I Just Want A House

You’ve got a great REALTOR by your side to get you to the finish line. Here’s the information you need if you only want the basics and leave the rest to your agent. The information below is approximate. You’ll need to talk to your lender to get specific numbers. This should get you started for a conventional purchase.

What can I afford?
You’ll need to talk to a lender to get an exact amount, but the ballpark number is up to three times your annual income (single, joint or household). If joint annual income is $100K and both have great credit without debt, they should qualify for a $300K loan.

What is the minimum cash to start?
Every transaction will have closing costs regardless of financing source. That’s about 2.5% of the house price. VA and USDA loans allow $0 down loans and the funding fee is rolled into the mortgage.

FHA loans require a 3.5% down payment. Most conventional loans require 3.5-5% as a down payment.

Bottom line: plan to have 6% of 3X your annual single or joint income in cash to start. More is better.

When do I need a 20% down payment?
Conventional loans will charge Private Mortgage Insurance (PMI) until the principal is below 78% of the property value. PMI only ensures the lender will be paid if the borrower defaults. When a buyer puts 20% down, there often is no PMI because the principal dips below the 78% threshold. However, don’t make assumptions – check with the lender for an exact amount. If an offered amount is over the asking price, expect to pay the difference to avoid PMI.

How do I find houses?
Your agent will send house options to you. You can see options monthly, daily, on specific days or the moment they hit the market (very high frequency if options aren’t properly limited). When you see one you like, contact the agent. The agent will arrange access and do basic research on the property so you can make an informed decision.

How do I find a new construction house?
If you want a new-build house, the agent needs to hunt them down by contacting the builders directly. The agent lets you know what is available, the cost and where it’s located. Most new-built homes are NOT on the listing service.

Never go to a builder without an agent. It’s like going to trial without a lawyer. The builder’s representative is obligated to protect the builder’s best interests – at your expense. Try to get an agent who is certified in new construction.

Never give a builder’s website your personal information (name, phone, email). Some consider this “procurement” and will prohibit you from having agent representation.

I found a house I like, now what?
Your agent should provide a comparative market analysis (CMA) of the house and a potential offer range in relation to the current market conditions. YOU decide what the house is worth to YOU. Tell the agent the price you want to pay – a combination of a cash down payment and any financed amount. The agent will ask some basic questions and make some suggestions related to other negotiation points in the contract.

Next, the agent completes the offer and sends it to you for digital endorsements. The entire signed and initialed package is called an Offer. The agent will send the offer to the Seller’s agent.

The offer was accepted and executed. Now what?
Most contracts will have an Option Period. It’s negotiated, but the Option Period is normally 3-10 days to perform due diligence inspections and terminate (back out) for any reason.

How do I know the house is OK?
Buyers need to have the house inspected quickly. Fast inspections allow additional time for roof and foundation inspections before the end of the Option Period. The buyer must select and pay for the inspection. Price is based on house size but expect $500-$700 for most. The agent can make the arrangements for the inspection but can’t pay for it.

When do I get the house?
How the house is purchased dictates when ownership will change hands. Most conventional loans can “close” in about 30 days. Cash-only purchases with no repairs can close in as little as two weeks.

Possession happens most often after “closing and funding.” Title can’t transfer ownership until it secures the entire contracted amount from the buyer and lender(s).

Finally, if you agreed to let the owner lease the house from you after closing (called a “leaseback”), you must wait until the lease is complete before you can occupy the property.

How do I turn on my utilities and get moved?
Your agent should present a list of utility providers for you to call. It will be in the Seller's Disclosure Notice (SDN). If there wasn't a SDN, ask your agent for a list from a recent nearby sale.

What else?
If you have a full-service real estate agent, everything else should be handled for you. Your agent will do the research, negotiations and guide you through the process while communicating with you and keeping you informed. Your agent brings the menu, YOU make the decisions.

If you want to know more about any part of the transaction, please view or download my Home Buyer Guide (free book). 

I’ve Got Your Six!

Mark M. Hancock, GRI, MRP, AHWD
REALTOR, New Build certified
214-862-7212
DFWmark.com

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