HomeSmart Evergreen Realty
Tricia Ebert & Ernie Sheesley, Realtors®

7 Steps to Home Ownership

by Tricia Ebert, Realtor®, CSA®, ABR®, BPOR®, CDPE®

 

      Last week, we discussed the most important terms for you to understand when buying a house. Now let’s discuss THE most important detail of buying a house… FINANCING!  

 

      (2)  Financing, Financing, Financing: This is THE most important step to take in determining whether or not you’re ready to buy a home. Before you even log into Realtor.com, or my Facebook page at www.facebook.com/TriciaEbertRealtor, to look for a home, you MUST deal with the financial aspect of your purchase FIRST.  

 

            Questions that need to be answered include:

 

            ~ How much money have you saved for a down payment? You don’t necessarily need 10% or 20% down. With an FHA loan, which is guaranteed by the federal government, you can put down as little as 3.5% of the purchase price. Some credit unions offer 3% down financing also. However, the amount of money you’ve saved for that down payment will have a direct impact on how much house you can afford to buy.  

 

            ~ How much money do you have for closing costs? These fees can cost an additional 1.5% of the purchase price of the house. For example, if you are buying a house for $500,000, you may have to come up with an additional $7500 for costs related to buying the house. These costs include escrow fees (this is to pay the company that holds your money until you’re ready to buy the house), title fees (this is to pay the company that makes sure the seller can legally sell the house to you and insures it for you), loan costs (charged by your lender, such as BofA, Chase, Wells Fargo, etc.), inspection fees (paid to the home inspector who checks out the house for you to tell you if it has any defects), appraisal fees (paid to the appraiser who makes sure the price you’re paying for the house is in line with other prices in the area), etc., etc. Sometimes the seller will help pay for these costs, and sometimes they won’t. You have to be able to pay them if necessary.  

 

            ~ How good is your credit? Your credit rating, referred to as your FICO score, will determine what interest rate you will have to pay the bank to borrow the money to buy your house. It’s in your best interest to pay your bills on time for at least 6 months before applying for a mortgage. It’s also a good idea to pay off or pay down whatever credit cards or loans you have before you apply. One factor the bank will look at is your “debt-to-income ratio.” If you are carrying too much debt compared to your current income, you will not be able to get a loan.

 

            So please, do NOT buy a new car just before applying for a mortgage! And do NOT buy ANYTHING other than groceries during the loan process when you are in escrow to buy a house. I have heard horror stories from Realtors who had clients in escrow who went out and bought a whole house full of new furniture just before closing escrow. The bank saw all the debt they incurred (believe me, they will check your credit the day before and the day of escrow closing). And guess who didn’t get their loan and who didn’t buy a house?  

 

            So I repeat, do NOT buy anything other than your normal groceries and gas for the car before and during the escrow process. If you need to check your credit rating, you can get your scores from the mortgage lender you go to when applying for a mortgage. You can also get your scores for free at www.CreditSesame.com or www.MyFICO.com. You can obtain a copy of your credit report for free once a year at www.AnnualCreditReport.com.

 

I suggest you check your credit report and your FICO scores before you even consider applying for a mortgage. If you want the lowest interest rate possible on your mortgage, then have the best credit score possible. The higher your score, the lower your interest rate will be. Your monthly mortgage payment will be lower if you get a lower interest rate, so this is extremely important in determining how much house you can afford to buy.    

 

            ~ Have you met with or spoken to a mortgage loan officer or loan broker to determine how much house you can afford to buy? Before you look at houses or start working with a Realtor, it’s important to know what price range you can afford. If you have no idea who to talk to, then ask your Realtor. Most Realtors have mortgage people they work with regularly, and they know who you can trust to get qualified for a loan. They also know who to trust to get the loan funded for you so that escrow will close and you will own the house you want. This is extremely important. Some loan officers are very good at following through and getting all the paperwork in order to fund your loan on time, and others are not. Please respect your Realtor’s opinion on who will do the best job for you. They have years of experience and know what they’re talking about.

 

      Also, if a Realtor requests that you get pre-approved by a direct lender (such as BofA, Chase, Wells Fargo, etc.) rather than a mortgage broker who works with many banks, please do so. Many real estate agents will not accept a pre-approval letter from a mortgage broker when you submit your offer to buy a house. They want to know one of the big banks has reviewed your financial information and that they will give you a loan. This is to protect the seller. If the seller accepts your offer, they want to know you are going to be able to get a loan and complete the purchase of the house. Unfortunately, many agents don’t trust mortgage brokers and so they require a pre-approval letter directly from a bank.  

 

Next week: Now that you have your financing lined up, we’ll talk about where to find your dream home.

 

See you next week!

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What my clients are saying  

"When my wife and I separated, we of course needed to sell our house. It was a very tough time for both of us. But despite our stress and grief, Tricia was really great understanding our difficult situation, and was able to work with both of us to satisfy our needs. We had to sell the house as fast as possible and get the most possible from the sale. Tricia was able to accomplish both! She is VERY knowledgeable about the market, and treats each sale (both buying and selling) as if it is her own home. It made our difficult situation less stressful knowing she was taking care of us. We are both very grateful she was there for us. Tricia is the best!"

 

~ M., Burbank, CA

Tricia is a great person to work with. She was very familiar with the process, and she was very patient. Tricia did help us find the right townhouse for us. Highly recommended!

 

~ Aristos & Suzanna Theoharides, Burbank, CA

Tricia is AMAZING! We had to do a short sale with our property, and Tricia's expertise made the process so easy, and dare I say, even enjoyable! We will definitely work with her again and refer her to everyone we know who needs a knowledgeable, patient, and professional agent.

 

~ Bowe & Gina K., Burbank, CA

I love Tricia! She really helped me through everything. Very knowledgeable and thorough. So glad she was on my side!

 

~ Mari Helgeson, Hollywood, CA

I call Tricia my Angel. She genuinely cares about her clients and goes out of her way to help them. She helped my family do a short sale on our house, and we felt completely taken care of throughout the process. I highly recommend Tricia to all of our friends and family.

 

~ Fides D., Van Nuys, CA

Tricia is truly a hands-on Realtor whose attention to detail takes the stress out of house hunting. She has helped me buy two properties over the years, and I would recommend her to anyone looking for a real estate agent. Tricia is hard-working, caring, and guides her clients through the buying and selling process step-by-step. A consummate professional!

 

~ Kari Wahlgren, Burbank, CA

Tricia: Impeccable professionalism, humor and good spirits. Constant cheerleader and positive force of nature. Not only our Realtor but our teacher, our guide, our guardian angel. We feel so fortunate that Debi found you and led us to you. You encouraged us from the get go. From the bottom of our hearts, we thank you. It goes without saying but, we could not have done it without you! Hugs and Happy Dancing!

 

~ Sarah & Chad Wiley, North Hollywood, CA

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