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Homebuyers’ Kit
NMLS ID #2239 (nmlsconsumeracces.org)
Owning a home requires a large investment of time, money and energy. If you
are a first time home buyer, or perhaps purchasing again after several years,
there are a few things to know and brush up on. Being a knowledgeable
homeowner will benefit you for years to come.
Homeownership also provides the opportunity to create the perfect ambiance
of your choosing. You can own pets, paint rooms whatever color you prefer,
make changes to lighting, floors and carpeting, landscaping and anything else
- with no required landlord approval. Freedom to create a home where
memories and traditions will be made to cherish for years to come and where
you can create a unique environment that’s all your own.
Remember, purchasing a home gives you financial advantages that renting
cannot, offers a sense of community and well being and most importantly gives you the freedom to create the home of your dreams.
At TJC Mortgage, Inc, we know that you have options when choosing a
mortgage company to assist with your new home purchase and we want you to
know that we want you to choose us!
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Finances
The first thing you must do is get your finances in order. Find out what your
credit report and credit score is and correct any inaccuracies as your credit
score will determine your ability to borrow money. Other considerations are
how much debt you currently have, your combined household income, and any
additional assets. All of these things help you determine how much you can
afford.
You can schedule an appointment with TJC Mortgage, Inc. and receive a free
credit report and pre-qualification. (Pre Qualified VS Pre Approval)
At this point, attempt to keep all of the above consistent. Do not purchase a
new car or incur other substantial debt. Only strive to improve your credit score
and save money.
After you are pre-qualified, it is time to decide what kind of home you prefer
that will fit within your budget.
Finding Your New Home
Carefully select which area of town you prefer to live in, considering distance to
work, schools and shopping. You will also want to research property tax rates
and crime statistics. When you buy a home, you care making an investment
and the neighborhood is a prime factor in determining how good an investment
your home turns out to be.
Decide if you want new construction or an existing home. A new home may be
your best option if you are interested in choosing your floor plan, lot, colors,
upgrades, and landscaping.
Or, perhaps a pre-owned home, ranging from a fixer upper to move in ready.
Some considerations are a pre-owned home may be less expensive and if
remodeling you can choose colors, etc, but be educated and prepared for
unexpected expenses such as HVAC, roofing or plumbing issues.
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Contact a Real Estate Agent
After you decide the location and the style of house you prefer, contact a real
estate professional. They are trained in many areas that will be beneficial to
your search and can help you:
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Assess areas and homes in your price range
Assist in finding homes that meet your wants and needs
Knows the market, making it easy for them to advise you with negotiations
Can write your purchase offer
Will help protect you with sometime complicated real estate transactions
When you find a house and decide this may be “the one” your real estate
professional will compose a purchase offer, or proposal. This offer is
accompanied with a check for earnest money, showing your good faith to the
seller. Your realtor or an attorney will hold your earnest money.
If your offer is accepted, you will be notified by your real estate professional. At
this time you have a binding contract and your earnest money is applied to your
down payment.
The seller may submit a written counter-offer. You are free to accept or reject it.
If you reject it, your earnest money is returned to you. If the seller rejects your
offer ask your realtor to inquire about the reason, assisting you in future offers.
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Loan Application Process
Now it is time to begin the loan application process. You will meet with a TJC
Mortgage, Inc. advisor to review mortgage options, the application process and
have your questions answered. These are the steps to expect:
• A loan processor will collect your documents and verify your financial
information. If there are any late payments or other issues, the mortgage
processor works with you to resolve these issues.
• An appraisal from a licensed appraiser will be ordered by the mortgage
processor. The appraiser will complete a full interior and exterior appraisal of
the property.
• The loan processor gathers documentation such as the application and title
and sends this information to the underwriter.
• A mortgage loan underwriter reviews your financial profile, providing you
with a conditional approval of the mortgage terms and conditions upon
approval. When the file is approved, the closing department will prepare all
documents for closing and contact your realtor to schedule the closing date.
At this time, the closing department processes the signed paperwork and
documentation.
• The down payment ranges from 3% to 20% of the price of the house. For
down payments less than 20% you may be required to pay mortgage
insurance. The more you pay down, the less your payment will be and the
more equity you will have in your new home.
• Home inspection. It is always recommended to have a home inspection
performed by a certified, experienced home inspector, even on new
property.
• Closing costs include fees for state and local governments and fees for
obtaining and originating your mortgage closing costs usually range from 2%
to 6% of the loan amount.
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Loan Options
When the purchase of your new home has been negotiated and you have a
contract in hand, know that TJC Mortgage, Inc. will assist in determining the
best mortgage for your particular situation. A few choices are:
• A Fixed Rate Loan allows you to lock in at a fixed rate for the life of the loan,
allows low down payment options, there are a variety of terms and the
monthly payment never increases. If you plan to own your home for several
years, this may be the best option for you.
• An Adjustable Rate Mortgage may begin with a lower initial interest rate.
Rates may rise or fall as interest rates increase or decrease. There is a limit
on the amount the rate can fluctuate over time.
• FHA Loans have been the most popular for choice for several years. The
minimum credit score for an FHA loan is lower as well as minimum down
payment. This loan is particularly appealing to first time home buyers.
• Conventional Loans are not guaranteed or insured by the federal
government. Requirements may be slightly stricter since conventional loans
are financed and insured by private lenders and investors. However, this
alleviates some guidelines and regulations enforced by the government with
an FHA loan. Sellers may be more likely to choose an offer with a preapproved conventional loan because of the stricter requirements begin met.
• VA Loans are available if you are a service member, Veteran or eligible
surviving spouse. VA Home Loans guarantee a portion of the loan enabling
private lenders more favorable terms. A VA loan offers the following
advantages:
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Possibility of no down payment.
No private mortgage insurance.
VA limited closing costs.
Closing costs may be paid by seller.
You do not have to be a first time home buyer.
You can reuse this benefit.
If you have difficulty making payments VA may be able to offer
assistance.
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Closing Day!
• A representative of your lender, or closing officer, your real estate agent, the
sellers and perhaps their real estate agent, and an attorney will be at the
meeting.
• Bring your homeowners information showing adequate home owners
coverage for the property.
• You will need a certified or cashier’s check for your down payment and
closing costs. Your lender will provide an exact amount before your closing
date.
• The closing officer will verify all of the information, then will proceed to
explain each closing document, asking you to sign each form. If you have
any questions during this process, do not hesitate to ask!
The Settlement Statement lists:
• All of yours and the seller’s closing costs.
• A summary showing how funds are transferred between you, the seller and
the lender.
• The net amount due from you, the buyer and the net amount that will be
paid to the sellers.
• Commissions to the real estate agents.
• Points and other fees charged by the lender.
• Any interest due from the date of the closing until the first mortgage
payment.
• Amounts that are deposited in escrow for insurance and property taxes.
• Charges for the title search required by the lender and title insurance
policies for you and the lender.
• The fee to cover the lender’s cost of researching the tax rate for the
property.
• Generally the left side of the settlement statement lists you, the buyer’s
transactions, while the right side lists the seller’s. The costs are totaled at
the bottom and the closing officer will request a check for the down payment
and closing costs.
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Getting Ready to Move
Congratulations!
You have just purchased a home! If the agreement states you immediately take
possession of your home, you will receive keys and are free to begin moving!
Occasionally the sellers may have possession a while longer, in which case it
will be agreed upon by all parties when you will receive the keys to your new
home.
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