Buying Your New Home

Here's an easy way to understand the financial steps you'll need to take to guide you towards your new home.  With a Milia Team Realty Sales Associate, nothing is too complicated.

• Calculate your budget
• Apply for a mortgage/paperwork/loan application
• Lender begins processing application
• Lender provides booklet of estimated closing and related costs
• Lending institution requests an appraisal of home, a credit report and verification of employment and assets
• Estimate of your loan costs in form of initial Truth in Lending Disclosure Statement
• Lender evaluates the application and approves the loan
• Search begins - Sales Associate shows you multiple listings
• You find the house you want
• You make an offer
• Lender disburses funds to closing agent
• Sign closing documents and loan is funded
• Appropriate documents recorded at county recorder's office
• The home is sold and it is yours

Now that you have a clear understanding of the entire process, let's look closely at each step.

Before you can begin to search for a new home, you need to determine your budget and estimate how much you can afford.  One of the most important factors in figuring out your financial budget is getting pre-approved for a mortgage.

The first step towards financing a new home is getting pre-approved for a mortgage.  A mortgage is an advance of money from your lender that will cover the finances of your new property.  Over an extended period of time, you (the mortgagee) must pay the bank back each month a percentage of the money they lent you plus interest, until the total sum is paid in full.  This is how most homes are financed.

When you apply for a mortgage, you will need to furnish information regarding your income, expenses and obligations.  To save time, have the following items available for each borrower:

• Two most recent pay stubs
• W-2s for the last two years
• Federal tax returns for the last two years
• Last months' bank statements
• Long-term debt information (credit cards, child support, auto loans, installment debt, ect.)

Of course, a lender will only lend you money if they're sure your credit is strong and they're confident you have the ability to pay them back.  A bank checks your credit by studying your financial history, income, federal tax returns, pay stubs, and long-term debt information (such as credit cards, auto loans, child support, ect.) to determine if you are a good candidate for a loan.  If your credit report is good, then you have an excellent chance of obtaining a mortgage.  If not, then you must take the appropriate steps to improve your credit rating.

At one time or another, most people have put blemishes on their credit reports.  If your credit report is tarnished, here are a few suggestions you can do to repair the damage.

Examine the credit report thoroughly and make sure it's accurate.  If there are mistakes on the report, contact the credit report agency and ask them to remove the mistakes immediately.  Here are some other helpful tips:

• Begin to pay your bills on time and in full
• Only use two to four credit cards so that you can keep track of them and do not spend more than your budget
• Keep a separate checking and savings account
• Keep the same job for a few years, the longer you stay put, the better

Now that you've examined your credit report and are confident that you're in good shape, you're ready to choose between getting pre-approved for a mortgage or pre-qualified for a mortgage.  Here's the difference:

Pre-approval uses basic information as well as electronic credit reporting to determine whether a lender will loan you money.  If you are pre-approved for a mortgage, the lender has given you a commitment to support your new purchase.

Pre-qualification is not a mortgage approval but simply an estimate of what you can afford.  When you pre-qualify for a mortgage, the lender also collects basic information regarding your income, monthly debts, credit history and assets, and then uses this information to calculate an estimated mortgage amount.  The lender has not yet committed to supporting your financial needs and, therefore, you have not received an actual guarantee of funds.

People who are pre-approved for a mortgage are more attractive candidates to the seller and have a better chance of getting the property when they make an offer.

Once you've been pre-approved for a mortgage, you need to decide which type of mortgage to get.  This decision is usually based on the interest rate of the loan and how much time you're given to pay the lender back.  The interest rate is the percentage of the loan the lender earns for lending you money.  You can get a Fixed Rate Mortgage or an Adjustable Rate Mortgage (ARM).  Let's look at the difference.

This is the traditional method of financing a home.  The interest rate stays the same for the entire term of the loan - usually 15 to 30 years.  This means that the interest and principal portions of your monthly payment remain fixed.

With a Fixed Rate Mortgage, your payments are stable and predictable, but initial interest rates tend to be higher with a fixed rate than with an adjustable rate.

The interest on an Adjustable Rate Mortgage is linked to a financial index, such as a Treasury Security, so the interest rate fluctuates with changes in market conditions.  With an adjustable rate, you payments will vary over the life of the loan.  Most Adjustable Rate Mortgages have a lifetime cap on the interest rate increase to protect the borrower.

The advantage of an Adjustable Rate Mortgage is that it offers lower initial payments and this makes it easier for buyers to qualify.  Some Adjustable Rate Mortgages may be converted to Fixed Rate Mortgages at specified times, usually within the first five years.

It is important to know that you are not limited to a Fixed or Adjustable Rate Mortgage.  If you are interested in exploring further options, contact us and we will connect you with a trusted mortgage professional.

To estimate your budget, add up your total financial worth then subtract all the costs included in the purchase.  Here are some of the expenses you will carry.

Most homeowners contribute a down payment on his or her new property.  The down payment is a percentage of the purchase price that the buyer pays in full before closing.  The larger the down payment, the smaller your mortgage will be.  How much can you put down?

There are quite a few costs when you're buying a new property.  Make sure you understand how much each cost is and factor them into the final budget.  Here are some examples of these costs:

• Monthly Costs:  The calculation of your entire monthly costs including the mortgage, insurance, taxes, ect.
• Points:  Borrowers have the opportunity to reduce the interest rate on their mortgage by paying points at the beginning of the loan.  One point is one percent of the new loan.

Now you're ready to calculate your final budget.  Remember to include all of your available monies, monthly salary, additional income, and then subtract the down payment, monthly mortgage payment, closing costs, moving costs, and any additional expenditures you might accrue.  When you have arrived at your estimated budget, you are ready to begin the search for you new house.

You have all of your financial papers in order, you've been pre-approved for a mortgage, and you've calculated your budget, now it's time to have some fun finding your brand new home!

Can you picture your dream house?  Does it have a huge backyard?  Lots of land? What kind of neighborhood is it in?  Is it important to have a good school system nearby?  What about public transportation or daycare facilities?  Do you want to live by a lake, a river, or a town?  These are just a few of the questions you should consider before you begin your search.  Remember, the more you know about what you're looking for, the quicker you'll find the perfect match!

One of the many advantages of working with a Milia Team Realty Sales Associate is our access to multiple listings.  That means you can see every house on the market if you'd like to.  We can provide a detailed description on any property of interest, including special features.  Plus, we try to screen all of the listings before we show them to you, in order to save you time and eliminate the homes that don't meet your criteria.

Open houses are a great way to get a feel of a specific property.  You can be sure that a Milia Team Realty Sales Associate will inform you of upcoming open houses, giving you the important information and details of the property.

If you require special features such as a swimming pool, wheelchair access, or even an in-law suite, we will be sure to show you only those properties that accommodate your needs.  In turn, if we know of any properties that have special features that are not listed, you will be the first to know of them.

Aside from the knowledgeable Sales Associates, MiliaTeam.com is also an extraordinary resource for you.  With access to thousands of listings, our website is home to a variety of time-saving and informative features.  Features such as:

• Customizable Auto-Search:  this convenient helper will search for a home even when you don't have time to.  Available through MiliaTeam.com, you will be alerted when new properties come on the market (or change their price) that meet your needs.  Additionally, our search tools can act as your personal online resource center that allows you to save your search criteria and favorite listings so that you will be organized and efficient during your search for a new home.
• Neighborhood & School District Information:  you'll learn about the details of any neighborhood or school district that interests you, such as climates, demographics, and much, much more!

With the helpful guidance of our Sales Associates and our informative and accessible website, we are confident you'll find the perfect house and reach your closing in no time.

Once you've found the perfect home, a Milia Team Realty Sales Associate will write up the offer.

After the offer is accepted, there are various steps that need to take place before you can close.  These include the loan application, qualification and commitment, all inspections completed and repairs made if necessary, property is surveyed and appraised, the title is analyzed and the title insurance commitment is issued, and you have secured homeowner's insurance.

This is the meeting where the sale transaction is finalized.  During the closing, settlement procedures take place.  The Disclosure Statement is released, money is exchanged, all paperwork and agreements are signed, and the title of the property is transferred.  This is the last step before you can call the property your home.

Once the seller has accepted the offer and both parties are in agreement, the settlement procedures can begin.  These include calculating and paying for the costs of the various settlement needs, signing all the appropriate papers, the transaction of money, and the title change of the property.

Often in real estate transactions, the seller will present a Disclosure Statement.  This statement includes the age and condition of the property and a list of any additional features (pool, garage, etc.).  The Disclosure Statement protects the seller against liability from a buyer who charges that he or she was not made aware of a particular condition, as well as providing the buyer with an extensive review of the property so that he or she can make a fully-informed decision before he or she purchases the house.

Your Milia Team Realty Sales Associate will guide you through all the closing procedures so that you can obtain your new home as efficiently and easily as possible.

Currently, there are over 50 different mortgage products available, including:

• 15, 20, and 30-year Fixed Rate loans
• Adjustable Rate loans
• New Construction loans
• VA and FHA loans
• 5 and 7-year Balloon loans
• Any many more

We will connect you with a trusted mortgage professional to see what's right for you.

It usually takes 30 to 45 days to process an application, although it can take as few as 7 days and as long as 90 days for some transactions.  The actual time depends on how quickly the lender can get an appraisal of the property, a credit report and verification of employment and bank accounts.

Be prepared to provide verification of income (including a pay stub and recent tax returns), bank account numbers and details on your long-term debt (credit cards, auto loans, child support, ect.).  If you're self-employed, you may also be required to provide financial statements for your business.

In recent years, lenders have been required to obtain more specific information from borrowers in order to package and sell loans to investors.  If you were lending someone such a large amount of money, you'd want detailed financial information.

If you provide the lender with complete, accurate information, everything should go smoothly.

You may face a delay if the lender discovers credit problems - a history of late payments or nonpayment of debts, or a tax lien.  You may then be required to submit additional explanations or clarifications.

You should also be sure to notify your lender if your personal or financial status changes between the time you submit an application and the time it's funded.  If you change jobs, get an increase (or decrease) in salary, incur additional debt or change your marital status, let the lender know promptly.  You may be delayed if the home you selected fails to appraise for the agreed purchase price.

Principal and interest on your loan.  Depending on the terms of your loan, the payment also may include hazard (homeowners) insurance, mortgage insurance and property taxes.

Not if it's an FHA or VA-insured loan.  With most other loans, you can pay your own taxes and insurance if you borrowed no more than 80 percent of the purchase price or appraised value of your home.  Check with your lender to be sure.

Closing costs cover processing and administration of your loan.  In addition to a loan fee, you'll usually be asked to prepay interest charges to cover the partial month in which you close, and you may also be required to deposit monies into an escrow account for property taxes, hazard insurance and mortgage insurance.

Usually about 30 days after closing.  The actual date of your first payment will be included in your closing documents.

Just contact your Milia Team Realty Sales Associate.