The pre-approval process is the first step in buying a house. A specialized lender, bank or credit union provides you with a letter after reviewing a few basic documents.

This letter is then sent to Jessica by email for her file. When you’re ready to submit an offer on a property, she sends the pre-approval letter to the other agent. Getting pre-approved shows you and your agent how much you are able to borrow based on your debt and income.

Jessica works with all lenders, but she can also directly connect you with a lender she has worked with before for an easy and quick pre-approval. A pre-approval letter usually is valid for 6 months. Even though you’re pre-approved for a certain amount, during the transaction, your lender works to verify all debt and financial circumstances in order to fund the loan at closing.

Once you’re pre-approved, you can begin searching for properties. When you find properties you’re interested in, you’ll send the addresses to Jessica. She checks the status first to ensure that the property is still available. Some listings online will show as active, when they may already have offers on the table. She also verifies if the property has an HOA and the fee, so you’re aware beforehand. The real estate market moves quickly, so when you find a great property that you’re interested in, Jessica makes every effort to get you in the door quickly. As a full time Realtor, she works around your schedule to make the showings convenient for you!

Debt to income ratios are important in the pre-approval process, and during the transaction. Just because you have debt, doesn’t mean you won’t qualify for a house. Everyone usually has debts, but it’s the ratio that matters. Your lender will discuss your debt to income ratio either in the pre-approval process ( or in the transaction ). Sometimes you may need to pay down a credit card, or a car loan, to be approved for a higher loan amount.

If you have a lower credit score or debt, don’t allow these factors to detour you from homeownership. Your lender can discuss different options with you, and if needed, help you with a plan to improve your credit score.

When actively looking for a home, or while in a transaction, try to avoid making large purchases ( such as cars and appliances ). Your pre-approval amount is based on your debt to income ratio, and if this ratio is thrown off, sometimes it can change your loan approval amount. This is something you want to avoid, especially when you’re in a transaction.

You also want to avoid making any changes to your employment or financial situation while in a transaction.

Once you find a property and have an accepted offer, the transaction begins. Transactions usually take 30-45 days on average. The earnest money deposit is roughly 1%-1.5% of the purchase price ( although it can technically be any amount. ) This deposit is held at the Title/Escrow company throughout the transaction. The amount of the earnest money is either applied to your downpayment or closing costs.

If a buyer defaults on the contract, their earnest money could be at risk. This is why it’s important to carefully track the contingency periods in the contract, to make sure your earnest money is protected. These contingencies typically include : the home inspection, appraisal, and loan.

Home inspections are incredibly important. While they are often considered optional, it’s risky to not have a Certified Home Inspector look at the property you want to purchase. After all, this is one of the largest purchases of your life and you should be aware of any issues.

The home inspection is an extra cost, but it’s worth the peace of mind. It’s usually the first thing scheduled in a transaction, and always within the due diligence contingency period given on the contract. If something of concern is found during a home inspection, you’re able to cancel the transaction and your earnest money is returned.

All homes have some flaws, whether resale or new construction. Some flaws are simple enough to ignore, while others may need to be corrected by the seller prior to closing. After receiving the home inspection report and carefully reviewing it, you can decide if you would like to submit a “Request for Repairs” to the seller. The seller isn’t obligated to complete any repairs, and if they choose not to agree to your request, you could then back out of the transaction.

It’s important to keep in mind, especially in resale homes, there will likely be many items on a home inspectors list. These could range from small items to larger concerns. When you first see an inspection report, it may seem overwhelming - but it doesn’t need to be. Carefully review the items, and along with Jessica, speak to the home inspector if you have any questions. Sometimes something on a report that seems major is just a $10 fix at Lowes!

Jessica always has your best interests at the forefront, and over time, she has worked with hundreds of home inspectors. She can easily connect you with a Certified Home Inspector who she has worked with before and trusts.

The appraisal is a mandatory contingency if you’re purchasing a home with a loan. It’s optional if you’re paying in cash. The appraisal is an independent and unbiased valuation of the property, completed by a Certified Appraiser. Your lender typically uses what is called an ‘appraisal management company’ which has their own list of multiple appraisers. This makes the appraisal fair, because the appraiser doesn’t have a connection to the transaction.

The appraisal is ordered by the lender and it’s typically completed within the first two weeks of the transaction. This is a cost that is paid for by the buyer. Your contract will state the appraisal contingency. Jessica will make sure that if more time is needed, an addendum is in place to allow for extra days to be added to this contingency.

The appraiser will visit the property, take notes, and check for specific home conditions that could effect the property’s value. Upgrades and other factors are taken into consideration, but the appraiser will account for these based off of recent sales in the neighborhood.

When we receive the appraisal report from the lender, the value is either exact, higher or lower than the purchase price. If the amount is lower, we can submit either a request for the seller to lower the purchase price, or to negotiate some to “bridge the gap” ( if you have extra funds available that you would like to pay above the appraised value for the property.) If the seller doesn’t want to make adjustments to the price, you would either need to come up with the difference, or cancel the transaction within the time frame provided on the contract to receive a return of your earnest money.

If the property’s value comes in low, Jessica could also submit a comparative market analysis report to support a higher purchase price and send this to the lender for the appraiser’s review. This depends on the situation.

The appraisal is an important and vital part of the transaction. Appraisers keep the market steady, by providing a knowledgeable and unbiased opinion of property values that reflect the current market.

Sometimes a low appraisal can be frustrating, but there are many ways to work through the complication to make all parties happy.

The home warranty is different from homeowner’s insurance. Home warranties are optional, but are often included in the contract to purchase a property. Sometimes this is paid for by the seller, but sometimes the buyer pays for the warranty.

Home warranties range in price, typically starting around $375, and go upward from there, depending on the square footage of the residence. Some home warranty companies include : Old Republic, American Home Shield and First American. They provide coverage for major appliances, plumbing, air conditioning, heating, the water heater, and more! This doesn’t mean everything is covered however, so it’s important to check the plan and make sure you‘re getting the coverage you want to protect your home.

Usually when you place a call with a home warranty company for service, there is a service fee of $75-$100. If the problem can be fixed and covered under the plan, this is all you would pay; however, if it’s something not covered, the vendor will provide a quote for the service.

Having a home warranty is an extra way to protect your home and provide some peace of mind. If your home warranty was included in your contract, it’s because your agent negotiated this for you to be paid for by the seller. After the first year, if you decide to continue coverage, you would then be responsible to pay for your warranty plan.

During the transaction, your lender ( loan officer ) will verify your employment and income. This will include checking your previous two years of tax returns, calling your employer, and verifying any debt. They also order the appraisal during the transaction and that typically is completed within two weeks.

Your file will be sent to underwriting, where the underwriter also checks everything. It’s important during this time to keep everything the same, including employment and debts. Jessica advises clients not to make any large purchases during the transaction because major changes could effect your loan eligibility.

Your loan officer also assists you in selecting homeowners insurance, or you could choose a homeowners insurance policy yourself. Many choose to bundle their homeowners insurance with their car insurance to get a better rate. Once you make a selection, your insurance representative will send a binder to your loan officer, for your escrow account.

Once your loan is fully approved, your loan officer issues a closing disclosure statement, showing your payment and other information about your loan. At this point, the loan is ready to fund on the closing date once they balance their numbers with the title company’s numbers.

Closing costs are added to the remaining balance ( lender’s fees, real estate transaction fees, hoa upfront dues, and title/escrow fees.) If you have any credits, the title company and lender incorporate those into your final balance due at closing.

The final walk through is when you go to the property to make sure it’s in proper condition. Typically, this happens three days prior to the closing date, but can sometimes vary. Once you sign the final walk through paperwork, the next step is signing the documents at the title company.

Your escrow officer will arrange a time for you to sign, whether in the office or with a mobile notary. This can take place before the actual closing date, and if you’re signing remotely with a notary, this would need to happen a few days beforehand.

On the closing date, the lender and title do their final balancing and the title company sends a “clear to close” email to Jessica, who then arranges a time to meet with you to give the keys!

Even though this entire process may seem complicated at first, Jessica guides you through it every step of the way.