Monthly Archives: December 2016

Buying a Home: Where to Start Your Home Search

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new home owner receiving key in hand after buying homeAre you looking to be a new home owner in the new year?  Buying a new home is a wonderful New Year’s resolution, and one that comes with some prep work by the soon-to-be home owner (after all, this is a major purchase and decision).  If you’re ready to get started on fulfilling your resolution, here are the steps you can take to get your home search off on the right foot.

Get your documents in order

If you want to make the process of getting approved for a mortgage smooth(er), start compiling financial documents now for future use.  Your mortgage lender is going to ask for different documents based on your financial circumstances, but here are a few documents to start locating and organizing for your mortgage loan application:

  • W-2’s
  • Pay stubs
  • Business profit and loss statements or 1099
  • Bank statements
  • Tax returns (1-3 years)
  • Investment statements
  • Titles (automobile, real estate, etc.)
  • Canceled rent checks (or proof of payment from landlord)
  • Gift documentation (if part or all of your down payment was gifted)
  • List of debts (your mortgage lender may be able to get this from your credit report)

Find a mortgage lender

There are a lot of mortgage lenders out there; it’s normal to feel overwhelmed by finding one lender out of all the options, but it’s important.  Choosing the right mortgage lender makes the process smooth and can save you money in the process.

To start with, ask yourself how much you know about the mortgage process and your preferred method of communication.  Make sure you choose a reputable company to avoid any headaches.  Once you know your preferred mode of communication (face-to-face vs. virtual), and the amount of assistance you need navigating through the home buying process, now it’s time to narrow your options.

Let’s make one thing clear: though you do need to apply to get the exact mortgage rate, you do not need to apply to get possible mortgage rates and a list of fees.  Any mortgage lender should be able to give you that information up front without an application. Once you have this information, ask your potential mortgage lender these questions:

  1. What is the current mortgage rate? (Be aware that mortgage rates, even fixed mortgage rates, do rise and fall over a period of time and that you may get a different rate.)
  2. What fees should I expect to pay? (A full, complete list!)
  3. What kinds of loans do you offer? (If you are interested in a loan specifically for veterans or think that a HUD loan is the best option, ask the lender if they offer that loan type—not all do.)
  4. What documents do I need to apply?
  5. What do you need from me to make the process smooth? When do you need this information?

Contact a local realtor

Once you have your mortgage lender selected, and you know you can get a loan, now it’s time for the fun of house hunting to begin.  Before you go on your first home tour, make a list of ‘must-haves’ and ‘would be nice to have’ to help guide you as you look. Be aware that you may not be able to get everything on your list, and be ready to adjust your expectations.

To set up home showings and guide you through the process, contact a local, experienced real estate agent to get started (here are other signs of a good real estate agent).  They can guide you through the process of finding and buying your home, and get you on your way to fulfilling your New Year resolution.

Home Buying: Earnest Money FAQ’s

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Photo of small chalk board with message about home sweet homeBuying a home seems so simple on all those TV shows: they just search for a home and then buy it, right?  In reality, the process of searching for and buying your home is filled with terms and twists along the way.  Sometimes you find the perfect property—and it’s the one every other buyer wants.  One way to get an edge on your competition is to include earnest money in your offer.

What is earnest money?

Earnest money is a deposit included with your offer that shows you’re serious about purchasing the home. The amount of earnest money you include in the offer is applied to the purchase price at the time of the home sale. For example, if you include an earnest money amount of $2,000 in your offer of $150,000, you will pay $148,000 at closing.

How much earnest money is the right amount?

There is no right amount of earnest money.  Ask your real estate agent for their opinion on how much earnest money is right for your home sale.  On average, the amount of earnest money varies from state to state, and even among communities and counties in Wisconsin.

What if I need to withdraw my offer?  What if the home sale doesn’t go through?

If the purchase falls through because of any of the contingencies included in your offer, such as an issue found in the home inspection report, you, the buyer, receive the earnest money in full. If you decide to withdraw from the sale for a reason not included as an offer contingency, the buyer and seller can negotiate an agreement to compensate the seller while still giving the buyer a partial refund. If you have any concerns about earnest money, ask your agent when you put together your offer.

What’s the importance of earnest money?

Earnest money demonstrates that your offer is genuine and committed. When you include earnest money in your offer, you show the seller you are making a down payment and are serious about the transaction.

If you have any more questions about earnest money, ask your agent about earnest money and the particulars of your transaction.  We know that we’ve helped our clients work through the specifics of earnest money in Wisconsin, and experience counts.