First Time Home Buyer's Guide
I have compiled the following list in an effort to help people resolve problems that frequently occur on credit reports. These are the steps to follow to get credit issues resolved. Many of the items listed may not apply to you, so please take note of the ones you need and ignore the rest.
If you have debt that is delinquent or past due either pay it off or make arrangements with the creditor to pay it off over time. These items have a particularly detrimental effect on your credit score.
Contact each creditor that is reporting erroneous information or information that needs to be updated. If you need contact information for creditors try calling First American Credco at 800-545-4701. Ask the creditors to make the necessary changes. The creditors may ask for proof of payment, or proof that the payments in question were made on time. For example, cancelled checks, bankruptcy papers, or other pertinent documents may be required. Ask the creditor to remove erroneous information from your account.
Ask the creditor to update old information with current information.
Ask the creditor to report paid judgments as satisfied.
Ask the creditor to send you a letter stating that this is not your account and that you never had an account with them.
Ask the creditor to correct the number of times that you have been late on payments. If you were never late ask them to have their records reflect that information.
If you have had a bankruptcy, there may be account balances that should have been discharged through your bankruptcy. If those accounts are still showing balances, or if the balance is listed as unknown, provide a copy of your bankruptcy papers to the creditor. Ask the creditor to show a zero balance, show that the balance has been discharged, and show the date of discharge.
Ask each creditor that corrects or updates information to send you a letter confirming the correction. Ask that it include correct dates for payments.
After you receive letters from each of the creditors, copy them and send copies of the letters along with any other supporting documentation to each of the three credit bureaus listed below. These credit bureaus keep your credit report on file and provide information anytime your credit report is requested. Be sure to enclose a copy of your recent credit report and a letter requesting that changes be made. The credit bureaus may require you to purchase a credit report from them in order to process your request. Check with them about this before mailing your request. After they receive your letters it will take 30 - 90 days for the corrected information to appear on your credit report.
If you don't have enough credit you will need to establish good credit. Get a couple of credit cards and charge a very small balance and pay in full each month. Most importantly, never be late on any of the payments!
Once your credit issues are resolved, be very careful that no payment is ever late. If you have trouble making your monthly payments look into debt consolidation to reduce those payments, but late payments should be avoided if at all possible.
WHY YOU SHOULD CHECK YOUR CREDIT BEFORE BUYING A HOME
It's always a good idea to obtain a copy of your credit report before applying for a home loan. By doing this, you can correct any errors on your credit profile In advance, establish credit If necessary or start repairing your credit if you've had problems in the past. Lenders look very carefully at your credit report as an indicator of your "character" or your willingness to repay your loan. Having poor credit, little or no credit, or unresolved disputes with creditors can affect your purchasing power and your ability to get a loan. To avoid unpleasant surprises down the road, you can request a copy of your credit report for a small fee by writing to any one of the following credit bureaus.
As a part of your lender's pre-qualifying procedure they will order a credit report for you. All we need is your full name, current address, your previous addresses for the last 2 years, your phone number, date of birth, Social Security number and your spouse's name. We'll run the report and review it with you, saving you time and money. When you receive our credit report, check for the following items:
INCORRECT ENTRIES- If there are mistakes on your credit report (i.e., accounts that aren't yours or on-time payments that are showing as late), you can have them corrected by writing to each credit bureau and requesting that the information be deleted. They will contact the creditor who must respond within 30 days. If the creditor does not respond, the item will be removed and a new credit report will be issued to you. If there is still a dispute, you can add a 100 word statement to your file explaining your side of the story.
OUTDATED NEGATIVE CREDIT- If there are unfavorable credit items older than 7 years showing on your report, follow the procedure outlined above. Bankruptcies can be removed after 10 years.
CURRENT NEGATIVE CREDIT- If you have current credit problems, the time to resolve them is before you buy. Re-establishing good credit after a bankruptcy or other credit problems is very important.
ESTABLISHING GOOD CREDIT HISTORY- Having an established credit history is also important, as lenders want to see a track record of debts owed that have been repaid. If you have not already done so, apply for credit cards and use them or establish a credit history by documenting your monthly rent payments and your monthly payments to utility companies.
GET A BUYER'S AGENT (Realtor)
Virginia law allows Buyers to be represented as well as Sellers. You see, when a Seller lists his/her property with an Agent, that Seller signs a contract with that Agent and firm to represent the Seller. It is that Agent's job to keep the Seller's best interest at heart. That means to get the highest and best price for that Seller. But in Virginia, you, as the Buyer, have the right to sign a contract with an Agent to represent your best interests. Your "Buyer Agent's" job is to get the best house at the best price and terms for you! When you meet with an Agent to discuss a specific real estate transaction, that Agent is required by law to disclose whom he/she is representing. That disclosure should be in writing. The next page contains a sample agency disclosure form. When it is time for me to show you property I will ask you to sign a form like the sample on the following page.
HELPFUL HINT: All Agents are automatically Seller's agents because the Seller has signed an agreement to put their home in the Multiple Listing Service (MLS) and make it available for all Agents to show. All Agents who are part of the MLS are part of this agreement. The only way to have an Agent on your side is to sign a Buyer Representation Agreement with one Agent to represent your best interests.
WHY HAVE A BUYER AGENT?
A Buyer Agent's job is to find the best house at the best price, terms and conditions that are acceptable to you. A Buyer's Agent must disclose to you everything he/she knows about the house and the Seller's situation. A Buyer Agent can do a market analysis on the home and give you his/her opinion of the price of the home as reflected by the most current market conditions. You get more service than someone who just opens a door to show you a home.
HOW MUCH WILL A BUYER AGENT COST ME?
Even though you sign a contract with a Buyer Agent to represent you,the Seller at closing pays the Agent in most cases. The Seller has already agreed in his/her listing agreement to pay a Buyer Agent to sell his/her home. It does not cost you any extra to be represented. And it may save you money.
HELPFUL HINT: Your Buyer Agent can represent you in the purchase of a "For Sale ByOwner" property. This can save you money and hassle when dealing with an Owner who does not know what he/she is doing.
START ON YOUR SEARCH
PICK A HOME
MAKE AN OFFER
APPLY FOR THE MORTGAGE
SCHEDULE HOME INSPECTION
PICK AN ATTORNEY OR SETTLEMENT AGENT
PICK HOMEOWNER’S INSURANCE
GET UTILITIES CHANGED
GET A CASHIER'S CHECK
Search MLS from my web site
You can search MLS listings from my web page. If you see a home with a FOR SALE sign, call me no matter who has it listed. I can show it to you. As a member of the Multiple Listing Service, I can show you just about any company's listing. Most homes have a lock box on it, which holds the key. I try to show the property when the seller is not home so you don't feel any pressure. I can find out more information about listings and ads I can pull up information on our computer about almost any listing. If not, I will make every effort to find out more information about that · home for you. If you see an ad in the newspaper or magazine, call me and I :can give you all of the information that is available. Receive e-mails on new listings as soon as they are listed on MLS I can enter you into my computer database and set it up so you receive all the latest listings as soon as they become available. My automatic matching service sends you an e-mail about new listings that match your criteria as soon as they are entered in the MLS. My buyers find out about the new listings as fast as the REALTORS can get them into the Multiple Listing Service.
Don't be afraid to call me with any Real Estate questions you might have. If I don't know the answer right away, I will find it for you.
HELPFUL HINT: Many buyers like to drive by listings on their own to see If they like the area before setting up an appointment. I am happy to give you all the addresses and directions you need. Just let me know if you want to see inside but remember: don't judge a book by its cover!
"Home ownership is a long term commitment; select wisely."It is important that you have realistic expectations. You've been pre-qualified. You know what you can afford. You may have to make reasonable compromises. You'll decide what features are most important for you. Do you really want air conditioning or is a garage more important? And finally, compare houses to their peers. You can't compare apples and oranges, or 5-year-old brick ranches to 50-year-old Cape Cods.
NO HOME IS PERFECT BUT WHEN WE FIND THE RIGHT ONE, YOU WILL KNOW!
Here are some things to look for; but remember, you'll probably want a professional home inspection as well.
1. Structure ... Cracks or Sags
2. Foundation ... Cracks or Damp
3. Electrical Box and Wiring
4. Type of Heat
5. Type of Air Conditioning
6. Plumbing ... Age and Condition
7. Windows ... Age and Condition
8. Kitchen appliances ... Age and Condition
9. Roof Age ... Any Leaks or Water Spots
10. Siding Type
HELPFUL HINT: Watch out for Buyer's Remorse. Many buyers, once they decide on the home that is right for them, talk themselves out of making an offer. They worry and wait, and sometimes the house is gone. Make up your mind and go for it.
Real Estate contracts can be confusing and long. This is where my expertise really comes through. I feel it is important that you understand what it is that you are signing; what your responsibilities will be; what the Seller's responsibilities will be and what the Agent's responsibilities will be. My goal is to help relieve some of the stress! I know this is a high anxiety time, and I will do everything I can to guide you through this process in the most informed way possible. Be prepared to spend at least an hour with me when you are ready to sign a contract. I will explain all the fine print. Be prepared to leave a good faith deposit. This is usually about 1% of the price of the home. If your offer is accepted, the check gets deposited in an escrow account. Then it is applied to your down payment and closing cost at closing. If your offer is not accepted, your check will be returned, un-cashed. As your Buyer Agent, I can advise you on the type of offer to make. Price is not the only issue. Will the Seller pay closing costs? How much of the closing costs? Will the Seller leave the appliances? When is the best time to plan the closing? Do you want a home inspection? If something is wrong, who will fix it and how much will it cost? These are just a few of the issues we address in the offer.
The Seller won't necessarily accept your first offer. We will discuss a strategy while writing the offer. Sometimes it is good to offer low and then come up a little. Other times it is better to make one offer and stand firm. I can help you make those decisions.
CONGRATULATIONS, YOUR OFFER HAS BEEN ACCEPTED!
The following is a list of things the Lender will require you to bring. Be prepared;
get them ready ahead of time.
- Name and address of employers for the last two years.
- Pay stubs for the past 30 days.
- A check for about $350 for the credit report and appraisal payable to the lender.
- Last 2 years' W-2's.
- If you were in school in the past 2 years, bring a copy of your diploma or certificate.
- Landlord's name and address for the last two years.
- Account numbers for all debts, loans, and credit cards. Know approximate balances. Bring the coupon books or most recent statements.
- Information on any retirement accounts or profit sharing
- If you receive child support, bring proof that you receive it, for example, a copy of the deposit slip as well as a separation agreement.
- If you pay child support, that debt must be counted. Bring a copy of your separation agreement.
- If you were recently divorced, you will need a copy of your divorce decree.
- If you are self-employed, you will need the last 2 years' completed Federal Tax Return and a year-to-date profit and loss statement.
- If it is a VA loan, you will need your certificate of eligibility, DD-214.
- If you recently sold another home, you will need a copy of the closing statement on that home to prove that it is sold and how much profit you received.
- Copy of the sales contract on the home you are going to purchase.
- Copy of driver's license or passport. If a "non-citizen" bring either your VISA or "green card".
When you made your offer I asked if you wanted a home Inspection.The Bank/Lender does not require a home inspection but we recommend it. The cost typically starts around $350.00. You will be required to pay the Inspector when the inspection is completed. It is not part of the normal closing costs on your good faith estimate .
OTHER IMPORTANT INSPECTIONS
- Radon Gas - Radon is a heavy gas that settles in the basement. It is usually an issue with finished basements. The cost is approximately $100.00
- Lead Paint - Any home built before 1978 has the chance that lead based paint was used in it. The test and removal are very expensive.
INSPECTIONS PAID BY THE SELLER
- Well or Spring water is tested for coliform bacteria. You must put in your contract if you want lead, nitrates, or nitrites. Seller does not typically pay for this unless it is written in the contract.
- Septic systems have a walkover inspection for leakage.
- Termites, wood-destroying organisms and mold/mildew will be inspected and treated if necessary.
The Home Inspector is looking for actual mechanical defects, not cosmetic flaws. The plumbing, heating, air-conditioning, electrical and appliances must be in safe working order. The roof must be free of leaks and the structure free of defects.
The Attorney or Settlement Agent will conduct the closing for you. At the closing you will sign and receive copies of all the documents pertaining to your purchase and new mortgage. The Attorney or Settlement Agent will also do the title search. He/she will look up the legal history of the property at the County Courthouse,and make sure that there are no title problems that could stop you from free and clear use of your new property. He/she will make sure all Owners have signed all the deeds, and there Is no one who can come back and claim they own the property. For example if the Seller is divorced, the Attorney or Settlement Agent will make sure that no one can lay claim to the property.
The Attorney or Settlement Agent may need a current survey on the property. If the Seller has one that is less than 10 years old we can use it and not have to pay for a new survey (which would cost you about $400-$800 and is not included in your closing cost good faith estimate). If you are purchasing in an established subdivision you may not need a survey at all. Your attorney or settlement agent can help you make that decision. I f there is no survey and you need a survey, we will order one for you. If you are buying a large tract of land, you may want one to insure you that the acreage Is correct. If you are buying In a rural area, you may need a new survey. Rural areas change frequently as fences are moved and land cleared. A survey on a larger tract of land will be more expensive.
You will need to call your Insurance Agent and tell him/her to contact us for information regarding the property. You can shop around for the best rate. Sometimes the firm who carries your car insurance will give you a discount for multiple policies.
Plan to have everything transferred to your name for the day of closing.
In the last few days before closing, we will do a walk-through inspection of the home. At this time we can make sure that everything in the contract has been completed, all repairs are done, all of the Seller's personal property has been removed and the home is in satisfactory condition.
The day before closing the Attorney or Settlement Agent will fax us a copy of the closing statement that shows how much money you will need to bring. We will go over the closing statement to make sure there are no mistakes. You will need to get a cashier's check made payable to the Attorney or Settlement Agent to bring to closing or plan to wire the funds. It must be certified funds because you get the house at closing, and your check cannot bounce. Many settlement agents now require a wire.
Plan to spend an hour at the Attorney's Office or Settlement Agent's Office. Limber up your wrist. You will be signing a large volume of documents that the Attorney or Settlement Agent will explain. You will get a copy of everything you sign. Keep these documents FOREVER.They will be important for tax reasons when you sell the home. Also,some of the expenses on the closing statement may be deductible on your income taxes this year. You should talk to your Accountant about that.