Buying A Home

Dated: 03/17/2020

Views: 18

For Buyers

Are You Ready to Buy?

Purchasing a home usually depends on obtaining adequate financing, typically in the form of a 15- or 30-year mortgage. Financing is the difference between the purchase price and the down payment. While there are cash sales, the majority of Americans take on a mortgage to finance the purchase of their home.



Demonstrating Financial Stability

Unfortunately, not every buyer qualifies for loans allowing a small or no down payment. Good credit is necessary to receive loans with the best rates and conditions. The best way to increase your credit rating and loan eligibility is to make all debt payments including rent, credit cards, and vehicle loans in full and on time for at least one year prior to purchasing your home.

Credit reports are maintained by three credit reporting agencies: Experian, TransUnion and Equifax. It’s a good idea to obtain your credit report from all three agencies, since each may contain different information and you don’t know which agency will be supplying your report to your lender.

If there is incorrect or missing information that would improve your credit score, report it to the credit bureau. Under the Fair Credit Reporting Act, consumers have the right to review and contest information in their credit reports. Even if your credit report reads exactly like you expected and your credit is in fine shape, going into the mortgage application procedure with peace of mind is worth the extra work.

What is credit?

Credit is a record of a person’s debts and payment history. Credit bureaus compile individual reports of consumer debt through an array of sources, including credit card companies, banks, the IRS, department stores and gasoline companies, and any other entities granting loans. A credit report is a résumé of your financial performance, with information on your payment history for all the accounts you’ve held for the past seven to 10 years (seven years for accounts not paid as agreed and 10 years for accounts paid as agreed).

What is a credit score?

Credit scores are composites that indicate how likely you are to pay on a loan or credit card as agreed based upon your payment history, amount of debts, length of credit history, and types of credit in use. The credit grantor reviewing your loan application compiles your score based on information from your credit report and other data, including your income level. Fair Isaac and Co. (FICO) developed the mathematical formula for establishing scores. Scores range from 300 (poor) to 850 (excellent), and the rule of thumb is the higher the score, the lower the risk to lenders.


How is my credit score determined?

The FICO Score is calculated from several different pieces of credit data in your credit report. This data is grouped into five categories, and reflect how important each of the categories are in determining how your FICO Score is calculated.

Your FICO Score considers both positive and negative information in your credit report. Late payments will lower your FICO Score, but establishing or re-establishing a good track record of making payments on time will raise your score.

Your FICO score is determined using the following percentages:

  • 35% Payment history

  • 30% Amounts owed

  • 15% Length of credit history

  • 10% New credit

  • 10% Types of credit used

What role does credit play?

Lenders review credit reports to determine debts owed and if they are repaid according to the terms of the initial contract. If you have any outstanding debt, lenders will analyze your debt-to-income ratio and how that debt will factor into your ability to make your mortgage payments.

Where can I obtain a copy of my credit report?

You can obtain a free copy of your credit report every 12 months from each credit reporting company.

You can request your free credit report from https://www.AnnualCreditReport.com, which is the official site authorized by the federal government for you to obtain your free report.

What do I do when I get my report?

Read through it carefully, paying extra attention to the section on your account payment history.

Free Buyers Guide



How do I establish credit?

If you have never taken out a credit card or borrowed money from a financial institution, or if your accounts are young, you can establish credit history by having your rent payments to landlords and monthly payments to utility companies added to your credit report.

How do I re-establish good credit?

If your credit report contains negative information, such as frequent late payments, repossessions, collection activity, or bankruptcy, you may want to wait to apply until after you’ve improved your credit record. Rebuild your credit by showing strong payment history in the years following any problems. Most lenders prefer for three years to have passed since a foreclosure on a mortgage and at least two years since bankruptcy. Lenders are willing to forgive past black marks on a credit report if you establish a pattern of responsible debt repayment.

How do I correct a mistake?

Follow the directions of the credit bureau issuing your report. The bureau will contact the source of the information in question and attempt to resolve the dispute. Also, if late payment information is accurate but you have a good explanation (e.g., you were laid off from work or became very ill), you are allowed to add that information to your report.

Searching For a Home

Millions of new and existing homes are sold each year. There are many choices with the types of homes that are available at any given time on the housing market. The challenge becomes finding the property which best meets your needs.

The housing market is complicated because the stock of homes for sale is constantly changing. If it were possible to have a complete list of every home for sale at this very moment in a given community, such a list would become obsolete within hours, as new homes become available and properties now for sale are put under contract.

In effect, buyers are looking at a moving target in a marketplace that is never consistent. Because of this, it is important to know as much as possible about the choices in preferred markets by working closely with a local REALTOR® who has a good grasp of the market.

What Are You Looking For?

A home is more than just a collection of bedrooms and bathrooms. Several properties with the exact same amenities may well represent radically different designs, commuting distance, lot sizes, tax costs, interior dimensions, and exterior finishes.

Each of us is different, so it’s important to list the features and benefits you want in a home. Consider what is important to you.

Next, it’s important to consider your priorities. If you can’t get a home at your price with all the features you want, then what features are most important? For instance, would you trade fewer bedrooms for a larger kitchen? A longer commute for a bigger lot and lower cost? A REALTOR® will help you weigh your options and establish your priorities.

Where Should You Look?

All neighborhoods and communities have a special nature that gives them identity and value. One community may be well known for historic homes while another offers both suburban living as well as easy access to downtown office areas.

www.harrypatel.com features millions of homes online, including tens of thousands throughout Georgia. By any standard, it’s the largest source for property information online or off. You can look at homes to contact listing brokers, and you can also search REALTOR.com to find brokers who offer buyer representation services.

How Do You Find A House?

Some buyers like to search REALTOR.com by looking at listings on the basis of location or price, while others prefer to consult their REALTOR® with their criteria and have him or her suggest properties.

Regardless of your choice, it’s important to target your search. By using basic measures such as general location and affordability, you can refine your search and focus on homes that offer the most desirable features.

As a guide, you should maintain a file with information on each of the homes you like. You can print out listing pages from REALTOR.com® and then make notes for each one  — what you like, questions, REALTOR® contact data, etc. Your REALTOR® will be your best guide when it comes to narrowing your search criteria.

Find a Home


Selecting a Home

There’s no doubt that choosing a home is a big decision and you want to do it right. As a buyer, here’s what actually happens. A home has been placed on the market for which the seller and listing agent have established a listing price.  At this point, you and your REALTOR® make an offer on the home.  The seller will either reject, accept, our counter your offer.  Following the advice of your REALTOR® will help you make the wise and right choice for your offer.

No aspect of the home buying process is more complex, personal or variable than bargaining between buyers and sellers. This is the point where the value of an experienced REALTOR® is clearly evident because he or she knows the community, has seen numerous homes for sale, knows local values and has spent years negotiating realty transactions.

Is This “the” House?

How do you know if a house is THE one? Probably the best approach is to talk with your REALTOR® and discuss all of the important criteria you have made in choosing a home (check prices, view photos, view tours, check neighborhood statistics, check the school information, etc.) . Once your choices have been narrowed, you analyze your final choices and how each fits into your plans for your future home.

How Much Down?

If you place less than 20 percent down, lenders will want the mortgage guaranteed by an outside third party such as the Veterans Administration (VA), the Federal Housing Administration (FHA) or a private mortgage insurer. More than 2.5 million of these loans are generated each year.

Can You Really Afford It?

Remember the preapproval process? Getting preapproved means you have a very good idea of how much you can borrow, what loan programs will most likely work best in your situation and how much home you can afford. How reliable is a preapproval? While preapproval is not a loan commitment, it’s still necessary for lenders to check such items as credit reports, debt to income ratios, liabilities, assets, and more. . Despite fluctuating interest rates, preapproval nonetheless provides a reasoned, careful analysis of what you can afford. After all, loan officers are routinely paid only when loans are originated. It doesn’t make much sense for loan officers to suggest high loan limits that later can’t be delivered. Seek the advice and recommendation from your REALTOR® and/or mortgage loan officer. Also, revisit our “How Much Can You Afford?” page to get a ballpark idea as to what you can expect to afford in terms of your financial picture.



Making an Offer

Typically, you will make an offer that the REALTOR® will present to the listing agent or may have the opportunity to present to the seller.  The seller, in turn, with his/her REALTOR® may accept the offer, reject the offer, or counter the offer. The initial offer will include a number of important items to be discussed by your REALTOR® – date of offer, full address, sales price, closing date, possession date, earnest money, due diligence date, closing attorney, material relationships, and many more.

While much attention is spent on offering prices, a proposal to buy includes both the price and terms. In some cases, terms can represent thousands of dollars in additional value or costs for buyers. Terms are extremely important and should be carefully reviewed.

Georgia REALTORS®, working with legal counsel, have developed forms that are appropriate for a variety of real estate transactions. These forms are tried and tested to protect the interest of you, the consumer. These documents include numerous sale conditions and their wording should be carefully reviewed to assure that they reflect the terms you want to offer. REALTORS® can explain the general contracting process as well as his or her role.

How Much?

You sometimes hear that the amount of your offer should be “x” percent below the seller’s asking price or “y” percent less than you’re really willing to pay. In practice, the offer depends on the basic laws of supply and demand. If many buyers are competing for homes, then sellers will likely get full-price offers and sometimes even more. If demand is weak, then offers below the asking price may be in order.  It’s important to seek to understand the numbers – have your REALTOR® run an analysis of the community in which you are interested.

How Do You Make An Offer?

Typically you will complete an offer that the REALTOR® will present to the owner and the owner’s representative. The owner, in turn, may accept the offer, reject it or make a counter-offer. The initial offer will include offer price, earnest money, desired closing date, and other stipulations that you feel are necessary.

Because counter-offers are common, it’s important for buyers to remain in close contact with your REALTOR® during the negotiation process so that any proposed changes can be quickly reviewed.

How Many Inspections?

A number of inspections can occur with the property you are considering.  Speaking with your REALTOR® about all of the options of inspections available is important.  From general home inspections, termite inspections, radon inspections, and feasibility studies of land are just a few of the inspections that could take effect when buying a home.

Structural inspections are particularly important. During these examinations, an inspector comes to the property to determine if there are material physical defects and whether expensive repairs and replacements are likely to be required in the next few years. Such inspections for a single-family home often require two or three hours, and buyers should attend. This is an opportunity to examine the property’s mechanics and structure, ask questions and learn far more about the property than is possible with an informal walk-through.


Getting Insured

No one would drive a car without insurance, so it figures that no homeowner should be without insurance. The essential idea behind various forms of real estate insurance is to protect owners in the event of catastrophe. If something goes wrong, insurance can be the bargain of a lifetime.

What Kind And How Much?

There are various forms of insurance associated with home ownership, including the following major types:

Title Insurance is purchased with a one-time fee at closing and protects owners in the event that title to the property is found to be invalid. Coverage includes “lenders” coverage, which protect buyers up to the mortgage value of the property, and “owners” coverage, which protects owners up to the purchase price.

Homeowners’ Insurance provides fire, theft and liability coverage. These policies are required by lenders and often cover a surprising number of items, including in some cases such property as wedding rings, furniture and home office equipment.

Flood Insurance is generally required in high-risk flood-prone areas. This insurance is issued by the federal government and provides as much as $250,000 in coverage for a single-family home plus $100,000 for contents. Your REALTOR® can explain which locations require such coverage.

Home Warranties offer the assurance that if something goes wrong after the purchase, it can be fixed. Home warranties bought from third parties by home builders are generally designed to provide several forms of protection: workmanship for the first year, mechanical problems such as plumbing and wiring for the first two years, and structural defects for up to 10 years. Home warranties for existing homes are typically one-year service agreements purchased by sellers. In the event of a covered defect or breakdown, the warranty firm will step in and make the repair or cover its cost.

Insurance policies and warranties have limitations and individual programs have different levels of coverage, deductibles and costs. For details, speak with a REALTOR®, insurance broker or home builder.


Where To Look?

REALTORS® often provide home insurance and such policies are also available from insurance brokers. The time to obtain insurance and warranty coverage is at closing, so speak with your REALTOR® or insurance broker prior to closing. Be sure to ask about limitations, costs, deductibles, and additional forms of coverage that may be available.

The Closing Process

Go to any local courthouse and you can find property records detailing real estate ownership in your community — sometimes records that date back hundreds of years. These records are important because they provide today’s owners with proof that they have good, marketable and insurable title to the property they are selling. Such records enable buyers to provide proof of ownership when they sell.

The closing process, which in different parts of the country is also known as “settlement” or “escrow,” is increasingly streamlined and automated. In some cases, buyers and sellers don’t need to attend a specific event; signed paperwork can be sent to the closing agent via overnight delivery.

In practice, closings bring together a variety of parties who are part of the “transaction” process. For example, while the history of property ownership has been checked, it’s possible that the records contain errors, unrecorded claims or flaws in the review itself, thus title insurance is necessary. At closing, transfer taxes must be paid and other claims must also be settled (including closing costs, legal fees and adjustments). In most transactions, the closing agent also completes the paperwork needed to record the loan.

What To Expect?

Closing is a brief process where all of the necessary paperwork needed to complete the transaction is signed. Closing is typically held in an office setting, sometimes with both buyer and seller at the same table, sometimes with each party completing their papers separately.

Whatever the case, the result is that title to the property is transferred from seller to buyer. The buyer receives the keys and the seller receives payment for the home. From the amount credited to the seller, the closing agent subtracts money to pay off the existing mortgage and other transaction costs. Deeds, loan papers, and other documents are prepared, signed and filed with local property record offices.

What Do You Need to Do?

One of the best parts of settlement is that buyers and sellers need to do very little. Before closing, buyers typically have a final opportunity to walk through the property to assure that its condition has not materially changed since the sale agreement was signed. At closing itself, all papers have been prepared by closing agents, title companies, lenders and lawyers. This paperwork reflects the sale agreement and allows all parties to the transaction to verify their interests. For instance, buyers get the title to the property, lenders have their loans recorded in the public records and state governments collect their transfer taxes.



Moving In

You’ve done it! You’ve looked at properties, made an offer, obtained financing and gone to closing. The home is yours. But is the home buying process complete? Whether you’re a first-time buyer or a repeat buyer, there are several more steps you’ll want to take.

Those papers you received at settlement are extremely valuable, so hold on to them! In the short-term they can help establish tax deductions for the year in which the property was purchased. In the future, such papers will be important for tax purposes when the property is sold, and in some cases, for calculating estate taxes.

Also at closing, determine the status of the utilities required by the home, items such as water, sewage, gas, electric and oil service. You want utility bills to be paid in full by owners as of closing and you also want services transferred to your name for billing. Usually such transfers can be done without turning off utilities. Your REALTOR® can provide contact numbers and related information.

About two weeks after closing, contact your local property records office and confirm that your deed has been officially recorded. Such records are public notices that show your interest in the property.

Condition of Home at Move In

It is generally understood that sellers will leave homes “broom clean” when moving out. This expression does not mean “vacuumed” or “spotless.” Broom clean makes sense because it means the house is ready to be painted and cleaned.

Your Home, Your Money

For most owners a home is the largest single asset they hold, so it makes sense to protect that asset. Many owners make a photo or video record of the home and their possessions for insurance purposes and then keep the records in a safety deposit box. Your insurance provider can recommend what to photograph and how to secure it.

You want to maintain fire, theft and liability insurance. As the value of your property increases such coverage should also rise. Again, speak with your insurance professional for details.

Finally, enjoy your home. Owning real estate involves contracts, loans, and taxes, but ultimately what’s most important is that homeownership should be a wonderful and rewarding experience.

e result is that title to the property is transferred from seller to buyer. The buyer receives the keys and the seller receives payment for the home. From the amount credited to the seller, the closing agent subtracts money to pay off the existing mortgage and other transaction costs. Deeds, loan papers, and other documents are prepared, signed and filed with local property record offices.

What Do You Need to Do?

One of the best parts of settlement is that buyers and sellers need to do very little. Before closing, buyers typically have a final opportunity to walk through the property to assure that its condition has not materially changed since the sale agreement was signed. At closing itself, all papers have been prepared by closing agents, title companies, lenders and lawyers. This paperwork reflects the sale agreement and allows all parties to the transaction to verify their interests. For instance, buyers get the title to the property, lenders have their loans recorded in the public records and state governments collect their transfer taxes.


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Harry Patel is with Keller Williams Realty Atl. partners and has been assisting home buyers in the Lilburn and Surrounding areas since 2004.  If you are looking to purchase a home call me or schedule a free consultation.


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Harry Patel

As an experienced Realtor, I am ready to assist you with all of your real estate needs. My approach is customized for each client; my solutions are never one-size-fits-all! Please view this website a....

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