The Buying Process
Follow this helpful homebuyer's guideline which includes worksheets, useful information and links to point you to the right front door.
Your Coldwell Banker Schmidt Family of Companies Sales Associate can provide detailed information on almost any property currently listed for sale - whether it's listed by Coldwell Banker Schmidt Family of Companies or another real estate company.
If you see a "For Sale" sign or an ad in the newspaper or online that interests you, we have access to all the data. So contact your local Coldwell Banker Schmidt Sales Associate for all the details:
- The listing price
- The description
- The special features
- The financing terms
And we'll arrange an appointment to show you the property at your convenience.
Your Sales Associate is already familiar with your housing and financial needs, so why go through the process again with someone else? We can save you time and take the hassle out of house hunting, and it won't cost you a penny more!
Step 1 - Deciding to Buy
Step 2 - Finding The Right Home
The more your Sales Associate knows about what you want, the easier it will be for them to help you find the right home. Take time to thoroughly complete the worksheets below for each home you are interested in purchasing.
Step 3 - Financing Your Home
Home Financing Choices
In today’s fast-paced real estate environment, home buyers need every possible advantage. Coldwell Banker Schmidt has made home buying simpler by helping buyers get "preapproved," and not merely "prequalified." What is the difference?
Pre-approval vs. Pre-qualification
What could be more comforting than the peace of mind that goes with knowing your mortgage is fully approved?
You will have a greatly improved negotiating position when you are preapproved for a mortgage. Sellers are more apt to negotiate with someone who already has a mortgage approval in hand. The pre-approval letter lets the seller know they are working with a serious buyer. A preapproved buyer can also close on a property more quickly—another major consideration for a motivated seller. Obtaining a preapproved mortgage is essential in a "sellers’ market" or where supply is limited.
Pre-approval uses basic information as well as electronic credit reporting. It is a true mortgage commitment. Which means a commitment to financing your home and an indication of the total mortgage amount available to you. Coldwell Banker Mortgage can help you through the pre-approval process. There is no charge for this service. Ask your Sales Associate for more information or click here.
Pre-qualification on the other hand, is not a full mortgage approval, but an estimate of what you can afford. When you prequalify for a mortgage, the lender collects basic information regarding your income, monthly debts, credit history and assets, and then uses this information to calculate an estimated mortgage amount.
Of the over 50 different mortgage types available, the two largest categories are fixed and adjustable rate mortgages, each with advantages to consider.
Fixed Rate Mortgage
The fixed rate mortgage is a traditional method of financing a home. The interest rate stays the same for the entire term of the loan — usually 15 or 30 years — so the interest and principal portions of your monthly payment remain the same.
Your payments are stable and predictable, but initial interest rates tend to be higher on a fixed rate mortgage than on adjustable rate loans. Many fixed rate mortgages cannot be assumed by a subsequent buyer.
Adjustable Rate Mortgage (ARM)
The interest on an adjustable rate mortgage is linked to a financial index, such as a Treasury security, so your monthly payments can vary over the life of the loan — usually 25 to 30 years. Most adjustable rate mortgages have a lifetime cap on the interest rate increase to protect the borrower.
The lower initial payments on ARMs make it easier for buyers to qualify. Some ARMs may be converted to fixed rate mortgages at specified times, usually within the first five years.
- Mortgage FAQ
- The Financing Process and Documents Needed To Apply For A Mortgage
- Mortgage Calculator
- If you are interested in pre-qualifying or getting pre-approved for a loan, or if you are just interested in finding out more about the mortgage process, click here.
Step 4 - Closing the Deal
You've found the home of your dreams, but there's still a lot to be done before you can actually close on the house.
There are literally hundreds of points that you can negotiate in a real estate transaction, and it is important to feel confident about negotiating with potential sellers, or there may be a danger that a seller will talk you into agreeing to terms in a contract that are not in your best interest.
There are many potential points that can protect and enhance your purchase, including financing and home inspection contingencies. Most purchase contracts, even if they are standard documents, contain boilerplate language that may not fit your situation and may in fact be unfavorable to you. Your Coldwell Banker Schmidt Sales Associate will explain the language, so that you can make an educated decision in order to make the best possible purchase decision.
There are two types of contingencies found in most transactions - a financing contingency, which makes the purchase conditional on the buyers' ability to obtain a loan from a lender, and an inspection contingency, which allows the buyers to have professionals inspect the property to determine potential property issues prior to entering a binding contract to purchase. You could forfeit your Earnest Money deposit under certain circumstances, such as by terminating a purchase without legal reasons provided for in the contract. In order to protect your position, your Coldwell Banker Schmidt Sales Associate sees that the purchase contract contains provisions which protect your purchase interests, including a clear and marketable title, having the seller agree to maintain the property in its present condition until closing and making any agreed-upon repairs to the property.
Deciding what stays with the property is a negotiable item. If sellers want to take fixed items out of a house, they must specify so in the sales agreement. Appliances that are not built in such as washer, dryer, refrigerator, portable dishwasher, portable microwave, and freestanding stove are not automatically included in the real property, just as anything is else not permanently attached to the property.
Earnest Money Deposit
This is a deposit paid by the prospective buyer of real property as evidence of the good faith intention to complete the transaction. The amount can vary, depending on the value of the property, and it serves as a source of payment of damages to the seller if the buyer defaults. The amount of earnest money may also play into the negotiation strategy your Coldwell Banker Schmidt Sales Associate employs. Once the offer is mutually accepted, the earnest money is held in trust by either the listing agent firm or the selling agent firm and is credited toward the buyer's purchase price at closing. If closing fails to occur, the defaulting party may lose any claim they have to the earnest money deposit.
The Contract of Sale otherwise known as the Purchase and Sale Agreement is a legal document which binds the buyer to a set purchase price and binds the seller to convey the title. The contract also services as the initial directions to the escrow company to begin processing the transaction. When your Coldwell Banker Schmidt Sales Associate prepares your Purchase and Sale Agreement, make sure you are perfectly clear about the following details:
Who is paying the various expenses of the sale, including closing costs?
Sellers customarily pay for the real estate commission, title insurance, the State transfer tax, one-half of the closing fee, some document preparation, and their portion of the year's taxes and assessments. Buyers customarily pay for ½ of the closing fee, their portion of the year's taxes and assessments, and their loan fees. Occasionally sellers and buyers decide to share the expenses of buying and selling. This must be negotiated during the purchase offer time and often depends on local real estate market conditions, other terms of the purchase contract, and timing considerations.
Some lenders will allow a credit from the seller to the buyer for a portion of the buyer's nonrecurring closing costs. But they usually won't allow a credit that reduces the amount of the buyer's down payment, or that includes any of the buyer's recurring closing costs, such as fire insurance premiums, interest on the buyer's new loan, property mortgage insurance and property taxes. Lenders' policies vary on how large a credit for nonrecurring costs will be allowed.
What is the actual closing date?
The closing date is the stated in the contract. It is set in the original purchase agreement by agreement between the buyer and seller. It is always nice to set a closing date that leaves you enough time to prepare to move in, and which doesn't cost you unnecessary money. The date of closing can affect your closing costs (make sure to ask your lender for a good faith estimate).
What is the date of occupancy?
Many times the seller will request to remain in the property after closing, in part to assure that closing actually occurs without the seller having moved from the property. If that is the case, the seller actually becomes the tenant of the buyer after closing, so proper documentation is needed.
Home warranties are becoming more of a standard in homebuying and home selling transactions. The home seller may have already purchased a home warranty. If not, you should consider buying a policy yourself at closing. The Coldwell Banker Consumers Best Home Protection Plan will cover the cost for repairs or replacement to most mechanical systems or most major built-in appliance for one year from the date of closing for one year. Ask your Coldwell Banker Schmidt Sales Associate for details.
A professional building inspection will bring to light problems or repairs that are recommended to be made on the home. The Sellers’ limitation for any and all repairs is a point of negotiation at time of contract. In the event that the estimated cost of repairs exceeds this limitation, the buyer and seller enter into re-negotiations on how the repairs are to be addressed. Your Coldwell Banker Schmidt Sales Associate is skilled at helping you achieve your goals during this stressful phase.
An appraisal is an opinion of a property's monetary value usually completed at the request of the lender and for the lender's benefit. Appraisers consider numerous factors such as square footage, construction quality, design, floor plan, amenities, energy efficiency, lot size, topography, view and landscaping. Other issues taken into account are neighborhood quality and a property's proximity to transportation, shopping and schools.
Title/Escrow & Insurance
The final stage of a closing occurs with the transfer of title from one party to another. The commitment for title insurance is normally ordered when the real estate contract is agreed to by both buyer and seller. The policy of title insurance is sent to the buyer by title company agent after closing has occurred. The title or abstract company handles the escrow, which is a third party that transfers the money and documents (including title and deed) from the buying and selling parties. The escrow company prepares documents, draws up the closing statements, obtains necessary signatures, records documents and receives and disburses funds.
Now that you've found a home to purchase, you want to protect your investment with insurance. Most buyers get a comprehensive homeowner's insurance policy, which provides coverage for fire damage, water damage, personal possessions, personal liability, vandalism, theft, loss of use of the house, and many other coverages, including personal property and furniture. If you are financing your home purchase, your lender will require you to buy at least basic hazard insurance. Be sure to talk to your insurance representative fully about insurance options.
After The Closing
Once you've bought your home, make sure to keep your papers in order and know your rights as a homebuyer.
Of course, one of the best parts about buying a home is the tax break you receive from the government.
1. Interest on your mortgage
2. Property Taxes (but water or sewer assessment may not be)
3. Some Closing Costs (including home inspections, appraisals or loan application fees)
4. Loan points (deductible in the year that you pay them; in a refinance, the points are written off in increments over the term of the loan)
What Is Not Deductible?
1. Home improvement Expenses
2. Homeowner and Co-op dues
3. Insurance Expenses
Note: Be sure to consult with your tax counsel about the tax benefits of owning your home.
For free publications from the Internal Revenue Service, call 1-800-TAX-FORM and ask for the following publications:
521 "Moving Expenses"
541 "Tax Information on Partnerships"
551 "Basis of Assets"
555 "Federal Tax Information on Community Property"
590 "Individual Retirement Arrangements"
908 "Bankruptcy and Other Debt Cancellation"
936 "Home Mortgage Interest Deduction"
Make a File
File all closing and settlement papers, including escrow papers, title report and your purchase and sale agreement. Also file your loan documents, inspection reports and insurance information. If you have additional questions, ask your Coldwell Banker Schmidt Family of Companies Sales Associate.
Step 5 - Preparing to Move In
Now that you have purchased your new home, the real fun and excitement begins. Packing your boxes is not all that you will need to do. Your Coldwell Banker Schmidt Sales Associate will be glad to help you find local services and answer any questions you may have about moving into your new home. Use this checklist to help make your moving experience a pleasurable one.