Checklist For Homebuyers

• Before you get started
• Checklist For Homebuyers
• Closing Costs

Before You Get Started

• Perform a self-evaluation of your credit
  • Know all three of your credit scores – lenders will check each one and your credit score is taken into account when determining the type of mortgage rates you get
  • Raise your credit scores if possible by paying down your debts
  • Correct any errors on your credit report as quickly as you can
• Shark Bite: The Federal Trade Commission has some helpful hints on viewing and fixing your credit report. Just click here
• Shark Bite: As a general rule, your annual mortgage costs should not be greater than 1/4 to 1/3 of your annual income
• Don’t be late making any bill payments – especially three months before starting the home search process. Late payments will negatively affect your credit score.
• Don’t take out any new loans / credit cards
  • You don’t want to take on any new long-term debt before applying for a mortgage
  • Buy that new car or new furniture after the closing.
• Be aware that co-signing for loans could count against you when applying for a mortgage
  • Having an excess of debt is a red flag to mortgage underwriters
• Try not to change jobs – unless you’re getting a better one!
  • Remember, things like commission, bonuses, and over-time for a new job could adversely affect your loan application, as lenders like to see a pay history in order to establish a baseline for your annual income.
• Income / Asset documentation – save all your pay stubs and bank statements (including all pages).
  • Banks will check records going back three months.
• Be aware of what you want to be near – schools, parks, shopping, work, etc…
• Be aware of what you don’t want to be near – schools, highways, high-crime area, waste management facilities, etc…

Checklist For Homebuyers

Financing

• Set a realistic budget. Do a thorough review of your available finances
  • Annual income
  • Long-term debt (car loan, educational loan, etc…)
  • Debt-to-income ratio - the amount of your monthly bills compared to your average monthly income
• Learn about the different types of mortgages. There are a lot of different mortgage options out there, and you want to make sure you make the right decision for your specific situation.
  • Fixed Rate Mortgage
  • Adjustable-rate Mortgage
  • Balloon Mortgage
  • And more!
• Shark Bite: The web site Bankrate.com offers a comprehensive list of mortgage calculators for the different types of mortgages our there. Check it out here
• Look into government incentives for first-time homebuyers. Eligible applicants can save on things like interest rate, down payment, closing costs and other loan terms.
• Shark Bite: Check your local government web site for more details about programs offered in your area.
• Decide if you want to work with a bank or a mortgage broker. If you can get a mortgage from your credit union, this can be a great alternative.
• Secure Financing. Get a commitment from a bank or mortgage broker, not just pre-qualification.
  • Pre-qualification is a very preliminary step and is by no means a guarantee. Go through the application process and see what type of mortgage and rates you can get.
• Shark Bite: Down Payment Source. If the money used for your down payment is borrowed, you will need documentation from the person from whom you borrowed the money. If the person lending you the money will sign a gift letter, that would be even better.
• Shark Bite: Employment documents
  • Applicants who are self- employed or work on commission will need to provide income records and tax returns for the past two years.
  • Over-time pay is also taken into account and will be averaged based on the last two years.
  • Annual income for part-time employees will be based on the average pay over the last two years.
• Mortgage Broker Jeffrey Guarino suggests that borrowers get at least two mortgage quotes on the same day, and be sure to confirm how long the lock on the rate is. So if you get a quote from “Bank A” and the rate is locked in for 45 days, and you get a lower rate from “Bank B,” where the rate is only locked in for 30 days, which is really the best opportunity?
• Real Estate Attorney Brian Tracz says that it is a good idea not to move gift money around from bank to bank. Gift money needs to be traceable from the gift giver’s account to yours. Multiple large deposits and withdrawals could require canceled checks, deposit receipts and other things needed to produce a complete “paper trail.”

Searching

• Determine the type of property in which you are interested.
• Shark Bite: Understand the difference between a Co-op and a Condo.
• Speak to a Broker (not your cousin who lives four states away).
  • While PropertyShark.com is able to provide you with the raw data about properties you research, your broker is the key to interpreting that data and making it usable information that can benefit you. Having a real estate professional on your side is a valuable asset when navigating the housing market for the first time.
• Shark Bite: Interview brokers, and be sure to speak with more than one so you can choose the broker you feel comfortable with and who will listen to your suggestions
• Shark Bite: Is your broker PropertyShark Certified? If you are using PropertyShark and are more informed than you broker, consider a different broker.
• Are you considering a distressed property (i.e. Lis Pendens or Foreclosure)? Distressed properties are becoming an increasingly popular prospect for homebuyers.
  • With Lis Pendens, (also known as pre-foreclosure) you can contact the owner of the property and initiate a Short Sale
    • Recommended reading: “The Pre-Foreclosure Property Investor’s Kit” by Thomas Lucier
  • With Foreclosures, you are attending auctions to bid on property
    • Recommended reading: “Making Big Money Investing in Foreclosures Without Cash or Credit 2nd Edition” by Peter Conti and David Finkel
  
  PropertyShark also holds training seminars on the Foreclosure process. For more information on our training seminars go to: www.PropertySharkUniversity.com
• Real Estate Broker Mark Wacker says that the best thing you can do before approaching a broker is to have a clear idea of what you want and where you want it. First, decide what type of property you want (house, condo, co-op) and then find a neighborhood that suits your lifestyle. This is also a good opportunity to start thinking long-term. If you are considering expanding your family, then proximity to good schools is something to consider as well.

Research

• Check if seller has a newer survey (10 years old or newer).
  • Please note that a survey is not necessary when purchasing a condo or a co-op.
• Ask the seller if there are any extensions on the house that do not have a Certificate of Occupancy (CO). If there are, then they will need to apply for any outstanding permits to get the new CO before closing.
• Shark Bite: If you purchase a co-op, condo, or house that has a Temporary CO, you should consult a licensed architect or engineer to determine what work has to be done in order for the building to receive a final CO.
• Get a home inspection from an inspector of your choosing.
  • Be sure to find out what the home inspector will cover. Will (s)he be looking for -molds? -insulation? -air quality? –termites?
  • Also look into any potential toxic issues that may come up
    • PropertyShark.com offers toxic site data in all of our NYC Property Reports
    • You can also contact Toxics Targeting to get a report of any environmental hazards present on the property or within a one-mile radius
• Check recent sales in the area to help determine market value. This gives you an idea of what to expect from the appraisal, which is invaluable because a low appraisal can kill the deal.
  • Your realtor can provide you with a list of sales that have recently occurred around your property.
    • PropertyShark.com provides a comprehensive list of recent sale data which you can use to generate your own Comparable Sales report
• Get info about the neighborhood in which you are looking.
  • Are there a lot of foreclosures in the area?
  • Are there a lot of other properties on the market?
  • Is the area being re-zoned?
    • PropertyShark.com has property data available in our in-depth Property Reports as well as Maps with a wide variety of overlays you can use to get more information about neighborhoods.
• Get familiar with the prospective neighborhood. You want to be sure you can see yourself living there long term.
• Shark Bite: See if there is adequate shopping nearby. Also, do you like your surroundings at night as much as you do during the day?
• Speak with an attorney who specializes in real estate law for your state and property type. Real Estate law is very intricate and having an experienced professional will help navigate, and in some cases, expedite the process.

Closing Costs

* Closing Cost data provided by Corcoran