First-time Homebuyer Information - Greenville, SC
Use a buyer agent. (period) It doesn't have to be one of us, just please, use a buyer agent.
- A buyer agent knows the market, and based on their knowledge, should be able to immediately identify neighborhoods that will fit the criteria you are considering.
- A buyer agent should also know the contracts verbatim, in order to answer any questions about that part of the process, before you even get there.
- It is free to you. Yes, free. The seller agreed to a total commission when they put their house on the market, and the listing agreement specifically states how the buyer agent will be compensated out of that total commission. If you buy a house without a buyer agent, you likely just made the seller's agent a good bit more money.
There may be some out-of-pocket costs that you need to be aware of, before you get started. (all amounts should be verified with the service provider)
- Assuming you are getting a loan, the lender may require the appraisal fee up front. This fee can vary, but in many cases is about $350. The lender may also require a credit reporting fee (typically about $25).
- While some home inspectors will allow you to pay the inspection fee at closing, most prefer the fee at the time of service. The fee varies by inspector, size of home, and other criteria. Generally, an inspection fee can range from $200 to $500 depending on the type of home.
- Other inspection services (CL-100 (Termite) Letter, Radon Testing, etc) are optional in some cases. Termite letters typically range from $75-125, and radon testing typically ranges from $90-$150 depending on the type of test performed (activated charcoal, continuous radon monitor, etc).
Earnest Money (aka escrow), but somewhat of a security deposit.
- There is no set standard for the amount of earnest money, in fact, it's not technically required. You would just have a hard time convincing the seller to accept an offer without it. This amount can vary based on the price of the home, and is part of the negotiations.
- The earnest money for many first time home buyers is $500-$1000, but you can literally negotiate pretty much any amount you feel comfortable with.
- The purpose of this money is to give the seller piece of mind, since they will be essentially taking their home off the market.
- This money is held in a trust account, so it is deposited, and must be deposited within 48 hours after the contract is finalized.
- This earnest money is not at jeopardy of being lost. The contract provides very specific contingencies for inspection, financing, appraisal, etc. If you should exercise any one of those contingencies, a release should be signed, directing that earnest money back to you.
- The earnest money deposit is credited back to you at closing, and reduced from the amount you would have brought as your down payment and/or closing costs.
The search process...
- The first thing we recommend is meeting with a lender or bank to find out exactly what you qualify for (type of program, payment, etc). That is probably the scariest part, but you are probably making it scarier than it needs to be. Everyone does!
- The next part of the process involves asking yourself what you want in a home (location, payment, bedrooms, bathrooms; the list goes on and on), but don't be surprised if your wants and needs change throughout the process. Honestly, that's the fun part. You'll notice we mentioned payment here too. We did this because what the lender says you can "afford" isn't always in line with what you feel comfortable paying every month. Many home buyers are pre-approved for far more than they ended up spending, since you still want to have a life outside of your new home.
- After that, it's time to go house hunting with your Greenville SC buyer agent! A good buyer agent will have sent you detailed information about homes on the market, but don't be too quick to rule properties out simply based on the photographs or description provided by the listing agent. You wouldn't want to completely rule out what may have been the "perfect" home.
- Once you have found your future home, you will know almost as soon as you walk through the door. If it feels like home, it is home. Don't be afraid to show that you're excited either. If you are using a buyer agent, they will still keep your best interests in mind, and won't relay that excitement to the seller or their agent.
The rest of the process...
- Once you find your home, it is time to write the offer. Typically sellers feel most comfortable with a closing date between 30 to 60 days. Less than 30 days gives them very little time to get out, while more than 60 can be a little too much for a seller to handle. Not to mention the fact that you're probably a little too exited to wait 2 whole months or longer!
- After the contract is negotiated, we will schedule any inspections and get things moving with the lender. I personally attend all of the inspections for my buyers, because I feel that it is important to have first hand knowledge of what the inspector found. Once the inspection is complete, we will typically receive the report within 24 hours. At that point, we formulate a list of requested repairs. There are certain items protected by the contract (i.e. electrical, plumbing, leaks to the roof, etc). If the seller declines to make repairs to any item protected by the contract, you can exercise your right to terminate the contract.
- After the inspection, we'll be honest, there is a lot of waiting. Much of the work at this point, is done behind the scenes by the lender and closing attorney. They should give regular updates, but at this point, it is waiting for "clear to close", which is the lender saying you have the "green light" to close on the house.
- Once you get the "clear to close", you should receive copies of the HUD-1 settlement statement, which details every penny moving from the buyer to the seller, and vice versa. You will typically receive this document 1 or 2 days before closing.
- Then you go to closing! Make sure you're writing arm is ready, because it is a lot of paperwork! The vast majority of this paperwork is identical for every closing in the United States. The forms are standardized in order to ensure consistent language and protections for both the buyer and lender. The seller signs very few documents at the closing. After everything is signed, certain documents are sent via e-mail to the lender. The lender then "funds" the loan, and you get your keys!
We truly hope this information helps, but please feel free to let us know if you have any questions. We would be happy to fill in any blanks.
Questions for Prospective Homeowners
Are you ready to buy?
Owning your own home is about more than just being able to decorate any way you like; it's about being prepared to maintain your home over the years, realizing that part of your income and time will go towards repairs and maintenance. It's about being willing to take the risks of home ownership with a realistic expectation of the rewards.
How much can you afford?
It can be discouraging to find that your salary won't stretch as far as the home you want to own. However, sacrificing a huge part of your income just to pay the mortgage can very quickly make home ownership a burden rather than a point of pride. In some situations, it's better to buy a modest home now and look at purchasing your "dream home" in a few years.
What is your debt-to-income ratio?
This is something that lenders take very seriously. Your overall debt should not be more than 40% of your income, and your housing debt should not be more than 32%. What 32% of your income will buy depends on where you want to live. In rural or downtrodden areas for example, it can buy a very comfortable residence and ample acreage. In highly sought-after urban areas however, it may not even buy a 400 square foot bachelor suite.
What do you want?
Do you like the idea of cleaning your own gutters? Do you shudder at the thought of lawn care? Would you rather just pay a fee every month and have everything done for you? Would obeying rules about when you can have your garbage cans out bother you, or do you want to live in a neighborhood where everything is 'just so'? The answers to these questions can help you narrow down the search for the right type of property for you.
We Can Help
You need a good agent who will work hard for you. We are dedicated to helping you find the right home, at the best price. We want you to find the home that will make you happy and successful in real estate ownership.
When you hire a buyer's agent to help you buy your first home, we want to know what you want and how much you can afford. Then we'll find a way to merge these two priorities and find a home that you'll love owning.
Keep your objectives in mind when visiting a home. Sometimes the idea of owning a home can overwhelm your practical sense, so keep your feelings in check. Keep a list handy of the features that you need and want in a home, and judge each home by the list instead of by details that could distract you from your goal. When you're alone with your agent, you can go over the pros and cons of each home. We can help you stay on track while still keeping our eyes out for a great property.
Engage the services of a good real estate lawyer. We can recommend several lawyers in the area who might be a good fit for you. The legalities of transferring land ownership can be dodgy, and a lawyer can be your best defense against future legal troubles. A good lawyer can charge several hundred dollars for their services, but the thousands of dollars saved in legal fees later on makes this a good expense.
Make the offer. This can be a maze of "buyer", "seller", "LTV", "earnest money", and "effective dates". We'll be happy to prepare the paperwork and go through it with you before submitting it. Remember, the seller may reject or counter your offer, so even at this late date, avoid setting your heart on the home you hope to own. You'll probably have to write an earnest money deposit check that proves the seriousness of your offer.
Get all necessary inspections done. A home inspector can check for signs of harmful materials like asbestos, lead paint and mold. They'll also check for evidence of pests, faulty wiring and leaks. This is a crucial part of the home purchase. Not getting an inspection done means that you could be stuck in a home with a bad case of black mold and no recourse other than to pay for its removal. Inspections will cost a few hundred dollars, but again, this is more than worth it in the end. There are several inspectors in the area that I'd be happy to recommend.
Do a final walkthrough before closing the deal. I'd be happy to do this with you to make sure that everything agreed upon is completed prior to the final signing.
From the first interview that determines your requirements to the moment that you receive the keys, we can help you with the complicated process of buying a home. Don't hesitate to contact us to find out more about how we can make the home buying process easier!
Contact us for more information about first time home purchasing.