HOME BUYING GUIDE

Your guide to…

• Finding & Understanding Financing

• Choosing Your Real Estate Agent

• Searching for Your Home

• Understanding the Purchasing Process

Finding & Understanding Financing

As your buyer’s agent, we will do our best to give you the knowledge to help you make decisions that will protect your financial future in your new home.

We will discuss some of your financing options, and show you real scenarios so you are aware of the differences, and ways you may be able to save yourself financially over the long run.

Before we start your search for a home, we will work with you to insure that your finances are in order and that you are ready to make a smart and safe investment for your future!

You should stay within these guidelines:

• Maintain at least a 10% equity position

•Keep the price of the home under 3-3.5 times your annual gross income

•Get a 15yr fixed rate mortgage

•Keep the monthly payment at or below 25% of gross monthly income

•Save a 3-6 month cash emergency fund

These recommendations will make the difference in your home being a blessing or a curse! Remember, lenders will approve you at much more lenient guidelines. Staying within the ones specified above will keep you in a safe position.

15 yr Loan vs. 30 yr Loan

30 Yr Loan$125,000 @ 5.5%$709.74 P&I monthlyAfter 5 years you have

paid $33,689.65 in interest alone and still owe $115,395.74

After 30 years you have paid $255,505.05 total for the house

15 Yr Loan$125,000 @ 5.0%$988.49 P&I monthlyAfter 5 years you have

paid $27,894.20 in interest alone and still owe $92,596.19

After 15 years you have paid $177,928.57 total for the house

Pay $200 extra a month

30 Yr loan$709.74 Monthly plus

$200 in extra principalAfter 5 years you have

paid $31,850.35 in interest alone and still owe $101,356.43

After 19 years you have paid $197,671.07 total for the house

15 Yr loan$988.49 Monthly plus

$200 in extra principalAfter 5 years you have

paid $26,236.32 in interest alone and still owe $78,738.30

After 11 years you have paid $164,829.36 total for the house

Your total monthly payment

PITI – MI

P – Principal portion of the payment

I – Interest portion of the payment

T – Monthly escrow for property tax

I – Monthly escrow for property insurance

MI – Monthly mortgage insurance for those without 20% equity or those using government backed loans

100% vs. Money down

100% Financing• Low out of pocket

cost• Higher closing costs• Difficult underwriting

process• Requires good credit

score and history• High risk of

foreclosure

Money Down• High out of pocket

cost• Lower closing costs• Easy underwriting• Requires no credit or

medium credit• Guaranteed equity• Low risk of

foreclosure

Mortgage Insurance Premium

• MIP is an upfront charge at closing

• It is common on little or no money down loans

• FHA, VA and RD charge MIP

• It varies from 1% to 3% of the loan amount

• Typically the amount of the loan is increased to cover the MIP

MIP Continued

• If you get a $100,000 loan that requires 2% MIP you are really getting a $102,000 loan

• FHA typically charges 3.5% down but then includes 1.5% MIP, effectively you have 2% down

• FHA also charges mortgage insurance monthly, RD & VA do not

Closing Costs

• Closing costs are any costs required to close your transaction

• Fees for your loan, appraisal, title search, title insurance, escrows, surveys etc…

• Closing costs typically range from 2% to 6% in the Cincinnati Market

• 100% and government backed loans cost the most

Getting a pre-approved Mortgage

A pre-approved mortgage will increase your chance of getting the best deal when you buy your home.

• Set an appointment with a trusted mortgage professional

• Get a good faith estimate- a break down of your mortgage, including an estimate of interest rate and payment

• Use your estimate to do some comparison shopping with other mortgage providers

Keep in mind…

A pre-approval is not the same as a pre-qualification .

A pre-qualification is a very loose estimate based on many hypothetical factors.

A pre-approval is more involved and gives you a concrete loan amount that the bank has approved for you.

In the sellers eyes, a pre-approved buyer is a serious buyer!

A few things you will need before you get pre-approved…

• A copy of your most recent bank statements

(checking, savings, and other accounts)

•Proof and balance of any retirement accounts mutual funds and stocks (401K, IRA, etc.)

•Most recent W-2

•Most recent paystub from your employer

•Driver’s License

Recommended Lenders

A Real Estate agent is your most useful tool during your search for a home and throughout the purchase process. A Real Estate Agent will

provide you with access to the most current information and the best

resources available.

Your Real Estate Agent

Buyer’s agent

• Represents you the buyer

• Has a fiduciary responsibility to work for your best interests

Seller’s agent

• Represents the seller

• Has a fiduciary responsibility to the seller

A dual agent

• Represents the interests of both the seller and the buyer• Has a fiduciary responsibility to both parties

Agency Relationships

• Finding you the right property• Negotiating the best price and terms for you• Handling all the details and keeping you informed• Making sure that we close

With your agreement to name me as your buyer’s agent, I will be your personal advocate , fully committed to:

Representing your best interests...

Buyer Services GuaranteeOur written guarantee demonstrates the full service of our company.

F I N A N C I N G TRANSACTION ASSISTANCE

Coldwell Banker Concierge®

Personal and Timely ResponseHome Showings

Property Previews

Home Buyer GuidebookBuyer Counseling Session

Buyer RepresentationHome Evaluation

Coldwell Banker Home Protection PlanHome Inspections

Property DisclosureNegotiation Strategy

Closing the Sale

Financing AlternativesEstimated Net Proceeds

Good-Faith Estimate From Lenders

C U S T O M E R S E R V I C E C O U N S E L I N G S E R V I C E S

Searching for your Home

FEATURES

Preferred style (colonial, ranch, townhome, etc.) Number of bedroomsNumber of bathroomsFamily roomBonus/Game roomFireplace Home office Kitchen amenitiesBasement Garage (no. of cars)Central air conditioning Lot sizePoolViewOther

LOCATION

Convenient to work Convenient to transportation Convenient to schools Convenient to shoppingNear recreation facilitiesNeighborhood Other

What are you looking for in your new home?

I will show you the properties that meet your criteria!

• We will tour properties that best match the criteria you have given me.

• As your buyer’s agent, I will share my evaluation of the homes we see, including factors that may affect their value.

• Describing your candid impressions of each property will help me fine-tune the search process.

• Cooperation and Communication between Buyer and Agent are most important during the search.

To find the right home for you...

Remember, your agent is your #1 advocate!

• You can ask me about any properties that are advertised, no matter who the broker is.

• I will provide you with detailed information and show you the homes that interest you.

• I can arrange private showings of homes displaying an “Open House” or “For Sale by Owner” yard signs.

• When visiting an open house on your own, give the salesperson my card and tell them that I am your agent.

As Your Buyer’s Agent…

Understanding the Purchasing Process

Once you’ve found the perfect home, we will write up the offer and ensure all paperwork and contingencies are completed so that you are fully prepared to close on your property.

Preparing the offerAs your buyer’s agent, I will work with you to...

• Prepare an offer that will meet your needs and provide a solid basis for negotiating with the seller.

• Apply information from the Competitive Market Analysis that will determine a realistic offer.

The prices that sellers askMany factors affect the price that sellers ask for their houses.

• Physical characteristics of the house:–Location–Age–Size of house and lot–Physical condition–Floor plan and style

• Competition:–Number of properties available–Their prices and terms–Their location and physical condition –How long they’ve been

on the market

• Market conditions:–Interest rates –Availability of financing–Qualified buyer demand–Prices of recent sales–State of the economy–Seasonal demand

• Asking price also may be affected by:–Seller’s motivation to sell–Seller’s original purchase price–Seller’s need for cash–Opinions of others

Negotiating the purchase agreement

• I will present your written offer to the sellers and negotiate on your behalf.

• The sellers will have the choice of:–Accepting your offer as presented–Rejecting it completely–Countering it–Multiple offer situation (highest and best request)

• I will communicate to you the seller’s response and, if necessary, suggest further negotiating options.

A well-prepared offer that is effectively presented stands

the best chance of a favorable response.

An accepted offer leads to a

legally binding purchase

contract…

Completing the purchaseA successful purchase involves several important

elements:

• Full written disclosure• Offers and negotiations • The purchase agreement • Professional inspections• Title insurance and appraisal• Walk-through and final closing• Home warranty

The Closing

This is the meeting where the transaction is finalized. I will guide you through all closing procedures to make your home officially yours. Upon the end of closing, you will take possession of your home as stated in your contract to purchase!