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Step 1: Figure out how much home you can afford
What you can afford depends on your credit, income, down payment, monthly expenses, and interest rate. The calculators on this site can help, but it's best to talk to a lender to find out the exact amount. I can recommend two that have done a great job for my clients in the past, or you can find your own.
Kara Robbins with Gateway Mortgage - www.utahhomesloan.comKrobbins@gateway.com
801-628-3573
Need help with your closing costs? In Utah most buyers don't have the money for a down payment or closing cost. In this case you can ask the sellers to contribute money for your closing costs and there are many programs with 100% financing.
What is Earnest Money and how much do I need? Earnest money is the money you put up as value goods for the contract. This money is put into escrow to ensure that both parties complete the contract. I recommend to my clients that they put 1% of the purchase price for earnest money. This is just a recommendation, you can put whatever amount you would like, with the exception of HUD home. If you have any questions on this please feel free to contact me.
Step 2: Find your home
Now that you know what you can afford, it is time to find a home. When deciding on a property, there are multiple factors to consider:
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Price Range: Usually, when you are preapproved with a lender, they will give you either a price range with a low and high end, or they will give you the maximum amount you can borrow and still stay in most guidelines. You must consider the percentage of your income that you are willing to put towards your mortgage payment. Remember, many people like to fix up or furnish their new home and need the money to do so. Make sure you will have enough money left over each month to feel comfortable in your new home.
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Location: When choosing a home, you may also want to consider its location. Here are some questions you may want to ask yourself: How far will I have to drive to work, and am I willing to drive it? Is this home close enough to the kids' school? Is this a neighborhood I want to live in?
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Type of Home: It is very important to get what you want out of the home you purchase. For example, if you love to play football with the kids, perhaps a home with a larger backyard is suitable. Or if long soaks in the tub are your ideal alone-time, consider looking for a master bathroom with a big tub. It is also important, however, to be realistic as a home-buyer. In most cases, the saying "You get what you pay for" is pretty accurate, so keep in mind that if you want certain ammenities, you may have to pass on others to stay within your price range.
Step 3: Make an offer
Once you have found a home you like, the next step is to make an offer on the property. An "offer" is basically defined as what you, the buyer are willing to pay the seller for the home, and also what terms and conditions must be met by both parties. An offer is put in writing in the form of a Real Estate Purchase Contract or a REPC. The REPC will identify both parties, the property, include all deadlines, legal purposes and signatures. A REPC also legally binds both parties to it and, if for any reason, either party does not complete the terms of the contract, the opposite party is then able to cancel the contract and possibly collect for damages. No party is ever obligated to accept any contract that they are not in complete agreement with, and may counter with more acceptable terms until both parties are satisfied.
This is also the time that Earnest Money is placed as collateral for the contract. The Earnest Money is a guarantee that the buyer will complete the contract according to the dates set forth. This way a seller is not taking their home off the market and away from potential buyers without any assurances. Should the buyer not complete the contract according to the terms, the seller then has the right to that Earnest Money. But in the same regards, if the seller does not complete the contract, the buyer's Earnest Money is realeased.
Step 4: Deadlines
When writing up a REPC, there will be several deadlines included. Dates are placed for each deadline according to the date the contract is written and what date the buyer wants to close the deal. You should understand each of these deadlines and make sure your loan officer and real estate agent keep you up to date on all of them. Below, I have given definitions for each deadline and what each will mean to you:
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Loan Application Deadline:
This step should be taken care of before you even begin looking for a home. This step involves meeting with a loan officer in order for them to take down all of your information and see what you can afford and which programs might work best for you. The date on the Uniform Residential Loan Application must be on or before this deadline date.
Seller's Disclosures Deadline:
When a seller choses to list their home, one of the forms they are required to has them fill out is the Seller's Disclosures Form. This is a list of everything that may have gone wrong with the home during the time the seller lived in the residence, including problems or issues with mold/ moisture, the roof, sewer/ septic tank, furnace/ air conditioner, property boundaries, or any other hazardous conditions associated with the property. It is required by law that the seller fill this out to the best of their knowledge, meaning they must disclose by law any problems that occured. Your real estate agent will go through each one of these once they are received so you know exactly the condition of the home you are walking in to.
Evaluations and Inspections:
There are two seperate parts to this deadline:
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INSPECTIONS: You will need to decide whether or not you would like a Home Inspector to perform a home inspection on the property. A Home Inspection will usually cost between $250.00 and $450.00 depending on the size of the home. The inspector will examine the entire home, including the electrical, plumbing, roof, bathrooms, etc. The inspector will then write up a report of everything he/she sees in the home that is not up to code or could be a potential problem. These reports are very extensive and a lot of times include items that are not really a concern. All of this information should be taken into account and a repair addendum will then be written up as to what the buyer would like fixed. The seller will then have the choice to either fix these items or possibly provide compensation for them to be repaired. For a great home inspector, visit Scott Knudson with Wind River Home Inspections at www.windriverproperty.com .
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EVALUATIONS: This step allows the buyer to walk through the home, turn on all appliances power outlets, lights, etc. to make sure everything in the house works and is as they expected. Whether or not a home inspection is performed, if something in the house does not work to its proper function, a repair addendum can then be sent and again, the sellers can choose whether to fix these items themselves or provide compensation.
Appraisal Deadline:
When a home is purchased, the buyer pays for an appraisal. An
appraiser will come out to inspect the property, compare similar properties that have recently sold in the area, and give a report as to what he or she thinks the value of the home is. The buyer will recieve a copy of this detailed report.
Loan Denial Deadline:
This is the last date a buyer can cancel the contract based on loan denial, or not having the ability to borrow the funds needed to purchase the property. This is a very important deadline, that is why it is imperative that you chose a loan officer who is on top of things and will keep you up to date with the progress of your loan.
Settlement Deadline:
The final deadline is the Settlement Deadline or Closing and takes place at a Title Company of each parties' choice. This is the date that each faction signs the paperwork to turn the ownership of the property over to the buyer. The final terms of the loan and all aspects of responsibility pertaining to the buyer are set in place.
Step 5: Settlement
As mentioned in the Settlement Deadline above, Settlement, also called the Closing, takes place at a Title Company with an Escrow Officer. Your Escrow Officer will go through all the paperwork pertaining to the purchase of the home and answer any questions you might have. All documents are signed by all buyers and the paperwork is then sent to the borrower's lending company for review.
Step 6: Funding and Recording
The final step in the home-buying process is Funding and Recording. Although they are two separate steps, both must take place in order for the buyer to take possession of the home. Funding takes place when the Lender has reviewed all of the information relavent to the loan and the monies for the loan are transferred to the Title Company. The money will then be wired from the Title Company to the seller's Lender, and the remaining balance will be given to the seller in the form of a check.
Recording occurs after Funding but will usually happen the same day. When all of the monies have been handled and taken care of, the Title Company will document the transfer of ownership from seller to buyer in the county records.
Once these last steps are complete, the buyer is then given the keys to the home and may take possession!
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