The decision to purchase a home is a big one, and one that should not be taken lightly. When you approach the buying process in a careful, methodical way, and when you have the right people on your team, buying a home can be a wonderful experience. If you approach the buying process haphazardly, however, it can bring you a lot of unnecessary headache and aggravation. Remember that when you purchase a new home, you’re not only investing in the property itself, but in your financial future.
When you’re ready to buy your new home, you’re bound to have a lot of questions about everything from the house-hunting process to the potential size of your monthly payments to the projected time frame from listing to closing.
The Cindy Jasper HummerHomes Team has 28 years of experience helping people buy their dream homes in the greater Nashville area. We use top-of-the-line home search technology to help you locate properties in your ideal neighborhoods, designs, and price range. We’ll email you new listings daily, and alert you immediately if a suitable home comes on the market. And our commitment to client education ensures that you’ll feel knowledgeable and secure through every step of the home buying process. So whether you’re a first-time buyer or a long-time real estate investor, let the Cindy Jasper HummerHomes Team help you buy your next home!
The process of purchasing a home is often the most confusing for first-time buyers. But it doesn’t have to be that way. If you educate yourself about the process, you’re sure to have a much more enjoyable home buying experience.
Here are some things you need to know about when you’re buying your first home.
When you buy a home for the first time, you’ll want a professional real estate agent on your side through the entire process. Trust Cindy Jasper and the HummerHomes Team to guide you through every step of the home purchase process with total dedication to your satisfaction. For more information, please call 615.300.4695 today, or email [email protected].
When it comes time to negotiate the sale price for your new home, it’s important to be prepared. Knowledge of the current real estate market, as well as a firm understanding of your personal financial capabilities, can make sure that the negotiations reach a conclusion you’re comfortable with.
When you’re ready to submit your initial offer on a home, your offer price should be based on a number of factors. Consider your offer price carefully. An offer that’s too high can cost you money, while an offer that’s too low may induce the buyer to refuse you outright. What you’re aiming for with your initial offer is a platform for mutually beneficial negotiation. Here are some questions to ask when considering your initial offer.
As the buyer, you want to maintain the advantage in any negotiation. Here’s how to do it.
Frame your timeline
If the seller feels pressured to sell their property, the buyer has a singular advantage at the negotiating table. Still, it’s best to be cautious, since you don’t want to be rushed into buying a property you’re uncertain of just because the price is right. Rushed sales often mean big problems, so pay close attention to any contract concessions, and schedule a thorough home inspection by a reputable area professional.
If you’re comfortable with the general time frame that the seller is proposing, negotiate exact dates for the closing and the seller’s vacating of the property.
A mortgage is not a single entity, but a product, just like anything else you purchase. Fortunately for home buyers, there are thousands of lenders out there offering thousands of mortgage products. With so many to choose from, there’s certain to be a home loan out there that’s perfect for you.
When you’re shopping for a mortgage, you may be confused by all the different types of loans you’ll encounter. The truth is, most mortgages fall into one of two categories: fixed rate or adjustable rate (ARM). Depending on your credit history and financial situation, you may qualify for a variety of loan packages – or, you may qualify for only one. Either way, the more you know about the different types of mortgages out there, the better prepared you’ll be when it comes time to shop for your home loan.
Choose a Fixed Rate Mortgage if you:
When you choose a fixed rate home loan, your payment amount and interest rate will be guaranteed for the life of the loan – a period which might be 15, 20, or 30 years, depending on the loan you choose. If you choose to make extra payments toward the principal of your loan (in addition to your monthly minimum payments), you will be able to pay off your loan faster with no additional interest penalties.
Timing is everything when it comes to fixed-rate mortgages. If interest rates are high (or if your credit score dictates a higher interest rate), your rate will not change until the expiration of the loan, or until you refinance. However, if you apply at a time when interest rates are low, you’re guaranteed a great rate no matter how the market fluctuates.
Here are some advantages and disadvantages to the different terms of fixed-rate loans.
This is the most common type of fixed-rate loan. It’s also one of the easier loans to qualify for, especially for first-time homebuyers.
If interest rates are very high at the time you’re applying for your mortgage, if you expect your income to increase substantially within the next 12 months, or if you’re comfortable taking a risk with your monthly payments, an ARM may be for you.
ARMs are useful for owners who plan to own their properties for only a short time, as they can potentially cut down on interest payments. Generally, interest rates on ARMs are lower upon the inception of the loan that rates for fixed-rate loans. The interest rate on your ARM is tied to the prevailing interest rate, plus two to three points. Which index determines this rate will depend on your loan: indexes include the Certificate of Deposit Index, the Cost-of-Funds Indexed ARMs, the Treasury or T-Bill Rate, and the London Interbank Offered Rate (LIBOR). When interest rates on these indexes rise or fall, you can expect your monthly payment to respond accordingly.
As we have seen recently with the sub-prime mortgage crisis and the subsequent string of foreclosures nationwide, buyers who choose ARMs must be prepared for large spikes in their monthly payments if they intend to carry the loan past the duration of the initial interest rate. Ask your lender to calculate the maximum possible amount of your monthly payments based on your rate index and your rate cap (the maximum amount of interest you can be charged based on your loan agreement). If you’re not comfortable making the maximum possible payment for a period of up to one year, you should choose another loan package.
Here are some advantages and disadvantages to the different terms of fixed-rate loans.
Convertible Adjustable Rate Mortgages combine the more appealing qualities of both fixed rate loans and ARMs. Convertible ARMs offer the initial low interest rates of a traditional ARM, but convert to a fixed-rate mortgage at a pre-determined rate after a specified number of years.
Government loan packages can be a tremendous help to first-time homebuyers, to people with lower incomes, or to veterans.
VA Loans are offered to veterans by the Veterans’ Administration. There are limits to the amount that can be borrowed, so this option works best for those purchasing low- to moderately priced homes.
FHA Loans are offered through the Federal Housing Administration. Most applicants will have to meet income standards to qualify. Also, you will need to look for homes that state ‘”FHA Approved” in their MLS listing or print advertisement. Some states also offer accessible home loan programs to lower-income individuals and families; ask your real estate agent for more information.
Comparison shopping doesn’t just apply to cars and electronics. You can – and should – shop around for your mortgage as well. Different lenders offer different products, and often have different qualification criteria. You deserve to get the best possible rate on your home loan, so don’t be afraid to research a number of lenders until you find a package that works for you.
There are two ways you can find your best loan and rate. You can shop on your own, or you can employ the services of a mortgage broker.
With so much information available over the internet – indeed, with many mortgage companies operating solely through the internet, without the use of brokers – it’s easier than ever for you to find a loan on your own.
When you’re shopping for that perfect home loan, there are some things you should remember.
A qualified mortgage broker can do a large portion of your research for you. They may also have access to loan packages that are not offered to the general public. Also, unlike a bank loan officer or a customer service representative at a lending company, a broker is paid to represent you, and will keep your best interests in mind. However, a mortgage broker may only write loans for a certain lender or lenders, and therefore may not be able to offer you the range of products you could find on your own.
The best way to find a reputable mortgage broker is through referrals. If you have friends or colleagues who have recently purchased homes, ask them about their broker and lender. Or, ask your professional real estate agent for a referral.
Sign on the Dotted Line
Once you’ve negotiated your final offer on a home, and you’ve signed the purchase agreement, you’ve officially opened escrow. For many buyers, this is the time when panic sets in. But as long as you remain organized and calm, and follow the expert advice of your Realtor, everything between now and closing can go as smooth as silk.
So that you can prepare and schedule accordingly, here’s a list of things you’ll need to do after you sign your purchase agreement.
The delivery of your earnest money shows that you are a serious buyer. This amount will be dictated by your purchase agreement, but it is often 3% of the total purchase price. This money is considered a deposit and will be applied to the total purchase price of the home. Your check will be cashed and the monies held by the seller’s attorney or by the broker’s trust account. Make sure that you have enough money in your account to cover this check – or better yet, get a certified check or bank check.
If for any reason the sale does not go through, you may be able to reclaim your deposit, minus standard cancellation fees. If the sale is forfeited through actions on your part, the seller may be able to keep this deposit as “liquidated damages.” When negotiating your purchase contract, you may want to consider adding a liquidated damages clause to cover any unforeseen events.
You’ll probably be in escrow for about 30 days, although that period is prone to vary. Over the course of those 30 days, every contingency specified in the purchase contract must be met. At the end of this period, when you open escrow, you will have reached an agreement with the seller about the closing date, contingencies, and any other contract conditions.
Although each purchase contract is different, most will include the following standard contingencies:
Once you’ve fulfilled your contractual obligations, you’ll be ready to open escrow and close the sale. But before the closing date, there are still a few more details to take care of.
Now, it’s on to closing, after which you’ll be the proud owner of a new home!
Cindy has carved a niche in serving high net worth and ultra-high net worth individuals in Brentwood, Franklin, and Nashville. With a deep understanding of these upscale markets, she brings invaluable insights and recommendations tailored to each client's unique needs. Upholding the strictest confidentiality for her clients, she consistently delivers an unparalleled level of service and expertise. As a trusted real estate professional in Brentwood, Franklin, and Nashville, Cindy ensures every transaction is smooth, discreet, and tailored to perfection. Choose Cindy to navigate the luxury property landscape with confidence and finesse.