Sarah Qureshi
703-868-1715
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Buying a Home
Buying a home is the single most important investment you will make. It is therefore important that it be approached in the right manner. The following is a Home Buyers Guide prepared to help you get familiar with the home buying process.
Buyer Brokerage Contract
You will sign an exclusive buyer brokerage contract with me which enables me to represent you exclusively in the real estate transaction. In becoming your agent I will be obligated to provide you with undivided loyalty, obedience, confidentiality, full disclosure(all information regarding the transaction and property), and accountability.
What do you want?
- Do you want a condominium, townhouse, single family (detached house)?
- What type of building architecture do you want - colonial, contemporary, or Victorian?
- What style of building do you want - split level, split foyer, rambler, or ranch house?
- Do you want a garage, basement, deck, back yard, fireplace etc.?
- Are you looking for a residential or investment property?
What do you need?
- How many bedrooms and bathrooms?
- Do you need a 1 or 2 car garage?
- When do you need to move into the new house?
- Do you need special handicap features?
- Do you need to live in a specific county or school district?
- Are you an empty nester in need of a smaller home?
- Do you have a growing family in need of more space or are your parents going to live with you so you need a home with an in-law suite?
Determining Purchasing Power
How much you can afford depends on your household income, savings, the type of financing and interest rate you get. As a general rule, lenders suggest that you do not pay more than 28-33 % of gross income for PITI payments, or 36-38% for both PITI and monthly long term debts combined. Your savings will contribute towards your down payment and closing costs. In terms of financing there are many different types of loan programs available and each program may have a different requirement for the amount of down payment and the interest rate associated with it.
Before you begin searching for your dream home, you have to meet with a loan officer for consultation and get yourself pre-qualified for a loan. This will give you the accurate amount of loan that you can get. From this point we can start searching for a house priced around the amount for which you have been approved of.
Sources of Downpayment
Apart from your savings you can tap into the following resources for down payment:
- stocks and bonds
- investment accounts
- money from relatives
- employer loan programs
- your 401K or similar retirement plan to borrow money from yourself
Mortgage Information
Click here for details about Mortgage Information.
Mortgage Insurance
you make a down payment of less than 5% on a conventional loan, your lender will require you to buy private mortgage insurance (PMI). This insurance provides the lender protection incase you default on the loan, thus allowing the lender to approve a larger loan amount.
Credit Cleanup
Your ability to get a reasonable loan depends on your credit score so make sure that you clean up your debt load. Any problems with your existing loans or credit cards can result in an inability to get a loan for home purchase. It is advisable that you keep checking your credit score every 3 months and take care of problems as they arise. To keep a check on your credit score you can register on the following websites:
Journey from Contract to Settlement:
Making an Offer and Negotiating
You have found your dream house and you want to make an offer. I will, as your agent, first of all ascertain whether the asking price is right or not. For this I will do the comparative market analysis ( CMA) which shows how much like properties have sold for or are in the market for. If the price of the house that you like fall into this range, it means that it has been priced correctly. In consultation with you, we will decide on the price to offer in the contract. Likewise we will put in the other terms that are suitable for you such as settlement agent and date, radon inspection, home inspection, home warranty etc. I will give you the best advice and will make such an offer that has a higher chance of getting accepted.
After I have presented the contract to the listing agent and the seller, the seller has the option to accept the contract, make a counter offer or simply reject the offer. In case the seller counters, I will help you analyze the terms the seller has changed, and in accordance with your wishes we can accept, reject or counter these terms. We will have a ratified contract once both parties have initialed every counter and signed the contract.
When you make the offer to buy, you also submit a check to me for the earnest money deposit. This shows that you are earnest about your decision to buy. After the contract is ratified I will submit the check to my company and it will be deposited in the company’s escrow account. The amount of the check will go towards your closing costs at the time of settlement.
Contingencies
Once the contract is ratified, we will start removing the contingencies immediately. Time is of the essence in real estate and the number of days is measures in calendar days and not business days. For the home inspection contingency, I will refer a number of inspectors and companies to you. You can decide which one to use based on the price and availability of the inspector. Or I can schedule for you if you like. Likewise for radon or lead based paint contingencies. If anything shows up to be wrong with the house after these inspections, we can negotiate with the sellers on how to solve the problems.
Settlement Company
I will forward all the necessary information along with the ratified contract to the settlement company, and make sure that they get all the information they need at a timely manner. I will keep in touch with them to make sure that all paper work is being done according to schedule.
Mortgage Company
I will keep in touch with the loan officer to make sure that the loan application process is coming along smoothly. If they need any additional documents I will make sure that they are received as soon as possible.
Home Owner's Insurance
You will be asked by the mortgage company to obtain a fire and hazard insurance policy called the homeowner’s insurance before you go for settlement. You will have to pay for the policy for the first year in advance. This policy provides protection from fire and other hazards to your home and its contents. I will refer you a number of home insurance companies and agents, and you can choose which one to purchase the policy from.
Home Warranty
Home warranties are a good investment by home buyers in case something major was to go wrong with your newly acquired home’s appliances or mechanical systems. A home warranty provider will repair or replace the faulty appliance or system, with no cost to you, for up to a year in most cases. This is your best defense against expensive repairs or replacement of major items such as a roof, air conditioning unit or refrigerator. Buying a home warranty policy will give you peace of mind after going through the stress of buying a home.
Utility Companies
10 to 14 days before you are due to settle for the house, I will remind you to call up the utility companies and make the switch to your names starting the day after settlement.
To access the numbers of major utility companies, click here.
Walk-Through Inspection
This is scheduled ideally on the morning of the settlement or a day before. In any case it should be scheduled as close to the settlement day as possible. The purpose of the walk-through is to make sure that all systems of the house are in working order and all the conditions in the contract are satisfied. I will go through the entire house with you room by room and guide you to check everything such as lights, fans, stove, dishwasher, washer, dryer, doorbell etc. Anything out of order should be noted. At the time of settlement, funds from the sellers will be withheld by the settlement attorney to pay for repairs. After the settlement, I will coordinate with the seller and his agent to repair or fix the problems. The funds will be released to the seller after the settlement attorney has received bills and a notification that the repairs are complete.
Settlement
The day is finally here. Be ready to do a lot of paper signing. The settlement attorney will explain all the documents that you are required to sign on and if you have any questions you can ask him or me at any point during the settlement. Don’t forget to bring the following items to closing with you:
- A picture id of all the people on the Deed of Trust
- If not a U.S Citizen, check with your loan officer if you need to bring any specific documents for settlement
- A cashier’s check made out to the settlement company for the estimated closing costs
- Your personal check book in case the closing cost estimate was less than what is required
You will receive the keys to your new home at the end of the settlement.
Congratulations!!! You are the proud owner!!!
Helpful Tips
- Before you start house hunting, plan to review your credit. The amount of loan that you get depends on how high your credit score is so study your credit report in detail and correct errors and fix any problems you find in it.
- Even if you don’t have children, buy in a district with good schools. This is important from the resale point of view.
- Hire a home inspector. The inspector's job is to point out potential problems that could require costly repairs down the road.
- Get a home warranty. This may save you a lot of money if something were to happen to one of the major appliances or systems of the house.
- A larger down payment means less money you need to borrow and hence a lower monthly payment. However don’t put your last penny on the closing table. You will need money for closing costs, moving, household setup and other items. Also don’t forget to put money aside for emergencies.
- The house that you are interested in buying, visit it during rush hour to take note of the traffic, on the weekends and evenings to see if there is parking available and study the neighborhood.
- From the time of the loan application to the settlement, do not make any big purchases on your credit card, do not attempt to buy a car or open up any new credit cards. This will affect your credit and hence jeopardize your ability to buy the house.
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