Home Buying 101
The decision to purchase a home is one of the biggest ones you will ever make. We're here to coach and assist you through each step along the way. Be sure to enjoy a world class experience by working with the team at Indy's Choice Real Estate!
1. Draw the Perfect Home
One of the best ways to begin the house search is to develop an ideal list of what you want to find in a home. Even though a clear picture won’t come together right away, the effort will enable you to focus your search and increase the possibility of early success. Although we can help coach you through this process, the list is largely about what you want in a home.
Some things to consider: Towns, school districts, neighborhoods, number of bedrooms, number of bathrooms, a new house or a home from a specific time period, 1 or 2 story, basement, garage, lot size, and types of financing. (Need to talk it out- hey, give us a call!)
What Others Are Saying
What Others Are Saying
What Others Are Saying
What Others Are Saying
What Others Are Saying
2. Get Pre-Qualified
Don’t get disappointed looking at houses you can’t afford. It only makes sense for you to find out how much mortgage you can afford and how much cash you will need up front. With this knowledge in hand, you’ll be more confident in what monthly payments you can afford. Your lender can even issue a Pre-Qualification Letter that will increase the likelihood of a seller
The pre-qualification process might also point you in the direction of a different financing process, such as doing a land contract. Not sure what a contract is or if it is a good idea? Just ask - We are happy to help you.
3. Find the Perfect House
Simply put, start looking at houses on the market that fit your criteria. By doing so, you not only get a better idea of what is out there and what is truly important to you, we are also able to create a more refined search as we progress as a team. How many houses should you look at? It depends. Some people find the perfect home right off the bat and others need to look at dozens. Most people prefer to look at 5 to 10 homes to get comfortable with what is out there and sharpen their focus, before buying.
No matter the path you choose, we are here for you every step of the way. To get an idea of what is available, search homes for sale. Please keep in mind that we can show you any house listed with any agent in the state of Indiana.
4. Make an Offer
Working together, we write up an offer and present it to the seller and his or her agent. They may accept it written, reject it completely, or make a counter offer. From this point, we just keep working to get the price and terms that both parties can agree upon. Trust our experience from more than 1,000 real estate transactions to work for your benefit. More often than not, the end result will be an accepted offer.
5. Earnest Money Deposit
At the time you make the seller an offer, you also offer an earnest money deposit. The deposit is “good faith money,” meant to signify your real interest in purchasing the home.
For your protection, the check is cashed and the money is held in the listing agent’s escrow account until the transaction is closed or cancelled. If closed, the money is applied toward your down payment. If cancelled, your money is returned provided it was cancelled for any one of the reasons we negotiate for in the purchase offer. Such reasons include the ability to obtain acceptable financing or failure to come to an agreement on repairs.
6. Choose a Lender
This is the key towards finalizing the real estate transaction because the lender is usually the entity putting up most of the money involved. Please keep in mind that not all lenders are skilled or honest or offer the best rates. While you can choose any lender that you wish to, we have developed relationships with lenders that you can trust to get the job done on time and at a fair price. They have helped many dozens of our clients to do just that!
7. Have the House Inspected
It’s often recommended that buyers obtain a home inspection by a licensed professional before closing the sale. We’ll gladly discuss with you the merits of your property and if you choose to have an inspection done, we will refer you to trustworthy inspectors. If something important is uncovered during the inspection, we will evaluate the issues with you and negotiate with the seller to correct major defects.
8. The Appraisal
Your lender will order an appraisal of the property. This is done so the lender knows that the property is acceptable as loan collateral based on the terms applied for. Being acceptable means that the appraised property value is equal to (or greater than) the price you are paying and that the property and report meet secondary mortgage market requirements. The latter is required by most lenders before they will loan you the money.
Send Us Your Home Buying Questions
9. Title Insurance
This is a policy that will ensure that you are being given clear title to the property and we strongly recommend that you receive one. It’s very nearly the only way to ensure that you are getting the property you expect to. We’ll help to negotiate this for you and also review it with you to be sure you understand what you are buying.
10. A Survey
Surveys show where a house is located on the lot, where the boundaries are, and if there are any easements or encroachments. Sometimes, surveys are required by the title company and often you’ll want one done prior to closing, regardless. We’ll help you determine if a survey is desirable and then help you find the most economical way to obtain one.
11. Property Taxes
The county assesses real estate taxes, which are to be paid twice a year. The purchase offer determines who pays the taxes for what portion of the year it applies. This can be a complicated topic and one that we will go over with you at closing to ensure that you get all the exemptions you are entitled to. Exemptions reduce your tax obligations.
12. Homeowners Insurance
In many cases, you are able to choose which insurance agency you wish to work with. Don’t know anyone in the area? We can provide you with the names of exceptional agents. Working with the insurance agent, you’ll be able to select your coverage, any riders, and the premium amount.
13. Flood Certification & Insurance
14. Home Warranty Coverage
This is an optional feature that is rather inexpensive and provides coverage for things that might go wrong during the first year you own your home.
Most often, closing is conducted by the title insurance company. This agency will collect all of the paperwork requiring a signature to make sure that it is properly endorsed and notarized. They will also present the final numbers for the buyer and seller, collect the money, and make sure all of the deeds and mortgages are properly recorded at the county office.
16. Getting the Keys
Once all the paperwork has been completed and filed and the money is collected and properly disbursed, the closing process is completed. The keys to your new home are finally yours!
17. Months Later
Even after the sale and closing process are completed, you can still count on us to be of service to you. There are a number of reasons you may need to reach out to us, and we are more than happy to answer any question you may have, or to lend assistance as needed.
ALL ABOUT MORTGAGES
7 Reasons Why You Should Get Pre-Qualified
There are LOTS of very good reasons why someone wanting to buy a house should get pre-qualified. Let's talk---
- Unless you're paying all cash or buying on contract, this step is a must do prerequisite to buying
- And even if you're going the contract route, it will improve your negotiating power.
- Most importantly, a pre-qualification letter is required before most offers will be accepted.
- It really doesn't expire (although after a couple of months, it may need updating).
- There's rarely a cost to do it.
- There's no penalty to your credit score.
- It let's you shop with confidence, knowing how much house you can buy and what your actual payments will be.
Bob worked in the mortgage industry for 17 years and still has strong contacts. We recommend only mortgage loan originators who have proven themselves with dozens of our clients over many years time. Two that have done the job, helping many of our clients to secure a mortgage and to buy the home they wanted are Mike Wickham and Alan Pressley. Do yourself a favor and give one of them a call. Get pre-qualified now.
How Much House Can You Afford
In addition to credit scores, credit reports, job history and other factors, one of the key qualifying items is Debt-to-Income ratio, or simply, Debt Ratio. Every loan program has its own qualifying number, and many lenders have their own numbers as well. The allowable ratio may be more or less depending on factors such as credit score or how large or small your cash down payment will be. Debt Ratios are calculated by dividing your monthly debts by your monthly income. Here are some of the items that go into the calculation:
- Mortgage Payments
- Loan Payments
- Auto Lease Payments
- Minimum required payment on credit card(s)
- Child Support
- Gross salary or wages, pensions, Social Security
- Average commissions and/or bonuses
- Net rental income
- Net self-employment income
Here are some fairly common qualifying Debt Ratios:
- Conventional Loan: 50%
- FHA Loan: 54.99% with automated underwriting approval
44% with manual underwriting approval
- VA Loan: Similar to FHA
- RD Loan: 45%
- IHFA Loan: 45%
But to get to the bottom line and learn how much house you can qualify to buy, give Allan Pressley or Mike Wickham a call or email, or visit them online today.
***FREE PRE-QUALIFICATION / FREE APPRAISAL***
Promo Code: ICREFREE
Use this promo code to obtain a free pre-qualification and save up to $450 off the cost of an appraisal at closing on ICRE brokered properties financed with loans through Mike Wickham or Alan Pressley.