Looking for a new home that is perfect for you and your family is very exciting!
We have outlined some steps that will help you with the process:
Step 1. Pre-approval - Cash or Mortgage?
If you are planning to finance your home and have not started the application process, now is the time. You should get pre-approved so you know the price range of homes you should be looking in. Also, you can call several banks to compare rates. The credit report check of these banks will not negatively affect your credit. It is imperative that your lender be secured at the time of an offer so they can complete their paperwork for a timely closing.
We will help you find the best options for your loan or if you already have trusted sources we encourage you to reach out to them and always get more than one quote on whats available.
Lenders Specializing in VA loans: If this is a need we will also recommend current lenders specializing this or again reach out to those you already know of.
CREDIT REPAIR : There are several sources we can recommend to help you with this process if needed.
You also need to consider how much money you will have to put down as a down payment. FHA loans will need 3.5% down and conventional loans will need 5-20% down. *See document, “Your Loan Has Been Pre-approved, Now What?” for guidelines to ensure you keep the approval and can close on your loan.
Step 2. Home Shopping!
Our professional buyer’s agents will work with you on the neighborhoods, style of home, number of bedrooms, bathrooms, etc. that you are looking for. Do you desire a home with older charm, mid-century modern or new construction? We will send you homes through MLS that meet your specifications. If you see any homes we send or you find that you would like to see let us know and we will set up an appointment to view them. Many homeowners need 24 hours notice for a home showing, please keep that in mind.
We work around your schedule and can show you homes 7 days a week. We can even set appointments with FSBO (for sale by owner) home owners, too. It’s important to always work through your buyer’s agent so that you are represented fairly and you have someone on your side that can fight for your rights and ensure your contract and other paperwork is correct. Our team has years of experience and training helping buyers find their dream home. Let us give you an advantage and guide you with our best judgement!
Step 3. Make an Offer!
When you’ve found that perfect dream home, it’s time to make an offer! Time is of the essence since it’s a seller’s market. There are less homes for sale and more buyers, so if you drag your feet you may lose the home. Think of these items for your offer:
Amount to offer. How much do you feel comfortable offering? It should be a balance of a strong enough offer that they will take us seriously.
Is there anything you want to include or exclude from the offer. (refrigerator for example)
Do you want to ask for any closing cost assistance? Closing costs range from $2500-$5000, sometimes sellers will pay for some or all of your closing costs but remember that takes away from their net amount so it would be like offering them less for the home.
When do you want to close? You pick the closing date to put into the contract. Mortgage banks usually need 30-45 days to close. If you are paying cash you can usually close in 2 weeks or less.
Amount of earnest money you want to offer. Usually buyers offer sellers $500 when the home is less than $100k, $1k when the home is $100-$300k, and $2-$10k when the home is over $300k. This tells the seller that you are very serious about this home. A copy of the earnest check must be sent with the offer.
Number of inspection days. This is the number of days you have to complete the inspection. Usually it’s 10 calendar days (default in contract).
Title company you want to use. There are many title companies in Kansas City. We can help you choose who is best and most convenient for you. We can also offer you a list of companies available. Their rates are all very similar.
Loan type and amount you want to put down on the loan. If the seller has many offers they may take the one that has a better chance to close. For example, if the buyer that has a more stable loan situation (more money down, stronger pre-approval, etc). They are less likely to accept an offer that is contingent on your selling your home. Also a pre-approval letter must be sent with the offer, or proof of funds if it is a cash sale.
Step 4. Have an inspection!
As the buyer, you have the opportunity to hire a professional inspector to evaluate the condition of the home. An inspection clause is included in the written contract given to the seller. You may need a different type of inspection depending on the condition of the property you are purchasing. These may include, or be limited to, whole home inspection, termite, radon and/or foundation inspections. The goal of a home inspection is to give you an objective, independent, and comprehensive analysis of the physical condition of your potential new home and to check for any safety issues that might otherwise be hidden.
A professional inspector will check the structure, construction, and mechanical systems of the house. This usually includes, but is not limited to: electrical systems, foundation, floors, plumbing and waste, HVAC, doors, roof, kitchen appliances, windows, ceilings and walls, insulation, chimney, and many more.
You will receive a written report of the inspection findings and a list of all of the recommended repairs.
Here is a list of inspectors we recommend. We can’t suggest anyone in particular, but based on past experience these are who we put forward to our clients:
General Inspectors
Heartland Home Inspections, Cory Jones 816.682.8347
Integrity Building Inspections, Gary Martin 816.922.9529
Termite Treatment Specialists/Inspectors
The BugMan, Jeff Braley 816.841.3880
Pied Piper Pest Control 913.299.3011
Radon
Integrity Building Inspections, Gary Martin 816.922.9529
Foundation/Concrete/Mudjacking
Foundation Guy, Jeff Huffine 816.520.5937
Olson Foundation Repair, Joe LaGue 913.592.3300
Royal Engineering, Bob Quick 816.728.2081
Think about what day and time you’d like to schedule your inspection(s). I recommend all buyers attend their inspections, but not everyone chooses to. If you do choose to be present during the inspection, upon completion you can ask your inspector about any unique features of the property and get their opinion on the necessary maintenance. We need to coordinate inspection times with the seller. One of the services I provide my clients with is attending the inspection as well.
Step 5. Shopping for Homeowner’s Insurance
Your home is probably your largest asset and you will want to make sure you are covered correctly and that the premium is reasonable. The more money you can save in other areas, the more you will have for your new home.
We always suggest our clients get started with the insurance process started during the ten day inspection period. This will give the insurance agent time to run property reports and give you an accurate quote. It will also help your mortgage company in calculating your monthly payments and keep the closing date on track.
We recommend you call your current insurance agent, as you may qualify for multiple policy discounts. We also suggest that you check with a broker that represents several different insurers as they might be able to find you the lowest price. All agents should discuss with you what coverage and deductible is right for you. You owe it to yourself to get the best coverage for your dollar.
Insurance Tips:
Don’t rush through this step. Be sure you understand your coverage.
Start this process early. It’s a great idea for the agent to run CLUE reports. These can find out if there have been any claims in the past five years (roofs and basements getting wet have been a huge issue lately), and ensure that any claims have been settled.
Your insurance agent can help determine what flood plain your property is in. This is always a big stressor when found out late in the game. You can check this out on your own from websites such as www.freeflood.com or www.floodsmart.gov . In the event that your home is in a high risk flood zone an additional policy or endorsement is needed for the extra coverage.
Special cases (horses, wood roofs, composition over wood roofs, prior claims, swimming pools, etc.) need extra time to find insurance and complete underwriting.
Insurance Agents
Farmers Insurance, Robert Adkins (Agents) 816.874.4920
State Farm, Blake Roberson (Agent) 816.478.1600
American Family, Clint Cole (Agent) 816.444.7468
Step 6. Clearing the Home Title
Simply explained, “title” is the right to own, possess, use, control, and dispose of property. When you buy a home, you are actually buying the seller’s title to the home. A deed is the written legal evidence that the seller has conveyed his or her ownership rights to you.
Before the closing meeting when the actual transfer of ownership occurs, an attorney or title specialist usually conducts a title examination. The purpose of this examination is to discover any problems that might prevent you from getting a clear title to the home. This process begins during the inspection period. Generally, title problems can be cleared up before settlement. In some cases, severe title problems can delay settlement, or even cause you to consider voiding your contract with the seller.
What are some common title problems?
Title problems come in all shapes and sizes. The following are just a few examples of situations that can create a title problem:
You are buying a house to which an addition was made several years ago. The sellers of the home took out a home improvement loan and did the work themselves. They have repaid the loan, but the lien was never removed from the title.
The seller of the house added central air conditioning several years ago. The seller and the contractor he hired had a dispute over the workmanship, and the seller withheld final payment on the contract. The contractor filed a mechanic’s lien on the property, which has never been removed.
You are buying a house with a newly paved driveway. The seller of the house bought his neighbor’s share of their shared driveway and converted it into a private driveway when the neighbor built a new driveway on the other side of his house. Unfortunately, ownership of the expanded driveway doesn’t appear in the public records.
Some “clouds on title” can be corrected relatively easy, like the examples listed above, while others can become quite complicated to remove. You should ask to be kept informed if any title problems are uncovered, as it is important for you to understand your legal rights.
What is title insurance?
Title insurance is the best way to protect yourself against title defects that have occurred in the past, which may not appear until after you’ve taken ownership of the property. Before a title insurance policy is issued, a title report is prepared based on a search of public records. This report gives a description of the property, along with any title defects, liens, or encumbrances discovered in the course of the title search. Title insurance protects you against title defects that were not discovered in the course of the title search (i.e. forged signatures). If such a defect is discovered later, your title insurance would cover you. This type of insurance is different than casualty insurance (auto, life, health) in that you pay a one-time fee and it protects you from past events.
If title problems are severe enough and not covered by insurance, you could actually lose your house. A title insurance policy protects you and your heirs against title defects for as long as you own the property. Most title insurance policies do have exceptions, however, so it is important to read and understand your policy. Be sure and call the title company if you have any questions about what is covered in your particular policy.
Step 7. Ordering the appraisal
Once it has been determined that there are no defects on title and all inspection concerns have been resolved, it’s time for your lender to order the appraisal.
An appraisal is an estimate of the value of a property, made by a qualified professional called an appraiser. An appraisal of the property you’re going to purchase is as important as your credit history in obtaining a mortgage. It is also a critical factor in determining the size of loan the mortgage company will approve. After all, the property you are purchasing serves as collateral for the loan. Although the primary goal of the appraisal is to justify the lender’s investment, it also protects you from overpaying. The lender usually hires an approved, professional appraiser and charges the buyer the fee for service.
You will be refused a mortgage or offered a smaller amount on the mortgage if the appraisal falls short of the purchase amount you and the seller agreed upon. Your contract is contingent on whether the property’s appraisal comes in at or above the purchase price.
The appraisal is ordered from the bank and you will be charged by the bank for this. Appraisals range from $400-$900. Sometimes banks can add that amount to your loan principal. Appraisals are usually done a few weeks before closing.
Step 8. It’s closing time!
A few days before closing the title company will provide the final figures of purchase in the form of a Closing Disclosure document. Amongst other things, this will show you the amount in the form of certified funds (cashier’s check or money order) needed to be brought to closing. Make sure to bring your driver’s license or other form of valid current ID to your closing appointment. The title company will explain all of the documents that need signatures and answer any questions. Based upon your original purchase contract, transfer of ownership will occur at agreed time. Your agent usually attends closing with you. Lastly, we always recommend contacting legal advice in the form of an accountant or attorney for any personal financial or legal questions.
Step 9. After the closing appointment.
You will get the keys to your new home and you can MOVE IN! Congratulations and thank you for the opportunity to work together!
Your Lotus Key Homes Team
Bobbie: 816.739.1157
Kevin: 816.813.1602
1220 W. Truman Road, Independence MO 64050
816.838.7368
LotusKeyHomes.com
Helping build dreams, one home at a time!
