’t pay more for it.
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BUYER AGENCY When a buyer agency relationship exists between us, you are entitled to special fiduciary client level services. LOYALTY The real estate agent must act in the best interest of the buyer OBEDIENCE Must follow the lawful instructions DISCLOSURE Of all material facts such as relationships between agent and other parties, existence of other offers, status of earnest money, seller’s financial condition, property’s true worth, commission split with other brokers, and legal effect of important contract provisions. CONFIDENTIALITY Any discussions, facts, or information that should not be revealed to others but does not include responsibility of fairness and honesty in dealings with all parties. ACCOUNTING IN DEALINGS Reporting of where any money placed in the hands of the broker is kept. REASONABLE SKILL AND CARE Arriving at a reasonable purchase price and advising buyer of such, affirmatively discovering material facts and disclosing them to the buyer, investigating the material facts related to the sale. With buyer agency, your interests will be represented in the purchase of your home. This is different from a typical sub-agency transaction where the buyer is not technically represented. Agency is a legal relationship and a written agreement should be completed to explain all the duties and responsibilities.
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W H O PAY S T H E C O M M I S S I O N ? THE SELLER In many cases, the Seller has signed a listing agreement with his agent specifying a certain fee to be paid for selling the home. It can include provisions for splitting that fee with the selling agent, regardless of agency representation. THE BUYER In some cases, the Buyer pays his agent a commission as set out in their written agreement. If the buyer pays his agent from his separate funds, it would not be appropriate for the buyer’s agent to also accept part of the fee paid by the seller. INDIRECTLY, THE BUYER DOES However, an argument can be made that the buyer indirectly pays the commission even if it comes from the seller’s proceeds. The assumption is that the buyer could have bought the home for less had it not been listed and the buyer could have dealt directly with the seller. THE CLIENT DETERMINES HOW THE AGENT IS PAID The seller agrees to pay his agent in the listing agreement and the sub-agent of the seller who sells the property. The buyer agrees to pay his agent if buyer agency is elected. In some cases, the buyer directs his agent to try and be paid from the seller’s proceeds. In any event, each party pays their agent as specified in their written agreement.
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PROTECTION PLAN Some sellers provide a Home Protection Plan for the buyer that covers certain items for a one-year period like: Heating and air conditioning systems Interior plumbing Built-in appliances Electric pool equipment If a Home Protection Plan is not provided on the home you contract for, you can acquire the coverage yourself. The price of programs will vary in price and coverage and among carriers.* HOME INSPECTION Usually, the seller will provide a property disclosure for interested buyers prior to writing a contract. This will declare the material facts about the physical condition of the property. The property disclosure does not take the place of a buyer’s inspection that is usually made after a contract is completed. A provision for a home inspection can be added to the sales contract identifying the areas to be inspected by a professional inspector. The purpose of the inspection is to find major defects in the home. The areas of concern include but not limited to:
MECHANICAL – heating, air-conditioning, appliances. PLUMBING – fixtures, lines, water heaters, sewers. ELECTRICAL – wiring, out of date systems. STRUCTURAL – doors, windows, roof, foundation, drainage, ventilation, and environmental hazards.
I will be happy to supply a list of recommended inspectors. You are encouraged to accompany the inspector to ask questions and receive a written report itemizing any areas of concern. * Ask to see additional pamphlet for more information.
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A D D I T I O N A L I N F O R M AT I O N What to keep from your closing If you’ve never bought a home before, get ready to sign a lot of paper—most of it in duplicate. What of this stack of documents is particularly important to stow away? HUD-1 SETTLEMENT STATEMENT Itemizes all the costs—commissions, loan fees, points, hazard insurance—associated with the closing. You’ll need it for income tax purposes if you paid points. TRUTH IN LENDING STATEMENT Summarizes the terms of your mortgage loan, including the annual percentage rate and recession period. MORTGAGE AND NOTE Spell out the legal terms of your mortgage obligation and the agreed-upon repayment terms. DEED Transfers ownership to you. AFFIDAVITS Binding statements by either party. For example, the sellers will often sign an affidavit stating that they haven’t incurred any liens. RIDERS Amendments to the sales contract that affect your rights. Example: The sellers won’t move out until two weeks after closing but will pay rent to the buyers during that period. INSURANCE POLICIES Provide a record and proof of your coverage. Sources: Credit Union National Association; Mortgage Bankers Association; Home-Buyer’s Guide (Real Estate Center at Texas A&M, 2000)
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1 0 Q U E S T I O N S TO A S K L E N D E R S Your relationship with a lender can potentially last 30 years. That’s a long time to be unhappy. To find a lender and loan that fit your needs, ask lending companies: 1. What are the most popular mortgage loans you make? Why? 2. Which type of mortgage plan do you think would suit us? Why? 3. Are your rates, terms, fees, and closing costs negotiable? 4. Will I have to buy private mortgage insurance? If so, how much will it cost, and how long will it be required? PMI is usually required if you put down less than 20 percent. Most lenders will let you discontinue the policy when you reach 20 percent equity by paying down the loan. But you’ll likely have to initiate that change. Lenders are required to cancel your PMI only when you reach 22 percent equity. 5. Who’ll service the loan—your bank or another company? 6. What escrow requirements do you have? Examples: number of days in advance of closing that money has to be deposited; form money must be in, such as cashier’s check. 7. How long is your lock-in period (the time that the quoted interest rate will be honored)? Will I be able to obtain a lower rate if rates drop during this time? 8. How long will the loan approval process take? 9. How long will it take to close the loan? 10. Are there any charges or penalties for prepaying the loan? Source: Real Estate Checklists & Systems, www.realestatechecklists.com. Used with permission.
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S AV E O N H O M E O W N E R S INSURANCE Homeowner’s insurance premiums are expected to rise , according to the Insurance Information Institute. More prevalent storms, hurricanes, floods, and wildfires are the biggest culprits behind the increase. Blame mold claims and stock market losses by insurance companies, as well. To obtain insurance at a good rate: 1. Review the Comprehensive Loss Underwriting Exchange (CLUE) report on the property you’re interested in. CLUE details the property’s claims history for the most recent five years, which insurers may use to deny coverage. Make the sale contingent on a home inspection to ensure that problems identified in the CLUE have been repaired. 2. Seek insurance coverage as soon as your offer is approved. You must obtain insurance to buy. And you don’t want to be told at closing that the insurer has denied your coverage. 3. Maintain good credit. Increasingly, insurers are using credit-based insurance scores to determine premiums. 4. Buy your homeowners and auto policies from the same company and you’ll usually qualify for savings. But make sure the discount really yields the lowest price. 5. Ask about other discounts. For example, retirees who are home more than working people may qualify for a discount on theft insurance. 6. Seek group discounts. If you belong to any groups, such as associations or alumni organizations, they may have deals on insurance coverage. 7. Investigate a government-backed insurance plan. In some high-risk areas, federal or state government may back plans to lower rates. Ask your agent.
Source: Real Estate Checklists & Systems, www.realestatechecklists.com. Used with permission.
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MUTUAL COMMITMENT IF I WILL Make my best effort to find the home that meets your needs until you either find a home or tell me to stop looking, Commit my time, resources, and experience to find exactly what you want, while incurring my own expenses
WILL YOU Tell me what you like and dislike about the homes we look at? Tell me if you want to look at a home listed with another broker, builder, or for sale by owner? Tell me if you feel the need to talk to another agent? Let me know if your plans change? Work with me until we find you the right home?
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PURCHASE AND SALE AGREEMENT I will supply a complete set of the buyer’s paperwork we will fill out when making an offer on your dream home. It will be very helpful for you to review the paperwork ahead of time. This will give us the opportunity to discuss any questions you have before actually writing an offer. THANK YOU again for reviewing this book I have prepared for you. I am looking forward to working with you… and being your Realtor® for life.
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MISSION TO S E RV E O U R C O M M U N I T Y W I T H T H E HIGHEST DEGREE OF EXCELLENCE
VISION TO E N R I C H T H E L I V E S O F A L L T H E P E O P L E W E TO U C H
VA L U E S I N T E G R I T Y, P R O F E S S I O N A L I S M , S E R V I C E , L E A D E R S H I P, C O M P A S S I O N
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