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Prospect Power Moves

Educate yourself on the homebuying process.

AUSTIN'S OFFICIAL HOMEBUYERS' GUIDE

Step 1

Know Your Finance Options

Unless you are planning to pay with cash, the most important step before beginning your home search is to get pre-qualified by an experienced reputable lender or mortgage broker. Why is this so important?

EXPLAIN FURTHER


  • It allows you to determine how much your monthly payment will be.
  • It helps us to determine what price range to shop within.
  • It gives you an estimate of how much money you will need to bring to closing.
  • It allows you to select the best loan package without being under pressure.
  • It helps us to negotiate from a stronger position because sellers will find your offer more attractive knowing that you can secure a mortgage loan. This may help your offer beat the competition in a multiple offer situation!





Prospect-Power-Moves-Homebuying-Process-
Prospect-Power-Moves-Homebuying-Process-

Step 2

Loan Approval Process

If you require loan financing, meet with a lender or mortgage broker to determine how much you can afford. Obtain pre-approval for the loan amount you need. This will save time in the home search, and improve your negotiating position with home seller 

EXPLAIN FURTHER


Pre-qualification vs. Pre-approval?
Getting pre-qualified for a mortgage is an increasingly popular practice among buyers who don’t want to worry about going through the approval process until after they’ve found the home they want. It is a verbal exchange in which the lender tells you in advance approximately how much money you are able to borrow, based upon the information you provide the lender about your debt and income.

Getting pre-approved goes a step further than pre-qualifying. Most lenders require you to furnish documents (tax returns, check stubs, etc.) to pre-approve your loan. A pre-approval is an actual commitment to lend you money, provided that, when you are ready to buy, you still meet all the qualifying conditions that were met at the time of conditional approval.

TIP: Many sellers do not accept offers from buyers who are not pre-approved. Lenders may issue either a pre-qualification letter or a pre-approval letter that can be sent with your purchase offer.





Step 3

Start Your Home Search

Decide which neighborhoods you want to live in and whether you want a new or existing home. Consider requirements –such as the number of bedrooms or price range, and preferences – such as whether you would prefer a 1- or 2-story home. I will set up a property search on RealtyAustin.com to show you homes that will fit your needs, and we can view the homes you save as favorite.

EXPLAIN FURTHER


EXPLAIN MORE: I will evaluate your home buying needs during our first meeting so that I can be better prepared to assist you in your home search. I am committed to locating the ideal home for you, whether it’s a resale home in MLS, a For Sale by Owner, Foreclosure, or new construction. In almost every situation, our fees are pre-negotiated so that the seller is responsible for my commission, not the buyer. Refer to FIND YOUR PERFECT HOME for home purchase types.





Prospect-Power-Moves-Homebuying-Process-
Prospect-Power-Moves-Homebuying-Process-

Step 4

Make Your Offer

When you find the right home, I'll provide a market analysis, and we'll review market conditions together and decide whether to present an aggressive or competitive offer. I will explain all documentation and negotiate terms that are in your best interest. The process may go back and forth a few times between you and the seller.

EXPLAIN FURTHER


EXPLAIN MORE: This is an exciting and busy time, and home ownership is very near. Contact me if you have any questions, and be sure to complete the list of tasks below:
● Get estimates and arrange for moving company or truck rental.
● Submit your Change of Address Form online at https://moversguide.usps.com.
● Contact utility providers to have the utilities transferred from the Seller to you.
● Select a date for the Final Walk-Through of the house.
● Schedule a closing date and time with the Title Company.





Step 5

Going Under Contract

After final acceptance of the contract from both parties, you go “under contract.” At this time, you’ll provide an “earnest money” check for the title company to deposit so they can open escrow, and provide an “option check” to the seller guaranteeing your right to terminate the contract for any reason within the option period. Both checks will be deposited. 

EXPLAIN FURTHER


EXPLAIN MORE: Upon acceptance of your offer, you will typically want to arrange for an inspection of the property. This must be completed during the option period so that if something is discovered during the inspection (that you cannot live with and the seller is not willing to fix), you can cancel the contract and have your Earnest Money refunded.
● I have provided a list of 4 home inspectors in this document, but you are free to choose your own inspector.
● The inspection will take 2-4 hours. Your attendance is optional; however we recommend you attend at least the last half-hour when the inspector reviews the findings with you.
● Most homes have a long list of minor and cosmetic repairs. You are mainly looking for major mechanical, safety or structural defects to the property.
Negotiate Amendment

Immediately following the Inspection, we will typically complete an amendment to the contract that will include items the inspector discovered that you want repaired by the seller, or a monetary repair allowance in lieu of repairs. Then we will negotiate on your behalf with the seller for the repairs you want completed. Once an agreement on repairs to be completed has been reached, you will typically forfeit your right to terminate the contract.





Prospect-Power-Moves-Homebuying-Process-
Prospect-Power-Moves-Homebuying-Process-

Step 6

Option Period

With an "Executed Contract," you start the negotiated Option Period, usually 7- 14 days. Final details are handled and you have an inspection performed to ensure the property is perfect for you. We negotiate contract details such as repairs. During this time, you’ll need to arrange insurance for your new home. Your title insurance company will provide a Commitment for Title Insurance for you to review. 

EXPLAIN FURTHER


EXPLAIN MORE: Once the option period is over, there are several important steps you need to take to ensure a smooth closing.

Obtain Homeowner’s Insurance

Your lender will require Homeowner’s Hazard Insurance to close on your new home. Ask your current insurance agent if you would receive a discount by having your car insurance and homeowner’s insurance with the same company. If you need a reputable referral, please let me know. Once you select an insurer, notify your lender of the insurance company you choose, and send me the information so I can provide it to the title company.

Select Home Warranty Provider (Residential Service Contract)

While new construction homes will typically offer a warranty from the builder, you can also purchase a home warranty – or "service contract" – for a resale home. The warranty usually covers your first year of home ownership, and helps protect you against the cost of unexpected repairs or replacement of major systems and appliances that break down due to normal wear and tear. In most cases, we will attempt to negotiate on your behalf for the seller to pay for most (if not all) of your Residential Service Contract. The basic programs start at around $350-400, and then you can add various optional items, such as certain appliances, pools, etc. If your total exceeds the amount paid by the seller, then the difference will be added to your closing costs. Property Appraisal Your lender will arrange for an appraisal of the property. This typically costs between $375 and $450, which your lender will ask you to pay in advance. The appraiser's report will describe the physical characteristics of the property and compare it to similar properties to determine the market value of the property so you don’t over pay. If the appraisal comes back lower than contract price, the bank will expect you and/or the seller to make up any deficiency. Remember that an appraisal is different from a home inspection. Appraisers do not report on damage or repairs needed; they only report on the market value of the home in its current condition, relative to other properties in the area. Property Survey The buyer usually pays for the survey as part of their closing costs. However, this is a negotiable item. A survey typically costs between $400 and $600, but it could be more on larger lots. The seller sometimes has an existing survey we can use so we don’t have to order one.





Final Step

Closing Day!

You will need to bring a certified check if you’re making a down payment and picture ID to the closing at the title company. Possession of your home will occur when your lender releases funds to the seller.

EXPLAIN FURTHER


EXPLAIN MORE: This is an exciting and busy time, and home ownership is very near. Contact me if you have any questions, and be sure to complete the list of tasks below:
● Get estimates and arrange for moving company or truck rental.
● Submit your Change of Address Form online at https://moversguide.usps.com.
● Contact utility providers to have the utilities transferred from the Seller to you.
● Select a date for the Final Walk-Through of the house.
● Schedule a closing date and time with the Title Company.





Prospect-Power-Moves-Homebuying-Process-

More Buyer Resources

EXPLAIN FURTHER


EXPLAIN MORE: Once the option period is over, there are several important steps you need to take to ensure a smooth closing.

Obtain Homeowner’s Insurance

Your lender will require Homeowner’s Hazard Insurance to close on your new home. Ask your current insurance agent if you would receive a discount by having your car insurance and homeowner’s insurance with the same company. If you need a reputable referral, please let me know. Once you select an insurer, notify your lender of the insurance company you choose, and send me the information so I can provide it to the title company.

Select Home Warranty Provider (Residential Service Contract)

While new construction homes will typically offer a warranty from the builder, you can also purchase a home warranty – or "service contract" – for a resale home. The warranty usually covers your first year of home ownership, and helps protect you against the cost of unexpected repairs or replacement of major systems and appliances that break down due to normal wear and tear. In most cases, we will attempt to negotiate on your behalf for the seller to pay for most (if not all) of your Residential Service Contract. The basic programs start at around $350-400, and then you can add various optional items, such as certain appliances, pools, etc. If your total exceeds the amount paid by the seller, then the difference will be added to your closing costs. Property Appraisal Your lender will arrange for an appraisal of the property. This typically costs between $375 and $450, which your lender will ask you to pay in advance. The appraiser's report will describe the physical characteristics of the property and compare it to similar properties to determine the market value of the property so you don’t over pay. If the appraisal comes back lower than contract price, the bank will expect you and/or the seller to make up any deficiency. Remember that an appraisal is different from a home inspection. Appraisers do not report on damage or repairs needed; they only report on the market value of the home in its current condition, relative to other properties in the area. Property Survey The buyer usually pays for the survey as part of their closing costs. However, this is a negotiable item. A survey typically costs between $400 and $600, but it could be more on larger lots. The seller sometimes has an existing survey we can use so we don’t have to order one.





Choosing a Home Inspector


Buying a home is one of the most significant decisions and one of the biggest investments you will ever make, so you need an unbiased professional’s opinion about the physical condition of any property you plan to buy. A home inspection will give you a clear picture of a home's condition, answer any questions you may have, and give you peace of mind. There are numerous types of inspections. An inspection is meant to evaluate, at minimum, the structural and mechanical condition of a property. It is not the same as an appraisal, which evaluates the market value of a property. Finding a qualified Inspector
Get referrals from friends or associates
Get referrals from a local real estate professional
Search online for "Home Inspection Services"

Recommended Home Inspectors

Preston Porterfield
Professional Inspector #5026
Town & Country Inspection Services 512-288-1888 www.tandcinspect.com

There will be other recommendations as well depending on the area in which you choose and price of the home.




Why You Need Title Insurance


When you buy a home, you want to be certain it’s yours, and that no one can later claim any ownership of the property. Even the most diligent search of the public records could fail to disclose a number of title defects. Defects may include:
A forged will or deed
A title transfer by someone under age or a married person conveying real estate

without his or her spouse
Fraudulent impersonations
Invalid divorces
False affidavits

Although rare, these are just a few of the problems that can suddenly surface to jeopardize your investment.

A service known as a title search describes the condition and quality of the title to the property you are buying. Your title insurance company issues a title policy, which protects you against mistakes or threats that might otherwise result in financial loss to you, including hidden, unknown items that might come up after you purchase your home.

Your Coverage: Your title insurance protection is a permanent assurance that your ownership and use will be defended promptly against claims at no cost to you, whether the claim is valid or not.

The Lenders Coverage: If a mortgage is to be placed on your new home, the mortgage lender will require that you purchase title insurance to protect the lender’s position as a holder of your mortgage loan. However, this mortgagee’s title insurance policy doesn’t protect you, the homeowner. You need an owner’s title insurance policy to protect your investment.

Title Insurance Rates: There are no renewal premiums, and there is no expiration date on the policy. The protection lasts as long as you, or your heirs, retain an interest in the property. Title insurance rates and policy coverage are set by the State of Texas, so there is no difference between insurers.

Escrow: The title insurance company also acts as an escrow agent between the seller, buyer, and lender, and has responsibilities to all parties for fair dealing. The title insurance company receives your money as well as all other documentation required for the transaction. When all requirements of the contract and the lender are satisfied, the title company transfers money to the seller, and the transaction is “closed.”




Going Under Contract


Making an Offer: Once you have found the home that meets your needs, it is time to make an offer, before another buyer beats you to it. One of the most important reasons to hire an agent is to benefit from their knowledge about the real estate market and access to data that is critical to making informed decisions during the offer process. I will research sales in the area and create a detailed market analysis for the home you wish to buy. This market analysis will show relevant recent sales and help you determine whether a home is priced reasonably or not. This will help you decide on the amount you should offer, and if necessary, I can present it to the seller’s agent to support your offer. Items that are typically negotiable include:
● The amount you will pay for the home
● Down payment and amount to be financed through a mortgage loan
● Amount of earnest money you will deposit
● How much of your closing costs, if any, the seller might pay
● Any personal property specifically included or excluded
● How long you have until your final loan approval is due
● The closing date and the occupancy date, which may not be the same date
● Length of the option period, and how much you will pay for the option period
● Which title company will be used, and who pays for the owner’s title policy
● Who will pay for a new survey if the existing one cannot be used
● Any repairs that you already know you want the seller to make before closing
● Who will pay the Homeowner’s Association (HOA) transfer fees
● How much the seller will contribute towards a home warranty

Our offer will be in writing and accompanied by an earnest money check (typically 1% of the purchase price) to show good faith. If the seller does not accept the initial offer, we will continue negotiating until we reach terms that are agreeable to both you and the seller. When both parties agree on the terms, you are officially “under contract” and the contract is executed on the date the last party signs and/or initials all changes and notifies the other party. Your earnest