Blog with MAE Capital

If you have never purchased a home before you are reading the right article.  This blog will give you some tips and show you the transaction flow of a typical Real Estate transaction.  These are the steps and the tips that will help you move smoothly through the process.

  1. Down Payment Requirement: Unless you are a Veteran you will need a minimum of 3.5% of the purchase price for a down payment, if you have more to put down great. If you put more than 20% of the purchase price as a down payment you will not have mortgage insurance in your monthly payment. If you are a Veteran, thank you for your service, and you will need no money to put down on a home. Know also that your Agent will ask you to put a earnest money deposit upfront when you make an offer on a home. The earnest money deposit goes towards your overall down payment requirement. If you are a veteran you could get that money back when the transaction closes, but make sure your lender know this upfront.

     

  2. Getting Qualified for the Home Loan: The next step you will need to be approved for your home loan unless you have cash to buy the house without a loan which most fist time home buyers do not. To prepare for this you will need to gather income items and bank account information. More specifically you will need to provide your lender with current pay-statements for the last 30 days, and you W2s for the last 2 years. You will need to provide tax returns if you are self-employed in any capacity such as a hairdresser or an independent contractor. You will need to provide your last 2 months of bank statements, investment statements, and retirement account statements to show where the money is coming from for your down payment. If you are getting a gift for you down payment you will need to provide a gift letter from the person gifting you the money and you will need to get a bank statement from them showing where that money is coming from. You will need to provide the lender with a valid picture ID as well. With this information your lender will be able to qualify you for a loan amount and a sales price and provide you with a letter of approval. Here at MAE Capital Real Estate and Loan we do all this for you.

     

  3. Shopping for your Home: After you have been approved for a loan amount and a sales price you now can start looking for home in your price range. It is highly recommended that you obtain a Real Estate Agent that works for you. This means that you want to have an Agent that does not represent the seller of the home you are interested in buying. I know we live in a digital world now where you can shop for house online, which is great as you get to see what is on the market in the area you wish to live in. It is not so great for you to use the Agent who also represents the seller as Real Estate law states that an Agent must look after the seller’s best interests first. Having your own Agent does not cost you a thing either, that is the best part, as when you buy a house the seller will your Agent from total commission already negotiated.

     

  4. Making an Offer on a House: Once you have found the perfect house in your price range you will want to make an offer to the seller to purchase their home. Your Agent will do this for you all you have to do is tell them what you would like to offer on the house. Your Agent should be able to tell you if there are any other offer that the seller has already received and the strategy that you should take to get the house. A good Buyer’s Agent will know exactly what to do in the market you are looking in. You should listen to the Agent as their advice at this stage can save you money and get you the house. The Agent will prepare all the paperwork and you will sign it, usually it will be done in digital signature form sent to you in your email where all you have to do is open and click. Once you have done this the Agent submits the offer to the seller. Be prepared to go back and forth if you have offered lower than the asking price. Once you have agreed on a price with the seller you now are in contract to purchase the house.

     

  5. Inspections: After your offer has become accepted by the seller you are officially “in contract” and within the contract are dates that all the buyer’s inspections must be done by. Your Agent will know the people that can get these inspections done for you in the times set forth in the contract. Inspections are very important especially for a First Time Buyer that may not know anything about houses and how they are constructed. These inspections will tell you the life of things in the home and the condition and if they need repairs. The pest inspection tells you not only if the house has termites or bugs it also tells you the condition of all the wood surfaces inside and out. You roof inspection will tell you the useful life left on the roof and if it needs any repairs. As a First Time Home Buyer you don’t want to buy a house that will require thousands of dollars of repairs after you buy it. Once you have received these inspections you will go over them with your Agent and they will recommend what, if any, work they want the seller to complete before you buy the house. Sometimes Sellers don’t want to do any work and it will your responsibility if you buy the house and sometimes sellers will do all the work you request them to do.

     

  6. Closing: Once all the inspections and work has been done on the house and the lender has everything they need and the loan has been formally approved they will issue a closing disclosure called the “CD” with a summary of the fees in the transaction and the final amount of money you have to bring to the closing Agent. You will have 3 days to review the fees and if they are not acceptable this is the time to get that fixed. If everything is OK on the CD you will have to wait 3 days before you can sign your final loan documents with a Notary. During this time you will have an accurate date to which you will own the house so take this time to move utilities, and set up people to help you move in.

 

This process is the same for every house you will purchase.  It looks an sounds complicated but your team at MAE Capital Real Estate and Loan we will walk you though the process and tell you what you have to do and when you have to do it by.  We try really hard to make a complicated process fairly easy.  We look forward to assisting you with your home buying needs.  Call us today at 916-672-6130 or click here to have one of our team members call you.

Posted by Gregg Mower on September 6th, 2019 2:56 PM

Excellent, you have decided to pursue the American Dream of home ownership.  Now what do you do?  Well you need to know how much of a home you can afford with the income and bills you have.  This step is the single most important step to your process of obtaining a home.  This process is called getting pre-qualified or pre-approved.  Although, the thought of shopping for a home may be an appealing one you should not even look at homes until you know for sure what you can buy or if you can buy.  The Pre-Approval process is where you will gather all of your financial documents together and get them to a licensed Loan Officer so he or she run the numbers and your credit report and derive a number to which you can qualify for.  You can read more about this process on our Pre-Approval page or our Process Flow page.  Your Loan Officer will give you a loan amount, a loan program, and a sales price you qualify for based on your finances. 

Once you have the Pre-Approval letter in your hand with the terms and amounts you qualify for it is time to find a Realtor to look for homes with.  You may ask why you need a Realtor, and a simple answer will be it doesn’t cost you anything to be represented by one that knows the laws, the inspections requirements, contracts, and inventory.   Yes, it doesn’t cost anything for you, as a home buyer, to be represented by a licensed Real Estate Agent as the sellers pay the real estate commissions to both the listing Agent and the Selling Agent.   If the free service is not enough to convince you to contact an Agent to work for you how about the laws, unless you happen to be a Real Estate Attorney the laws with regards to real estate process and procedures are many.  If that doesn’t scare you enough to be represented, how about the contract itself, there are items in a professional Real Estate contract that, if missed, could cost you thousands of dollars.    Then there is the inventory, or shopping help an Agent can provide for you.  Again you might say I can find anything I need on the internet.  Again true, but, the problem with internet data is the updating of the data is old.  In some cases like Zillow it requires that the listing Agent actually input the data into the system in order for the world to see it.  Whereas the Multiple Listing Service or MLS is required to be used by licensed Realtors for every listing they have or they will be fined.

Now, that you are convinced to find an Agent to represent you, who do you use?  I would, of course, recommend one of our qualified Agents, but if you are out of our service area we can always screen Agents for you in the areas you are looking to buy.   This is a little know service, again its free to you as a buyer, that we offer to assure our clients are represented by an Agent who knows their stuff.  You see, if you go dialing for dollars, as we call it, you will undoubtedly end up with an un-experienced Agent.  This is because the experienced Agents are out working not sitting in the office waiting for the phone to ring, the Agents that are in the office waiting for the phone to ring are generally new to the business trying to get call in business.  Another pitfall buyers run into is calling the listing Agent on a house they wish to buy and have them represent you.  This is called dual Agency, and we as listing Agents love this as we get both sides of the commission, however, undenounced to the un-educated home buyer, the listing Agent’s allegiance is to the seller first, by law.  So it can really pay to be consulted first by one of our Agents to have them either represent you or screen other potential Agents to represent you and your needs. 

Shopping for the perfect home should not be taken lightly either.  You should have a list of items that are “must have” items in a home such as number of bedrooms and bathrooms, updated kitchen, new or existing home, and most importantly location.  Making this list is crucial for your Agent as they will be able to search for properties that fit your exact criteria, so you are not wasting your time looking at homes that don’t fit your needs.  In addition to the “must have” list you should do a “wish list” like granite counter tops, hardwood floors, a pool etc.  You should also do a list of items you absolutely do not want.  You Agent has the ability in the MLS system to put in exacting parameters that you can’t get on the consumer version on the internet.   Your Agent will put your parameters into the MLS system and put you on an automatic drip of homes in the area(s) you are looking in with the exacting parameters you have.  Your first email of homes will be the largest as the initial search will pull all the current listings that fit your parameters.  The emails you will get after that are “as they hit the market” emails, in other words you will be the first to see the properties come on the market.  This is great if you are in a competitive price range as you will be able to see properties as they come on the market with no delays.  This could be the difference of you getting the best home or not. 

A great strategy to look at homes is to drive the properties that look good in the listings that you have viewed on line.  Driving the properties will give you a real idea of where they are, what they really look like, and how they have been maintained.  When driving the properties you don’t have to include your Agent as you are simply doing your own diligence.  Make notes of the ones you would like to see and then call your Agent to make appointments to see the homes.  Never go up to the door and disturb the occupants it is not nice nor is it safe.  To see the homes your Agent will need to make appointments with the listing Agents or the owners directly for you to get inside.  Your Agent will put together “a tour” that will include your availability to see them and the seller’s availability to show them.  When you go to view the home take pictures and take notes so you can remember the ones you liked and disliked.  You may not find the perfect house after several showings, don’t get discouraged homes are coming on the market every day and with patience you will find what you are looking for. 

You did not expect to go looking for houses today and find the perfect one, but that is the way it happens, one minute you think you will never find the perfect house the next you find one you can’t live without.  You now need to get it tied up so no one else can have your perfect home.   Your Agent will write an offer for you and ask you to provide your pre-approval letter and a Ernest Money Deposit (EMD).  The offer will be on a 10 page form that has all terms in it from the offer price to the loan amount, to the items that need to be inspected, and it also spells out who pays what.   Remember you can ask for anything in the offer and your Agent will go over those details with you.  Once you have decided the price and terms you will be offering you will sign the offer and your Agent will then submit your offer to the listing Agent.  Within the offer you wrote a time period the seller has to get back to you with a response.  When the seller reviews your offer they will either accept it as is or they will counter offer your offer with different terms.  This is all part of the negotiation process.  Once you and the Seller have reached an agreement and both have signed and accepted the terms you are now officially in contract.

Once in contract you will have certain dates that you must adhere to in the contract such as inspection periods.  The inspection periods include your right to get a home inspection, appraisal and any other inspections you and your Agent deem fit.  Those inspections periods are about 2 weeks so you should be prepared to start paying for them right away.  Your Agent will know good inspectors to use so rely on them to guide you through this time period.  A special note about home inspections is that they cover everything from cracks in the driveway to mold in the attic and sometimes it is difficult to determine what items are important to have repaired or if they need repair.  You can talk with the inspector directly to determine this or talk with your Agent or both.  If you determine you require additional repairs in order to buy the house you will have your Agent prepare a repair addendum, and submit it to the seller.  The seller has the right to say that they will or will not do the repairs.  If the Seller says that they will not do the repairs you may need to make the decision to renegotiate price or back out altogether.  If you do back out during the inspection periods you are entitled to a refund of your deposit.  If you miss the time frames in the contract and decide to back out you could very well lose your deposit.  Your Agent will work with you to make all of this legal.  Another variable inspection is the appraisal.  If the appraisal comes in lower than the offering price your Agent will discuss your options with you.  Those options will be to give the seller a counter offer with the lower value as the price, or you could pay the difference in down payment if you are so inclined.  If you decide to pay the difference be prepared to make the down payment on the lower of the sales price or appraised value and pay the difference.  For example if the sales price is $250,000 and you are putting 10% down for a 90% loan to value (LTV) or $25,000, and the appraisal came in at $245,000 you will be required to put your $25,000 down and you will have to add an additional $5,000 for a total of $30,000 and you will still be at a 90% LTV. 

Once you have made it through the inspection periods and everything has passed your standards, we are full steam ahead to the closing of this transaction.  At this time I would suggest you get back with your MAE Capital Loan Officer and make sure they are on schedule to close and see if they need any more documentation from you or explanations.  By now the loan should be approved, and hopefully you are just waiting for the legal paperwork to be delivered to the escrow so you can sign and bring in the remainder of down payment and closing costs.  You can always refer to the closing diagram on our Process Flow page to see where you are at in the process.  There still may be a few weeks left in your escrow process so be prepared to provide more information for your Loan Officer.  Now would be a good time to start preparing to transfer your utilities so you have no interruption when you move.

OK, you signed brought your money in to the Escrow and are ready to close.  The lender must review everything before they release funds to Escrow to make sure all signatures are correct and the all the conditions the underwriter put on the file have been met.   Once everything is good the lender funds the loan to the Escrow and they then take the Deed to the county to record the transaction to make the house legally yours.   Congratulations you are now a home owner and you can move in and do anything to the home you wish.  Your first mortgage payment will be due the first of the following month and be sure to make that payment on time or it will affect your credit.  I hope this helped you with some basics to buying a home.  If you go to our Pre-Approval page and complete the form at the bottom of the page we will contact you are start your process or give us a call we would love to talk to you at (916) 672-6130.

Posted by Gregg Mower on February 26th, 2019 3:02 PM

Most people think when you buy a new home in a brand-new subdivision you can’t use your Realtor.  This is a myth; most major builders will co-operate with outside agents to get their inventory sold.   This will help you as a buyer in that your Agent is driven to work for you not the builder, whereas the sales agent in the subdivision is looking out after the builder’s best interests not yours.   Having representation with your own Agent will not cost you anything as the builder will pay your Agent at the close of the sale.  It most cases, your Agent will be able to better represent your best interests in getting the best base price and will have the ability to negotiate on any improvements you might want. 

It is very tempting to just stop into a builder’s sales office and look at the model homes they have staged to view.  When or if you do this, you should tell them you are working with an Agent even if you are not.  This will allow you time to get representation to negotiate the best deal possible.  Communication with your own Agent will be far easier than trying to deal with the sales Agent that works for the builder as they don’t have the incentive that an Agent working for you would have to get the answers back to you in a timely manner.   Real Estate Law states that an Agent must look after the seller’s best interest first, except if a buyer designates an Agent to work exclusively for them. 

Your Agent can generally provide you with more information on the project than the sales Agent working for the build can or will.  A good Agent will be able to tell you the dynamics of the neighborhood and surrounding area better than the builder’s Agent as they don’t have any incentive to know what is going on around the builder’s project, they are there to move units like a car dealer.  If there is a Home Owner’s Association (HOA) your Agent should be able to get you good information on what it pays for and what the goals of the association are.  An Agent will also be able to take the time to research the schools and if there any new schools coming to the area and when they will be opening.   Your Agent will have the time to devote to you to research school bonds, Mello Roos,  and other items that may affect your payment when purchasing a new home. 

If you have never purchased a new home before you will notice that the model homes have tags on several items in the homes that may say “optional” or “upgraded item” these items are not included in the base price of the home.  Potential home buyers will sometimes miss these items and expect them to be in the home they purchased when it is completed.    Then when it becomes time to do the walk-though they are not in there and this can bring confusion and disappointments to new home buyers where if they had representation their Agent would have known to put those items in the initial contract.  These upgraded items can raise the price of a new home significantly so it is important that you know exactly what the end price will be with all the upgrades you want.  MAE Capital Real Estate and Loan’s Agents know how to negotiate for these items for you and you would be surprised how much money you can save by having that representation.

You will also see that when you are dealing with a builder’s sales Agent that they will steer you towards their lender in the form of giving you incentives to use their lender as opposed to an outside lender.  This is an illegal activity specifically called steering, however, they still do it.  At MAE Capital, we have a system that will be able to work around the builder’s lenders, in most cases, and still get you the best interest rate and the lowest costs even if the builder is offering $10,000 in incentives to use their lender.  This actually works in the form of “Bundling” our services.  We have proven this to work and save our client’s money and maintain control over their own transaction.  This helps our clients in that they only have to make one phone call to find out about the house and the loan.  This not only saves time but will save thousands of dollars.

To recap, when looking to purchase a New Home in a New Subdivision you should really try to have your own representation.  This will work in your advantage in many ways.  You will, generally get a better price with the upgrades you want, you will get more financing options, you will get more knowledge of the area and feel more comfortable that you have someone working for you towards the purchase of a new home.  Your Agent will go through the walk-through with you at the end and if anything is not up to your standards your Agent can deal with it for you with the builder directly.  This is a big undertaking so if you are looking to purchase a new home in a new subdivision you should get some advice from a professional Agent prior to making an offer to purchase and you could be saving thousands of dollars just by having a conversation that doesn’t cost you a thing.  Here at MAE Capital Real Estate and Loan we are here to help guide you through this process and save you money.  Give us a call today at 916-672-6130. 

Posted by Gregg Mower on July 24th, 2017 10:14 AM

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MAE Capital Real Estate and Loan

CA DRE #01913783|NMLS #806170

4940 Pacific Street Suite A
Rocklin, CA 95677