How to Make the Process of Buying Your Austin Home a
Stress-Free and Pleasant Experience.
1. Hire a Buyer’s Agent
Why should you hire a buyer’s agent? Sellers are represented by agents and buyers have the right to equal and equitable representation as well. The available homes for sale are controlled by the seller’s agent. The goal of the seller’s agent is to get the seller the best price and terms. The seller’s agent is contractually obligated to get the seller the best deal. When a buyer is represented by a buyer’s agent, he or she will represent only you and have a fiduciary responsibility to look out for your best interests. In most transactions, the seller agrees to pay a 6% commission (these fees are not controlled by laws or other rules and can vary). In most cases, the seller’s agent has agreed to split the commission (3%) with the buyer’s agent, so the fee for your buyer’s agent has already been provided for by the seller. You are entitled to representation and you should always take advantage of the opportunity to have your best interests a priority by hiring a buyer’s agent. I welcome the opportunity to provide you with dedicated service as a buyer’s agent. Please contact me at 512.461.4192 for assistance.
2. Avoid These Things
Unless you plan to pay cash for your Austin home purchase, make sure that you begin your home buying process by planning several months in advance if possible. There are four things to avoid before applying for a home loan and during the loan process itself.
(a) Do Not Pay Off Bills unless your loan officer advises you otherwise.
(b) Do Not Change Jobs if at all possible
(c) Do Not Move Your Money to a new bank or a new account type.
(d) Do Not Make Major Purchases such as cars, furniture, etc.
3. Credit Report/Credit File Disclosure
Consumers are entitled to a free credit file disclosure, commonly called a Credit Report once every 12 months from each of the three nationwide consumer credit reporting companies. (Equifax, Experian & Transunion). Go to AnnualCreditReport.com to get your free credit report. This free report does NOT provide your Credit Score, a figure used to determine if you qualify for a loan. Credit scores of 750 and above are considered Excellent, 660-749 Good, 620-659 Fair, and anything at or below 619 is Poor. You can acquire your Credit Score for a fee from all of the credit reporting agencies. If you find mistakes on your credit report, you’ll want to get them corrected before applying for your home loan. If your credit report is less than stellar, there are Credit Repair companies that can work with you and assist you in improving your score so that you can get qualified for a home loan.
4. Collect Your Documents
You will need to provide residence history, employment history and savings, checking and investment account information. For a detailed list please visit my Loan Documentation Requirements page.
5. Get Pre-Approved for a Loan
A Pre-Approval Letter is the lender’s opinion, that with the information you provided and your current credit scores, you can qualify for a loan. Today most sellers will want to see a pre-approval letter before considering your offer. Also, if there are competing contracts, your contract is likely to get better consideration if you are pre-approved.
6. Find a Property
Recent studies show that 80-90% of homebuyers start their home search on the internet. And it’s a great place to start! There are many real estate sites that use the same databases that professional real estate agents and brokers use. This database is called the Multiple Listing Service (MLS). While access to these databases is advantageous for consumers, few people realize that the information about homes for sale on the internet is incomplete. Many home builders do not list their full inventory of new homes in the MLS database. Also, real estate professionals have access to information that is not available to the public, such as the homes that have sold and what they have sold for. Most of the public MLS websites are only updated once a day, while the MLS information that agents have access to is in real time. This is the type of information that real estate professionals can provide consumers so they can make the best offer based on factual data. When working with a real estate professional in the Austin Texas area, they will be able to set up a custom search for you, so that you can automatically receive emails when a property comes on the market that meets your search criteria. When you’re ready to make an onsite visit, contact your buyer’s agent to set up an appointment.
7. Make an Offer
Once your buyer’s agent presents your offer, the seller can (1) accept the offer (2) reject the offer or (3) reject the offer and counter with other terms. When your offer is accepted, you’ll provide an earnest money check to represent that you are a serious buyer. Your offer will contain contingencies so that you have options to cancel the contract and have the earnest money returned to you. In addition to contingencies, you have the opportunity to include an option period for a nominal amount of money, allowing you to cancel the contract. During the option period, buyers hire licensed inspectors to inspect the home for such things as septic, termite, structural, etc. Buyers usually submit to the seller a list of repair requests based on their findings. Essentially, the repairs to be performed become a re-negotiation and fine-tuning of the contract. The seller is not obligated to agree to repair requests and you may terminate the contract as long as you are still in your option period. Buyers may ask the home seller to pay for a one year home service policy, sometimes called a “home warranty”, to help eliminate the number of disputes after the sale. Home warranties cover the cost of certain repairs to systems and appliances during your first year of ownership.
An appraisal of the property will usually be ordered by your lender, to verify that the property supports the value of the home in the contract. If you are securing a FHA or VA loan, the appraiser will require that the home meet certain standards set by the FHA and VA.
A survey will be required by the lender and is usually ordered by the title company. If there are any title issues related to the survey, you may choose to accept the encroachment and proceed with closing or terminate the contract.
10. Title Commitment
The title company will research the title property records relating to the property and will issue a “commitment” to provide title insurance. Title insurance insures against events that happened in the past which affect the title to the property. Title insurance rates are set the State of Texas. Generally, in resale contracts, the seller pays for the owner’s policy of title insurance and the buyer pays for your lender’s title policy.
11. Home Owners Association
If the property you are buying is in a subdivision with a mandatory home owner’s association, you should receive information about the HOA. This could include the rules, regulations, annual dues, cash reserves, etc. Unacceptable terms in a HOA can be grounds to terminate the contract if you wish.
12. Homeowners Insurance & Utility Accounts
Several weeks before closing, set up your home owners insurance and utility accounts so that both will begin on the closing date.
13. Closing Statement
Several days before meeting to sign all the closing documents, the title company will prepare a statement showing your charges and credits and the total you need to bring to closing. The closing statement will reflect your credit for your earnest money and the option fee. You can either wire your closing funds to the title company or bring a cashier’s check to closing.
14. Sign the Documents
Closing or signing of all the documents is usually held at a title agency or an attorney’s office. The closer will compile all the legal documents, order title insurance, payoff liens, prorate taxes, prepare a closing statement, pay the seller and record the documents. Some buyers opt to have an attorney examine the closing documents prior to closing.
15. Move into Your New Home!
Congratulations on your home purchase.