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HOME

BUYER TIPS

Creating

Goals

What is important to you in your home

purchase? It is important to have goals

before you begin looking. During our Buyer

Goal Consultation, we will make a goal

checklist of amenities that are essential and

those you would like to have in your new

home.

Most clients work with us

because they know how

much we care about meeting

their goals!

The list below may help you clarify your

thinking on what is important to you when

you are ready to purchase.

What monthly payment are you

comfortable with?

What neighborhood(s) or cities would you

like to live in?

What price range do you have in mind

Are schools a factor?

What type of home interests you?

(one-story, two-story, split-entry,

townhouse, condo, duplex)

What style appeals to you?

(Contemporary, traditional, no

preference)

Do you need to be close to public

transportation?

How many bedrooms and bathrooms do

you need?

How many do you want?

What other interior features are

important to you? (Separate family

room, formal dining room, home office,

etc.)

What about exterior features? Have you

considered a garage, yard size,

patio/deck, hot tub, view, or waterfront?

Are there any special features you are

looking for in a home?

HOME

BUYER TIPS

Buying a Home: Practical

Considerations

Be realistic: There are no perfect

homes. Decide what is important to you, and make sure you find a home that has the features you require. Be prepared to compromise on some of the items on your wish list.

Decide on a price: Get pre-approved

for a loan, not just prequalified. Consider not only the amount of the loan the lender will allow, but also what you feel comfortable spending every month. Take an honest look at your budget. We can provide you with a lender recommendation so you are sure to be working with the best in the business!

Choose carefully: Buying a home is

much more permanent than renting. Purchase a home that you are prepared to keep for a while. Select a home that will be reasonable to maintain, in both utilities and/or repairs.

Think long-term: Are you looking for a

starter house with the idea of moving up in a few years or do you hope to stay in this home longer? This decision may dictate what type of home you’ll buy as well as the type of mortgage terms that suit you best.

Buying a home is an important decision that can make an enormous difference in your lifestyle.

It is also the biggest financial transaction you may make. There are some specific things to consider about a home to buy.

HOME

BUYER TIPS

Pre-Approval

A buyer must be pre-approved to start

looking at homes. This gives them a good

idea of what they can afford, or more

accurately, what loan amount they qualify

for.

When you become pre-approved, you

actually apply for a loan. The lender checks

credit, verifies employment, and often

verifies that you have sufficient funds to

close. Then once you find your dream home,

just about the only thing left is the appraisal.

The reason savvy buyers obtain loan

approval before shopping for a home is that

it strengthens their negotiating position

when they make an offer. All sellers want to

sell their home to a pre-approved buyer.

Pre-approval can also cut days, even weeks,

off the closing process.

Pre-approval can really help you to

determine your price range, which helps

you narrow your choices of homes to buy.

You will already know how much you can

afford before you even start looking.

HOME

BUYER TIPS

Consider

Your Down

Payment

Most lenders require you to pay a portion of

your own funds--the down payment--toward

the purchase of a home. Saving for a down

payment can be one of the most challenging

steps in buying a home.

Your down payment plus your pre-approved

loan amount will determine how much home

you can afford. A down payment can come

from many places: savings, investments such

as stocks and bonds, gifts from relatives,

company bonuses, equity in other assets,

and life insurance policies, to name a few.

Then again, there may be home mortgage

alternatives that do not require a down pay-

ment.

If you currently own a home, then you may

want the equity you have built in that house

to serve as the down payment on your next

home. But how much is your current home

worth? I would be happy to provide you

with a Qualified Home Assessment so that

you will know its current value.

Ask me for information about

down payment

assistance programs!

HOME

BUYER TIPS

The Importance

of Your Credit Report

When you apply for a loan, your lender will look at several things:

• Down payment amount

• How long you have been employed in your current position

• Whether you have the funds on deposit for your down payment and closing costs

• Your income-to-debt ratio and your credit report

Lenders nowadays place much emphasis on the credit report. Credit bureaus compile a record of debts from credit card companies, banks, department stores, and other firms.

This information appears on your credit report, so it shows whether you pay your bills on time. Lenders develop credit ratings based on how well you manage this function. The higher your credit score, the more flexible lenders will be in loan approval and specific requirements.

When you meet with lenders, ask how they decide if you are a good credit risk. It is likely to be from a credit report. Lenders can order the credit report for you and discuss your score. If your credit is less than sterling, they can usually offer suggestions on how to strengthen your credit position.

HOME

BUYER TIPS

Negotiating a Winning

Offer

When you are ready to purchase a home, I will negotiate on your behalf to help you get the best house your dollar can buy. I can act as a buffer to minimize the emotional elements so you can enjoy the process.

When you make an offer on a house, the seller can accept it, reject it, or counter it. If the offer is too low, the seller may reject it outright. Or the seller may counter the offer, naming a price or other specifications that are more in line with his or her expectations.

If a property is in strong demand, it may receive several offers. Then the seller may choose to accept the highest one or the one from the most qualified buyer.

Here are some tips to make sure your offer is accepted in any market:

• Be pre-approved by a lender, not just prequalified. This strengthens your position. • Provide a substantial earnest money deposit. This is "good faith" money that shows the seller you are serious about the property. • Limit your contingencies to those most important to you, such as financing, Inspections.

HOME

BUYER TIPS

Steps to a Successful

Closing

Here are the steps to close the sale once the purchase and sale agreement has been signed by both parties. Please know I will walk you through this step by step to make sure this is a smooth and enjoyable process.

Step 1 - Removing contingencies: The most common contingencies are financing and the inspection. These conditions must be removed or waived before the sale on your new home can close.

Step 2 - Appraising the property: Your lender requires a formal appraisal to confirm the value of the home you're buying, to be used as collateral to secure the loan.

Step 3 - Preparing closing documents: Most often real estate attorneys prepare documents that confirm the transaction, pro-rate funds, and so on.

Step 4 - Signing closing documents.

Step 5 - Recording the deed and disbursing funds.

Step 6 - Enjoy your new home!

HOME

BUYER TIPS

Minimizing

Stress

Did you know that for most people, moving ranks near the top of the list of stressful events? Here are some things you can do to minimize stress when you are ready to make a move:

• Choose a real estate agent who

communicates clearly and frequently,

keeping you up to speed on every

step of the process.

• Consider how long it will take from the

time you make an offer on a property

until the transaction closes. Once an

offer is received and accepted, it may

take from 30 to 45 days to obtain

financing.

• Decide whether you want to move

yourself or have professional movers

handle the job. If you hire a moving

company, be sure to book well in

advance.

• Think about cleaning services. After

everything is packed and moved is a

great time to have someone come in

and clean.

• Arrange at least two weeks in advance

to have utilities and phone service

disconnected at your old house and

reconnected in your new home on

move-in day.

HOME

BUYER TIPS

Make Your Move a

Happy One

Moving is an adjustment, whether you are moving across town or relocating across the country. Moving across town or to a new neighborhood may mean learning new routes to work, selecting a new dentist, and finding a new grocery store. It may also mean a change in schools if you have young children. Moving across the country can be much more challenging. Relocation is rarely easy. But being prepared can help you make good decisions and ease the transition. Here are some of the most common concerns: • Spouse or significant other: Many relocating couples are concerned about finding work for the trailing spouse. Some companies offer career counseling and job placement.

• Children: Often children resent a move. Researching activities and getting the kids involved in the new community will help them make the adjustment. Some experts recommend moving mid-school year rather than waiting until summer. This may enable children to make friends faster. • Costs: The cost of housing can be a shock to a transferee. Many companies have relocation packages that help with the closing costs and the cost of moving. This may be something to negotiate with your employer. • Community: When relocating to a new city, people often try to replace what they left behind. Communities may have many amenities, but they may not be the same as you were used to.

10 Tips for Home Buyers

1. Be selective, but not unrealistic. There is no “perfect” home, just the right

home for you.

2. Do your homework before you start looking. Decide specifically what features

you want in a home and which are most important to you.

3. Get your finances in order. Review your credit report and be sure you have

enough money to cover your down payment and your closing costs.

4. Determine what you can afford. Talk to a lender and get preapproved for a

mortgage before you start looking.

5. Trust in yourself. Limit the number of people you turn to for a second opinion;

as it could make your decisions more difficult.

6. Decide when you could move. When is your lease up? Are you allowed to

sublet? Do you have a home to sell? Is there an ideal transition time?

7. Think long-term. Are you looking for a starter house with the idea of moving

up in a few years or do you hope to stay in this home longer? This decision

may dictate what type of home you’ll buy as well as the type of mortgage

terms that suit you best.

8. Think big picture. Consider other expenses, home maintenance and financial

goals when determining what price range to purchase in.

9. Be informed. Hire a qualified home inspector and have the home subject to an

acceptable home inspection.

10. Get help. Hire a professional realtor as your buyer’s representative. Unlike a

listing agent, whose first duty is to the seller, a buyer’s representative is

working only for you. Your realtor’s commission is paid for by the seller.

The Move…a Checklist of Things To Do

Stop services on present home and arrange services for new home___Cable Television/Satellite (check to see if you have to turn in your receiver)___Internet___Electricity___Garbage collection/recycling___Gas/Fuel Oil___Lawn Care/Snow Plowing services___Newspaper___Telephone___Water/Sewer

*NOTE: Review your check stubs for other services to be stopped/added

File change of address with___Accountant___Bank/Credit Union___Clubs/Memberships___Credit Card Companies___Employer___Friends/Relatives___Financial Planner___Insurance Companies (auto, fire, health, home, life)___Lawyer___Magazine/Newspaper Subscriptions___Other Lending Institutions___Post Office

Four weeks before the move___Get estimates from van lines/truck rental companies___Separate everything you plan to sell or give away___Set aside appliance manuals & instruction booklets for your new buyers___Start packing___Contact your insurance agent to transfer/cancel your homeowner’s policy___Contact your lender if your closing date is in the first half of the month to

determine if you need to make a mortgage payment for that month___Collect all lien waiver notices (or receipts of payment) from all contractors, who have supplied labor and/or materials to your home, prior to closing and forward

those receipts to your title company

Four weeks before the move (continued)___Finish all perishable and frozen foods___Transfer all medical records for family members and pets___Locate and enroll in new daycare and/or school district___Notify daycare/school district you are leaving___Obtain copies of your children’s school transcripts___Open new bank accounts if moving to a new community___Order checks with new home address___Return library books and other borrowed items___Collect items lent out to neighbors/relatives___Dispose of all combustible items if using a moving company___Advise your neighbors if your home will be vacant for an extended period

of time prior to closing

One week before the move___Pick up all dry cleaning___Collect all garage door openers and extra keys given to

neighbors/relatives to bring to closing___Arrange for transportation or storage of house plants___Make arrangements for children/pets on moving day___Make arrangements for meals on moving day___Pack clothing and other necessities for the moving day___Pack a small box of tools for any last minute needs___Defrost your refrigerator and freezer, if moving them___Drain all gas/oil in lawn mower, weed whacker and snow blower___Transfer bank account and empty safety deposit box (if leaving town)___Set aside the items you will need immediately at your new home and

mark the boxes “Open First”

Moving Day___Make sure that your home is cleaned for the new home owners___Make sure all your garbage has been removed___Transport your jewelry and valuable documents yourself___Take a final tour of the entire house (Double check all closets & cabinets)___Ensure the mover has your correct, new address___Give the driver telephones #’s where you can be reached during transit

After you arrive___Register to vote in your new home’s district___Register your car if moving to a new state___Apply for new drivers and pet licenses___Obtain emergency numbers for new home___Locate new doctor and dentist

Who’s Who in Real Estate Transactions

Sandy Erickson Team - Realtor/Real Estate Agent We are here to help you navigate the transaction and provide skillful guidance from beginning to end. We have aligned ourselves with other professionals in the field to ensure you get the best outcome and a successful closing of your transaction. Sandy Erickson Team - Client Care Coordinator She is responsible for the administrative duties. She facilitates document completion, executes systems, and communicates with all parties in the transaction to provide expert service and support. Cooperating Realtor/Real Estate Agent This is the realtor representing the other side of the transaction. We work with this realtor to negotiate a successful agreement to all parties and to facilitate a successful closing. Loan Officer The loan officer works with the buyer to prepare a lender pre-approval and secure a loan to buy a home. Though, as realtors, we can provide valuable information regarding financing, specific questions should be directed to the loan officer. Title Company Closer There are usually two closers involved in each transaction—one representing the buyer and one representing the seller. The closers work to clear title so it can be transferred to the new buyer at closing without issue. They also ensure funds are distributed appropriately. Home Inspector The inspector is hired by the buyer and is relied upon to look for issues or maintenance items in the home. They provide a report to the buyers and may serve for renegotiation with the seller. Appraiser The appraiser is hired by the buyer’s lender to determine a value of the home based on their personal assessment, set criteria, and comparable homes. If the loan is FHA, they also perform a mini-inspection of the home per FHA guidelines. If an appraisal comes in low, the transaction may fall apart.

GLOSSARY OF TERMS

**Items highlighted in red refer to the costs that could be associated with the home-buying process.

Abstract of Title: A short account of what appears in the

public records affecting the title of a particular property.

Addendums: Supplemental documents added to the

purchase agreement that become part of the legal binding

document.

Adjustable Rate Mortgage (ARM): A loan in which the

interest rate can fluctuate during the term, based on an

index to which the interest rate is tied.

Amendments: After final acceptance of purchase

agreement, this form is used to make changes. Both

parties must sign for the change to become binding.

Appraisal: An estimate or an opinion of value for a

property, as performed by a qualified appraiser on the

lender’s behalf. This is paid for by the buyer once they

have an accepted offer on a home.

(Approx. $350-$475)

Arbitration Agreement: A supplementary agreement the

seller and buyer can execute to settle disputes out of

court about the property. If both parties sign this

document, they agree to have an independent arbitrator

resolve any disputes.

Assessments: Non-recurring specific charge against a

property for a definite purpose, such as curbs and

gutters. Pending assessments, typically paid by the

seller, must be paid in full at closing for ownership to

transfer to the buyer.

Association Dues: The monthly payment that

condominium and townhome owners must contribute

towards the upkeep & management of shared property.

Bill Of Sale: A document used to transfer title,

ownership, or interest in personal property from the

seller to the buyer.

Bylaws: The rules and regulations that govern a

subdivision or condominium association.

Closing: The date on which ownership transfers from

the seller to the buyer. This typically occurs

45-60 days after offer is accepted.

Closing Costs & Prepaids (taxes & insurance): The cost a

buyer pays when purchasing a home. These costs

typically equal 3% of the loan amount.

Commitment Letter: The letter you receive from your

lender stating that your loan is approved and describing

the terms of the loan.

Contingency: A clause that is added to a purchase

agreement stating that certain conditions must be met

within a specified period of time for the purchase

agreement to be valid.

Down Payment: The amount a buyer puts down at

closing towards the purchase of their home. The

amount usually depends on the type of loan; it is

typically 3-25% of the loan amount. NOTE: Be sure

that your down payment money is deposited in your

bank account well in advance of the closing.

Dual Agency: Representation of both parties to the

transaction, such as one broker representing both the

seller and the buyer.

Earnest Money: “Good faith” money (typically 1% of

the sale price) paid by the buyer at the time an offer is

written on a home. Upon acceptance of the offer, the

buyer’s check is cashed within 72 hours and placed in a

trust account until closing where it is applied towards

the buyer’s down payment.

Equity: The portion of a home’s value that is owned,

free and clear of any mortgage or lien.

Escrows (pre-paids): Lenders often collect up to two

months of homeowners insurance and four months of

property taxes at closing; which are deposited in an

account called an escrow account.

Fixed Rate Loan: A loan with an interest rate that

remains constant throughout the term specified in the

loan.

Good Faith Estimate: The disclosure form on which a

lender estimates all of a buyer’s closing costs. The

lender must give the buyer this form within three days

after they apply for a loan.

Home Inspection Contingency: Usually a complete home

inspection is requested and paid for by the buyer and

performed by a state-licensed qualified inspector within

3-5 business days from the acceptance of the offer.

(Approx. $250-$350)

GLOSSARY OF TERMS

**Items highlighted in red refer to the costs that could be associated with the home-buying process.

Homeowners Insurance (hazard insurance):

This is an insurance home buyers must purchase to

protect the investment they and their lender have in

their home. Buyers must provide the lender an

insurance binder with a one year paid receipt prior to

closing.

Homestead Taxes: Property taxes paid by live-in

property owners. The annual homesteading deadline is

December 15th.

HUD-1 Form: A settlement statement listing all the

buyer and seller’s closing costs. The U.S. Department of

Housing and Urban Development requires that a closer

make this document available to all parties at least one

business day prior to closing.

Loan Origination Fee: This is a fee that buyer’s pay a

lender for handling their loan application.

Loan Processing: The steps a lender must take to

analyze a buyer’s ability to qualify for a loan. This

analysis involves weighing a buyer’s income, credit

report and financial records against the value of the

home they want to buy.

Lock-In Agreement: A document the buyer signs to

guarantee the interest rate the lender quoted them for

their loan. A buyer can lock in their rate when they

apply for the loan or at any time prior to closing (or per

purchase agreement). However, most lenders require a

signed purchase agreement before they can lock in on a

rate.

Mortgage Discount Points: Prepaid interest on a loan,

resulting in the buyer receiving a lower interest rate on

their loan.

Mortgage Insurance Premium (MIP): An insurance

premium the buyer is required to pay for an FHA loan.

The cost is typically 2-3% of the loan amount,

depending on the term, plus ½ percent over the life of

the loan. This premium is usually paid as part of the

buyer’s monthly loan payment.

Multiple Listing Service (MLS): A service that real

estate agents subscribe to that lists homes for sale and

homes that have sold by neighborhood, price and

features.

Non-homestead Taxes: Property taxes paid by landlords

who rent their property, or by owners who do not use

their property as their primary residence.

Pre-approval Letter: The buyer obtains this from their

lender. It is required when an offer is made on a home.

PITI: the monthly loan payment which includes the

loan principal, interest, taxes, and insurance.

Private Mortgage Insurance: Insurance the buyer pays

when they take out a conventional loan with less than a

20 percent down payment. It protects the lender from

losing money if a buyer defaults on their loan.

Purchase Agreement: The legally-binding document

that lists all of the terms of a home sale including

contingencies, between a buyer and seller.

Re-issue Credit: A savings on the cost of title insurance,

when the buyer uses the same title insurance binder that

the previous owner used.

Title Insurance (Owners Title Insurance): The optional

one time insurance payment a buyer makes at closing to

protect themselves against claims on the title of their

property.

Lender’s Title Insurance: The one time insurance

payment a buyer must make at closing on the lender’s

behalf, to protect the lender against claims on the title

to a buyer’s property.

Seller’s Property Disclosure: A required document to be

completed by ALL sellers disclosing all conditions that

may affect the buyer’s use and enjoyment of the

property.

Torrens System: a system for the registration of

property in Minnesota to verify title without the

necessity of a title search, unlike that of an abstract of

title.

Trust Account: a bank account in which a broker

deposits trust funds, to keep them segregated from the

broker’s own money.

Truth-In-Housing Report: A report required by some

cities that the sellers obtain from a licensed inspector to

disclose the condition of their home.