Dan Newell, REALTOR®
Guide to Home Buying
The following is a thorough overview of the
home-buying process. Please let me know if you have any more specific
Using a William E. Wood and Associates agent to help you find a
Whatever your reasons for buying, know that
finding the right home, in the perfect neighborhood and at a cost that is within
your budget, is no small task. That's why many buyers enlist the help of a
William E Wood and Associates agent.
William E. Wood and Associates sales associates are licensed
professionals with specialized skills. There are many benefits you receive from
working with our professionals.
As your William E Wood and Associates
- I know the local market and can quickly
narrow down a few areas where you are likely to find your home at the price
- I can save you time by doing a lot of the
legwork. By knowing your needs, I can eliminate homes that do not meet your
- I will make appointments, preview homes
with you and help you determine the pros and cons of each home.
- I have access to the multiple listing
service (MLS), a service that provides access to thousands of homes for
- I can provide information and make
appointments to see almost any property listed for sale. A home does not
have to be listed by a William E Wood and Associates agent in order to get detailed information
or an appointment to view.
- Once you find the home you want to buy, I
will guide you through the negotiation, legalities and details of purchasing
Beginning the process
Organization is the key to finding the home
you want while spending the least amount of time and energy.
Find out how much house you can afford. Do
this before you go house-hunting. I can refer you to a loan officer who can help
you determine how much of a down payment you can afford, along with a monthly
payment you qualify for.
Make a list of everything you want in a home.
Is a master suite important? How many bathrooms? What about closet space? Do you
need a yard for the kids and pets to play in? How about a fireplace or a bay
window? Do you prefer a rambler or multiple-story house? Are schools or access
to transportation important?
Separate the essentials from the items you
could do without and put them on the "A" list. Prioritize the rest of
the items into a second and third list in order of importance. We'll then go
over the list so that I'm very clear on what you want and need in your home.
Keep good notes as we look at homes. After a
while, it becomes difficult to remember which features belong to what home. I
can provide you with a form and rating system to help you compare homes. Some
buyers make audio tapes as they go along.
When selecting a home, look beyond cosmetics.
Make sure the home is in good physical condition and that you understand the
cost of repairs. For more information on how to assess the home's condition,
refer to the Home Inspection information on this website.
Look at additional homes, even if you love
the first one you see. Many times, it takes looking at several homes before you
find the one that is really right for you.
As your William E Wood and Associates agent, I'll check with you
regularly, even if you haven't found a house that suits your needs. Keeping in
contact with you allows us to establish a good rapport, and helps me to learn
how to help you effectively. I'll continue to be on the lookout for homes that
suit your needs.
How much home can I afford?
Before you start looking at homes, it's a
good idea to find a target price range that you can afford. A mortgage lender
will want to make sure you can qualify for the down payment, plus a monthly
mortgage payment made up of principal, interest, taxes and insurance (PITI).
Interest rates and your personal finances
will influence the amount of house you can afford. For a quick estimate of a
monthly mortgage payment for which you may qualify use the following worksheet.
Remember, it's always good to talk to a
lender before you start shopping for a home. I can refer you to lenders suited
to your specific financial needs.
|Annual gross income
|Divide by number of months
|Monthly gross income:
|Many lenders will not
allow you to spend more than 28% of your monthly income on housing
|Maximum monthly housing
|Many lenders will not
allow you to spend more than 36% of your monthly gross income on
|Total monthly debt, not
(This amount includes auto loans, credit cards, child support, etc.)
|Add housing allowances
In addition to the mortgage you borrow from a
lender, normally you will be required to make a cash down payment - a percentage
of the purchase price that you pay for the home. Conventional loan down payments
range anywhere from 5 to 20 percent, depending on the requirements of your
lender. There are also specialized loan programs that allow for as little as 3
percent down for those who qualify. A higher down payment often allows the
lender to be more flexible with a loan package, including interest rates and
closing costs. In addition to the down payment, you will need to have enough
cash available to pay closing costs.
Purchase and sale agreement
Once you've found the home you want to buy,
together we'll complete a purchase and sale agreement. This is the contract in
which you and the buyer outline the details of your property transfer. The
purchase and sale agreement usually consists of the following pages:
- Earnest money receipt.
- Financing addendum.
- Inspection addendum.
- Conditions/disclosure addendum.
- Contingency addendum-when appropriate.
- Addendum outlining special conditions.
- Lead-based paint notification-when
In selected areas, the following forms will
also be a part of your agreement:
- Agency disclosure.
- Property disclosure form completed by the
What are closing costs?
Closing costs are charges paid to various
entities during the real estate transaction. They can include escrow fees,
document preparation fees, cost of an inspection and lender fees.
What is a point?
A point is equal to one percent of the loan
principal. Some lenders charge points, in addition to interest and fees, at
What is title insurance?
Title insurance protects against loss from
any defects in the legal title, liens against the property or other adverse
claims. The lender usually requires title insurance.
When you're ready to complete a purchase and
sale agreement on a home, your offer will generally be contingent on a
professional inspection of the entire property, including improvements. The home
inspector looks beyond the cosmetics to make sure that the home's general
systems operate properly. The inspector will also look for large repairs that
are needed and report on the condition of the home.
The standard home inspector's report will
review the conditions of the home's heating and cooling system, interior
plumbing and electrical systems; the roof, attic and visible insulation; walls,
ceilings, floors, windows and doors; foundation, basement and visible structure.
The inspector will also look for cracks in cement walls, water stains that
indicate leakage and any indication of wood rot.
A home inspection also points out the
positive aspects of a home, as well as the maintenance that will be necessary to
keep it in good shape.
As your William E Wood and Associates agent, I'm familiar with
home inspection services and can provide you with a list of names from which to
choose. Another good source for finding a home inspector is to ask a friend, or
perhaps a business acquaintance, who has had a home inspection and can recommend
a home inspector they were satisfied with.
Remember, no home is perfect. If problems are
found, I will help you negotiate through the process.
Settlement - who pays what
During the negotiation stage of the
transaction, a mutually agreed-upon date for closing is determined.
"Closing" is when you and the seller sign all the paperwork and pay
your share of the settlement fees, and the documents are recorded. Settlement
obligations vary widely due to specific contract language, local laws and
customs. Prior to closing, the closing agent (usually an escrow or title company
or attorney) will complete a detailed settlement statement for both buyer and
seller. As your William E Wood and Associates agent, I can help you understand which of the
following typical settlement fees apply to you.
The buyer will receive:
The buyer pays:
- One-half of escrow or legal fees paid to
the attorney or escrow company for preparing the closing
- Document preparation fees
- Recording and notary fees
- Title search and title insurance
- Local transfer taxes, if any
- Repairs or inspections the buyer has
agreed to pay for
- Loan fees
- Appraisal fees
- Credit report fees
Six to eight weeks before:
- Use up things that may be difficult to
move, such as frozen food.
- Get estimates from professional movers or
truck rental companies if you are moving yourself
- Once you've selected a mover, discuss
insurance, packing, loading and delivery and the claims procedure.
- Sort through your possessions. Decide what
you want to keep, what you want to sell and what you wish to donate to
- Record serial numbers on electronic
equipment and take photos of or videotape all your belongings.
- Obtain a change of address packet from the
post office and send to creditors, magazine subscriptions and catalog
- Discuss tax-deductible moving expenses
with your accountant and begin keeping accurate records.
- If you're moving to a new community,
contact the Chamber of Commerce and school district and request information
- Make reservations with airlines, hotels
and car rental agencies, if needed.
Two to four weeks before:
- If you are moving yourself, use your
inventory list to determine how many boxes you will need.
- Begin packing non-essential items.
- Arrange for storage, if needed.
- If you have items you don't want to
pack and move, hold a yard sale.
- Get car license, registration and
insurance in order.
- Transfer your bank accounts to new
branch locations. Cancel any direct deposit or automatic payments from
- Make special arrangements to move pets
and consult your veterinarian about ways to make travel comfortable for
- Have your car checked and serviced for
- Collect items from safe-deposit box.
One week before:
- Talk to your pharmacist about
transferring important medical prescriptions.
- Arrange for a baby sitter on moving
- Return library books and videotapes.
Two to three days prior:
- Defrost your refrigerator and freezer.
- Have movers pack your belongings.
- Arrange to have payment ready for
- Set aside legal documents and
valuables that you do not want packed.
- Pack clothing and toiletries, along
with extra clothes in case the moving company is delayed.
- Give your travel itinerary to a close
friend or relative so they can reach you as needed.
- Pick up the truck as early as possible
if you are moving yourself.
- Make a list of every item and box
loaded on the truck.
- Label each box with the contents and
the room where you want it to be delivered.
- Let the mover know how to reach you.
- Double-check closets, cupboards,
attic, basement and garage for any left-behind items.
- Be on hand at the new home to answer
questions and give instructions to the mover.
- Check off boxes and items as they come
off the truck.
- Install new locks.
- If you've used William E Wood and Associates' Northwest
Home Connections program, your utilities should be turned on and ready
- Unpack your "first day" box.
- Unpack children's toys and find a safe
place for them to play.
- Examine your goods for damage.
Essential packing materials:
- furniture pads
- packing tape
- bubble wrap
- crumpled newspapers or packing paper
- utility knife
- felt-tip markers
- Styrofoam "peanuts"
- plenty of boxes
Pack a "first day" box with
items you will need right away. Handy items include:
- utility knife
- local telephone book
- coffee cups
- tea kettle
- instant coffee or tea, soft drinks
- pencil and paper
- bath towels
- trash bags
- shelf liner
- paper plates
- toilet paper
- children's toys and books
RATE MORTGAGE (ARM)
interest rates on this type of
mortgage are periodically adjusted up or down depending on a specified
a method of equalizing the monthly
mortgage payments over the life of the loan, even though the proportion
of principal to interest changes over time. In the early part of the
loan, the principal repayment is very low, while the interest payment is
very high. At the end of the loan, the relationship is reversed.
the actual finance charge for a loan,
including points and fees, in addition to the stated interest rate.
an expert opinion of the value or
worth of a property.
the value placed on property by a
municipality for purposes of levying taxes. It may differ widely from
appraised or market value.
a large principal payment due all at
once at the end of some loan terms.
a limit on how much the interest rate
can change in an adjustable rate mortgage.
a document, signed by a title
examiner, stating that a seller to buyer and documents are recorded.
the deed to property is legally
transferred from seller to buyer and documents are recorded.
see "Settlement" or refer
to "Settlement - who pays what?" in this guide.
a fee (usually a percentage of the
total transaction) paid to an agent or broker for services performed.
MARKET ANALYSIS (CMA)
a survey of attributes and selling
process of comparable homes on the market or recently sold; used to help
determine a correct pricing strategy for a seller's property.
a condition in a contract that must
be met for the contract to be binding.
a binding legal agreement between two
or more parties that outlines the conditions for the exchange of value
(for example:money exchanged for title to property).
a legal document that formally
conveys ownership of the property from seller to buyer.
a percentage of the purchase price
that the buyer must pay in cash and may not borrow from a lender.
the value of the property actually
owned by the homeowner: purchase price, plus appreciation, plus
improvements, less mortgage and liens.
a fund or account held by a
third-party custodian until conditions of a contract are met.
interest rates on this type of
mortgage remain the same over the life of the loan. Compare to
"adjustable rate mortgage."
a recognizable entity (such as a
kitchen cabinet, drape or light fixture) that is permanently attached to
property and belongs to the property when it is sold.
compensates for property damage from
specified hazards such as fire and wind.
the cost of borrowing money, usually
expressed as a percentage rate.
a security claim on property until a
debt is satisfied.
an agreement whereby an owner engages
a real estate company for a specified period of time to sell property,
for which, upon sale, the agent receives commission.
the price that is established by
present economic conditions, location and general trends.
the actual price at which property is
security claim by a lender against
property until the debt is paid.
LISTING SERVICE (MLS)
a system that provides to its members
detailed information about properties for sale.
an application fee(s) for processing
a proposed mortgage loan.
principle, interest, taxes and
insurance, forming the basis for monthly mortgage payments.
one percent of the loan principle.
It's charged in addition to interest and fees.
a fee paid by a borrower who pays off
the loan before it is due.
one of the parties to a contract; or
the amount of money borrowed, for which interest is charged.
divide or assess proportionately.
& SALE AGREEMENT
see "Contract," or refer to
"Purchase and sale agreement" in this guide.
all financial transactions required
to make the contract final. See "Settlement - who pays what"
in this guide.
a document that indicates ownership
of a specific property.
detailed examination of the entire
document history of a property title to make sure that there are no