With prices low, inventory high, mortgage rates fluttering around record lows and with great HUD and Foreclosure Offerings, now is a great time to buy and an even better time to buy your first home. So what does the average tenant need to know to get started buying that first home?
This is a basic list as people’s past experiences will also impact their situation or their understanding of the process, so we still suggest a personal consultation to have the best buying experience.
- Make a Budget: While you are still renting or living at home setup your financial budget for monthly expenses and income. Get a comfortable feeling of what you think you would like to spend monthly on your housing needs. This is the first step in understanding the price point of the house you should be looking for and how much down payment money to save in anticipation of offering on a home.
- Start saving for a down payment: There are many down payment assistance programs available, but by far the best plan of action is to save a down payment of at least 3.5% of the purchase price.
- Contact a REALTOR: make contact with your REALTOR of choice or with The Grumbles Team to have any questions you may have answered. Remember that the listing agent represents the seller so we advise you to make initial contact with an agent that you feel comfortable working with to protect your best interests in the transaction. It is as easy as calling an agent or now most agents are acceptable with communicating on Social Media outlets like FaceBook, or even texting and emailing to establish a relationship and determine if there is good connection and an agent you choose to continue to work with for your home purchase.
- Search for homes online: The majority of buyers start their look online to establish more criteria for their first home and narrow down areas within their price range. The Grumbles Team has a website that allows for two way communication of favorite homes, new home listing alerts and setting appointments for homes online.
- Connect with a Mortgage Lender: The agent can always make a recommendation of lenders but finally this also needs to be a service provider that you feel comfortable working with and are confident that they have great product offerings. You can find a lender typically at your local banking institution or from friends referrals as well as from the referral of your agent. The lender will establish credit worthiness in a few ways. Asking questions about employment, social security number, and running a credit check to obtain a credit score. Then they can explain the loan products available to you and determine the loan limit available and help determine the cash that will be needed to close on a property. Thus further clarifying property price ranges for our search to meet your comfortable monthly payment.
- Property Selection: Based on the lenders report we can begin to select specific homes that meet your criteria and budget. We may at this point single out certain properties that have specific loan programs for their purchase. For example HUD acquired properties currently have a $100 down payment program, so a lower cash for home purchase entry buyer may focus just on HUD properties as candidates. Other options like THDA, Tennessee Housing Development Agency offer 100% financing programs (therefore no down payment) for homes in rural defined areas. If you qualify then maybe our search needs to confined to these geographic areas. So this is obviously an important part of the process and The Grumbles Team is fortunate enough to have a member of the team with 30+ years of mortgage experience to help navigate this step.
- Home Tours: Together we identify the prospective properties and The Grumbles Team will schedule the tours of all the homes matching your criteria and do the research to identify value. We are experienced in the area and can provide guidance on the market and provide web links to allow you to do further research on schools, and other issues of importance to the buyer.
- Review the Offer to Purchase contract: It is recommended to review the offer forms before he emotions and time crunch of an actual offer on a home clouds the buyers ability to interpret the meaning of the terms of the offer.
- Earnest Money: Each offer must be accompanied by an earnest money check to show that the parties are acting in good faith with the offer. In the case of default of the contract the Earnest Money is lost. In the case of performance of the contract then the buyers earnest money check will be applied on the day of closing towards the purchase price of the home. Typical first time home buyer earnest money is $1000 to $1500 and thus the buyer must have that amount in their checking account to submit an offer as the check will be cashed within a few days of the agreement being confirmed by all parties. If the buyer is applying for a $100 down or no money down loan program then the balance of the earnest will show as a credit to the buyer at closing.
- Find your future home: This is just a small part of the REALTORS job but the one that most people think consumes REALTORS time, showing houses. The Grumbles Team utilizes our proprietary Total Market Overview, GPS, iPad with 3G, and market experience to make these home tours educational and beneficial to the client.
- Offers: The agent will write up the offer and submit it to the seller or sellers agent once the terms have been determined that best fit the client. Things to consider in the offer are cash to lose needs, price, closing date, seller assistance in closing costs, inspections, financing, and much more. The Grumbles Team works closely with the lender to make sure that the offer is in the best interest for a 1st time home buyer who is typically focused on less cash to close and low monthly payments.
- Negotiation: There is typically some offer – counteroffer back and forth before the final agreement is made and each time the agent must relay the information timely and concisely to the client. The Grumbles Team can reduce the headache and time of the negotiation by utilizing SignMyPad or Electronic Signatures via email to avoid scanning and faxing signatures.
- Inspection: The buyer has the option to have the home inspected either by themselves or via a licensed TN home inspector. The cost is due from the buyer at the time the service is performed. The cost is determined by the type and size of the property. A typical 1st time buyer property would be around $350. Another negotiation may occur to clarify the items that need to be repaired before the buyer will proceed with the purchase. The Grumbles Team has experience with a lot of different cases and understands timing is crucial in this process.
- Title and Escrow: There needs to be a title insurance policy in place and it needs to protect bothe the new owner and the mortgage company. It is negotiable as to who pays for the Title Insurance. Title policies run about $4 to $5 per thousand of purchase price. If the buyer is paying for it and the seller is offering closing cost assistance it can be used for this. The title company will also escrow (hold money on behalf of others) and they make all the disbursements of funds. There is a charge for that service and to prepare all of the closing documents. Home Owners Insurance needs to be setup and the Title company advised of the agent/company.
- Closing: Schedule your closing date and make all arrangements to move into your new home and set up utility services.
- Follow-up and Testimonial: After the sale, the buyer may still have questions so ask your agent if you have further questions. The Grumbles Team will follow-up and we also request a video testimonial of the buying experience and for a Zillow online review to be completed.
Should you be renting in and around Franklin area now, please review this list above and contact The Grumbles Team to have a no cost consultation of making home ownership a reality for you.
You can reach us with any of the social media links below or by dialing 615-587-5843.
The Grumbles Team is our family serving your family with your real estate needs in Franklin, Tennessee 615-587-5843.
EXIT Realty of the South | 1227 Lakeview Dr. Suite 1 | Franklin | TN | 37067 | 615.550.5555
Williamson County Real Estate Agent
Each EXIT Office Independently Owned and Operated