Any home purchase is a big step, regardless of whether you’re a first-time buyer, a seasoned investor, or you’re a “move-up” buyer. That’s why you need an experienced agent like Mike Dunitz on your side. With over 25 years of experience in the local market, Mike is in the best position to guide you through the often confusing maze that is the home buying process.
What can I afford?
In the first step of the home buying process, prospective home buyers should determine what they can afford, their home “buying power”, before beginning the hunt for their dream home. The most efficient means of determining this is by getting pre-approved for a mortgage. Most lenders will do this at no cost — Mike can help you find a lender if you do not already have one. Without assessing their home buying power, many prospective homebuyers fall in love with homes that they cannot afford. On the other hand, buyers taking the first step by getting pre-approved may be surprised to find they can afford more house than they thought possible. Regardless, with a pre-approval a buyer is better prepared to meet the challenges of finding the perfect home.
Generally, borrowers must have a total monthly debt-to-income ratio of 43 percent or less. This is the maximum debt ratio for a Qualified Mortgage (QM). Housing costs are a total of your mortgage payment, property tax, homeowners insurance, mortgage insurance along with any revolving (credit card) or installment (auto loan, student loan) debt. Lenders can be somewhat flexible with these basic guidelines, depending on the type of loan you need and the size of your down payment. Loans that are eligible to be bought, guaranteed or insured by government agencies like Fannie Mae, Freddie Mac and the Federal Housing Administration are considered qualified mortgages until at least 2021, even if they don’t meet all QM requirements. Check with your lender for specifics.
Determine the type of home and neighborhood that best suits your needs.
The next step in the process is to determine the type of home and neighborhood that best suits your needs. What characteristics do you want or need, and which are to be avoided? Factors such as home size, number of bedrooms and bathrooms, style, features, condition, location, schools, etc. all need to be taken into consideration. Identifying the type of house you are looking for up front will prevent us from wasting time looking at unsuitable properties. In showing homes Mike will objectively point out their advantages and disadvantages. He can help evaluate a home’s potential, keeping in mind future resale value. Above all, Mike will never pressure a buyer. Buying a home is a huge commitment and investment — it is important to make the right choice, even if it takes some time.
Determining the best buying strategy.
Having located your dream home Mike will sit down with you to determine the best strategy for purchasing it. Issues such as the seller’s motivation, current market conditions, and whether or not other offers exist on the property all need to be taken into consideration. Together with Mike, you will then determine an offering price and terms, and begin the negotiation process. Once the seller has accepted your offer, escrow is opened.
It is important to investigate all aspects of the property to avoid unpleasant surprises. A professional inspection to determine the structural condition of the home and its major components is of critical importance. If you don’t already have an inspector, Mike will help you find a reputable professional. As a result of an inspection, the buyer will usually ask the seller to make certain repairs, or offer a credit in lieu of repairs. In many cases this request produces another round of negotiations. Using his years of experience and his knowledge of construction and remodeling, Mike will guide his clients through this “second negotiation” until an agreement is reached.
During the escrow period you will receive a preliminary title report to determine if there are any matters that affect title, such as liens or easements. A termite report will be obtained and treatment arranged if necessary. All the while the process of obtaining your loan will continue. Your lender will complete an appraisal and submit your loan for underwriting. When your loan is approved, documents are prepared and an estimate of closing costs is calculated. Once you have signed the loan documents, obtained homeowner’s insurance, and deposited funds into escrow, your loan will be funded and the new title will be recorded. At this point you now own your new home and congratulations (and keys) are in order! Mike will be with you every step of the way. After closing, Mike will be available to answer questions and solve any problems that may arise.