Jason Will’s Home Buying BluePrint

FHA (3.5% down payment) $472,030 max loan ($490K purchase price)

Seller can contribute 6% of the purchase price towards closing costs, prepaids and points
Higher debt to income ratio (up to 55% DTI normally)
Less stringent credit criteria
No income limits or geographical limits/restrictions
PRIMARY RESIDENCE ONLY – Few caveats to this.
Safe, Sanitary & Secure – No chipping paint, windows have to open and close, etc.
Mortgage Insurance Premium (MIP) – NEVER comes off loan, unless they put 10% down

CONVENTIONAL $726,200 max loan amount

Must have a minimum of 5% down for primary residence; 10-20% down for second home; and 20%-25% for investment property (changed your down payment on investment)
Seller can contribute up to 3% (sometimes 6%, but usually 3) Monthly PMI is slightly lower than FHA
Mainly for good credit buyers
3% down options- first time home buyers or lower income buyers

VA 0% down

Must be a veteran with an honorable discharge for 100% financing Minimum credit score 580
Seller can contribute up to 5% in closing costs
Can use appraised value to roll in closing costs
Primary residence only
Safe, sanitary, and secure

USDA 0% down

income household limit 1-4 people: $103,5000 5-8 people $136,600
Has to be in eligible location
1% mortgage insurance premium financed into loan
Good credit buyers- 640+
Seller can contribute up to 6% of closing costs
Can used appraised value to roll in closing costs Primary residence only & can’t own any other property
Safe, sanitary & secure

AHA 0% down (conventional AND fha options available)

640 credit score for FHA & 680 credit score for CONV
45% DTE MAX
6% seller concession for FHA & 3% seller concession for CONV
FHA: 96.5% † 4% ($10K max) CONV: 97% + 4% (10K max)
$130,600 max income limit (qualifying income only)
AlS grant available on CONV only, and have to make less than $104,480

Start the Mortgage Application Process Here: dianawillteam.com

What Are Closing Costs?

A recent article from Bankrate explains:

“Closing costs are the fees and expenses you must pay before becoming the legal owner of a house, condo or townhome . . . Closing costs vary depending on the purchase price of the home and how it’s being financed . . .”

Simply put, your closing costs are the additional fees and payments you have to make at closing. According to Freddie Mac, while they can vary by location and situation, closing costs typically include:

Government recording costs
Appraisal fees
Credit report fees
Lender origination fees
Title services
Tax service fees
Survey fees
Attorney fees
Underwriting Fees

The Earnest Money Commitment in the Home Buying Process

Understanding Earnest Money Earnest money, also known as a good faith deposit, is a sum deposited by the buyer into an escrow account to demonstrate a serious commitment to completing the purchase. In a market flooded with potential buyers, sellers seek assurance that a buyer is genuinely interested in proceeding with the purchase. Although not mandatory, offering earnest money can distinguish you from other buyers and initiate the escrow process, beneficial to both parties involved.

Alternatives to Show Commitment: Promissory Notes As an alternative to earnest money, buyers may opt to submit a promissory note. This document serves as a declaration of the buyer’s intent to purchase the property. However, without a financial deposit, promissory notes may not hold as much sway with sellers.

The fate of earnest money can vary; it may be refundable under certain conditions or applied towards closing costs and other expenses if the sale is completed. It’s essential to understand the circumstances under which earnest money can be reclaimed.

Deciphering Down Payments A down payment is an initial payment made by the buyer, representing a portion of the total purchase price of the home. This percentage varies, with minimums often set to qualify for mortgage approval. Unlike earnest money, down payments directly contribute to the purchase price and are not refundable. They are pivotal in the closing phase of a home sale, with no alternative routes to bypass this financial requirement.

The Role of Financial Contributions in Securing a Home Earnest money and down payments collectively facilitate the home buying process. While earnest money can make your offer more appealing and kickstart the buying process, down payments seal the deal, transferring ownership.

The Path of Your Money A key distinction between the two lies in their application. Earnest money enters an escrow account, potentially being applied towards the down payment or closing costs upon the sale’s completion. Conversely, down payments are dedicated solely to the purchase price, finalizing the property’s transfer.

Recipient of Your Financial Contributions Earnest money resides in escrow until it is time to be allocated, ensuring a secure transaction. Down payments, however, go directly to the seller as part of the purchase price.

Financial Commitments Explained The amounts required for earnest money and down payments vary, often influenced by regional norms and the property’s value. In California, for instance, earnest money typically ranges from 1%-3% of the purchase price, while down payments can span 5%-25%, affecting subsequent mortgage payments.

By understanding these financial components, you’re better equipped to navigate the complexities of the home buying process, making informed decisions that align with your financial strategy and home buying goals.

Navigating the Offer Process How does one go about making an offer on a house? Initiating an offer involves presenting your terms—including the proposed price, completion date, contingencies, and any additional requests—to the seller for their consideration. The seller will then accept, reject, or counter your offer. If an agreement is reached, both parties sign a purchase agreement, laying the groundwork for inspections, appraisals, and loan approvals, leading up to the transfer of ownership at closing.

Crafting a Written Offer on a Home

What are the steps to make a written offer? A written offer should clearly state the property address and your offer price, along with any conditions such as financing or inspection outcomes. It’s essential to sign this document, making it legally binding, and ensure all necessary attachments are included. Upon acceptance, the closing process involves finalizing all paperwork, during which you’ll settle any remaining payments and officially take ownership of the home.

Pre-Offer Preparation Checklist Before making your offer, ensure you have:

Analyzed the market: Understand local real estate trends to gauge the fairness of your offer.
Secured mortgage pre-approval: This demonstrates your serious intent and financial readiness.
Partnered with a real estate agent: Their expertise in the local market can be invaluable in finding and securing your ideal home.
Focused your search: Prioritize listings within your budget that also meet your desired location and amenities.

Post-Acceptance Steps What actions should I take after my offer is accepted? Celebrate this milestone, then focus on the following with the guidance of your agent:

Conduct inspections: Essential checks might include pest and structural assessments.
Finalize the purchase agreement: Address any contingencies and complete all necessary documentation.
Secure financing: Ensure your mortgage conditions are met and align with your financial plans.
Close on the property: Attend the closing meeting to sign off on the property transfer and complete your purchase.
Move into your new home: Arrange for moving services and set up utilities to start enjoying your new space.

Offer Strategy Insights What’s a smart approach to making an offer? Informed decision-making is key. Research the market, consider the property’s condition and location, and assess any additional costs like repairs or closing fees. Align your offer with your financial landscape, ensuring it’s competitive yet within your means. Remember, your real estate agent is a crucial ally in this process, equipped to advise on offer strategy and potential home issues.

Final Thoughts As you navigate the home-buying process, keep open lines of communication with your agent and legal advisor, ensuring you’re informed and confident from offer to ownership. Your journey to finding and purchasing your dream home is a significant one, and being well-prepared at every step will help make it a successful voyage.

The Home Inspection: From Concept to Scope

The journey to homeownership is filled with anticipation and complexity, particularly for those navigating it for the first time. After the thrill of finding the right home and agreeing on a price, a series of crucial steps follow, involving you, your agent, and your lender, culminating in the moment you become the proud owner of a new home.

A critical part of this process is the home inspection, often stipulated in the purchase agreement as a contingency by the buyer. This step involves hiring an independent expert to evaluate the home’s condition, offering insights into its maintenance, necessary repairs, and the health of its mechanical systems.

For most homebuyers, discerning potential issues or knowing how to address them isn’t second nature. This is where a professional and licensed home inspector comes into play, identifying specific concerns that could affect the property’s value or your living conditions. Given the inspection primarily safeguards the buyer’s interest, it falls upon them to select and finance this service. Your real estate agent can be a valuable ally in recommending a reliable and certified home inspector.

The Cost of Insight The investment in a home inspection varies by region, but typically ranges from $300 to $500. It’s a scenario where the adage “you get what you pay for” holds true, with numerous tales of bargain inspections falling short of industry benchmarks, sometimes at great cost to the buyer in terms of lost opportunities or unforeseen repairs down the line.

Scope of a Standard Home Inspection A standard home inspection is a thorough visual assessment of the property’s interior and exterior. It yields a detailed report on the current state of various home systems and components, aligned with standards set by the International Association of Certified Home Inspectors. This includes:

Roof
Exterior surfaces
Basement, foundation, and crawlspace
Heating and cooling systems
Plumbing
Electrical systems
Fireplace
Attic, including insulation and ventilation
Doors, windows, and interior

Understanding the Limits It’s crucial to recognize what a home inspection does not cover. Being noninvasive, inspectors cannot damage the property to uncover hidden problems, such as cutting into drywall to check for mold or lifting carpet to inspect the condition of the subfloor.

Additionally, while the report provides a snapshot of the property’s current condition, it won’t predict the lifespan of its components, only offering an estimated age for elements like the roof and HVAC systems. The decision on how to act on the inspection findings rests with you, without explicit advice on proceeding with the purchase. This ensures the buyer can make an informed decision, weighing the costs of potential repairs against the value of the home.