FOR GETTING PRE- APPROVAL LETTER

1.       Fill out mortgage application.

2.       Pay for credit check.

3.       Provide paystubs and employment letter.

4.       Verify you have sufficient funds for down payment and closing cost.

5.       Run the data on Fannie Mae or Freddie Macs software and receive a pre-approval letter. This letter will tell you the maximum amount of loan you can get.

6.       Check if the interest rate in pre-approval letter is locked for 30 days/60 days or not.

AFTER GETTING PRE- APPROVAL LETTER

1.       Prepare list of lenders.

2.       Get GFE (Good Faith estimate). This letter will give you estimates on all closing costs and the APR.

3.       Get at least 3 GFE and compare and select the best.

4.       You may also start looking for home insurance policy.

5.       Decide between maximum or buy conservatively.

6.       Compare 30 year loan or 15 year loan.

7.       If the down payment is less than 30% of home price then the buyer has to get PMI (Private mortgage insurance).

8.       Opt for fixed rate mortgage. If possible get rid of PMI.

9.       Check for bi weekly payment options.

10.   Sometimes lenders may put points on you offering low interest rates, compare monthly payment and total payment with and without points and choose the best.

11.   Ask the mortgage company for an amortization schedule at closing. This is a breakdown of how much of your payment goes to principle and how much to interest. Doubling up on principle payments is a good way to pay your loan down to the point where you don’t have to pay PMI.

HOUSE HUNTING

1.       Hire a professional and experienced realtor.

2.       Look for in best location you can afford even if you have to go for a slightly smaller home.

3.       Check for school reputation.

4.       Create a list of must haves and wants in your dream home.

5.       Check for zoning changes and traffic pattern changes.

6.       Ask your real estate agents for print outs of houses sold in last 6 months in your price range. Get other information like number of days in market, list price and sold price. All this information he can get from multiple listing service (MLS) database.

7.       Create a list of houses you like and then start narrowing it down.

8.       Check for buyers’ agency agreement. Does he have exclusive or nonexclusive agency agreement?

9.       Sometimes sellers’ agent can represent as dual agency for both sides (Buyer and seller), if you are not comfortable with this, consider hiring an exclusive buyer agent.

PREPARING FOR OFFER

1.       Refer to MLS database results like list price, sold price and number of days in the market to decide what should be the offer amount.

2.       Check if seller is paying any concessions. (This information can be obtained from MLS system of previous deals).

3.       First do home inspection by yourself according to inspection check list.

4.       If houses passes in your inspection, then hire a professional home inspector.

5.       Never criticize or point out flaws in the home to the seller.

6.       Try to establish an emotional connection with the seller.

7.       Make a list of items that seller has agreed to include in the sale.

8.       Once you get home inspection results, calculate repair or replace cost (If any) and ask seller to pay repair/replace cost.

9.       Ask seller to pay loan cost (Closing cost).

10.   Ask your agent to present the offer to seller in person.

HOME INSPECTION

1.       Check for aluminum wiring or copper wiring.

2.       Feel sounds in the day and at night time.

3.       Check for cell phone network signals inside home.

4.       Check for early morning and evening time traffic.

5.       Talk to neighbors to get feedback.

6.       Hire a professional inspector who is independent from deal.

7.       Check ASHI (American society of home inspectors) or  NIBI (National institute of building inspector)

8.       Check if return visit or re inspection is included in the price or not.

9.       Get at least 3 inspectors and choose one upon accreditation clauses and how long they have been in business. Get few references.

10.   Home inspector will check for items that don’t meet current building codes especially wiring, heating system and plumbing.

11.   Ask home inspector if you can join the inspection process or not.

HOME OWNER INSURANCE POLICY

1.       Single family home requires HO-B policy. This policy has broadest coverage. It doesn’t cover flood insurance.

2.       Make sure to have coverage on damage cost by internal source of water. (Plumbing)

3.       For outside water (Flood) , you would need flood insurance and that is sold by only US govt. (FEMA)

4.       If you pay more than 20% of home purchase price, then you can choose home insurance yourself. Otherwise you may have to agree with Mortgage Company.

5.       Check your policy option, if possible opt for “Replacement” not for actual cash value.

6.       Make sure the policy has sewer back up, foundation damage coverage.

7.       If Mortgage Company is handling your insurance payments then you need to set up escrow account to receive money that you pay into it each month.

8.       If down payment if less than 20% then mortgage company itself get home owner insurance plus property taxes plan and you have to pay that monthly.

9.       Home insurance agent should be on speed dial to change or add coverage whenever you need. For example :

a.       If area’s home values have increased.

b.      Your home value is increased due to remodeling or any addition.

c.       If you leaving your home vacant while trying to sell it.

d.      If you are turning your home into rental.

e.      If you are remodeling, contractors or workers will be working and if anyone gets hurt on your property, you want to be covered.

f.        In case you are buying a trampoline or a swimming pool.

10.    Before hiring a contractor or sub-contractor, get proof that the operator has general liability and worker compensation coverage.

11.   Add supplemental coverage for living expenses in case of damage and that requires repair and you have to move out.

12.   Keep contracts material, receipts and other papers in a safe place so you can document any improvements you have made.

13.   Photos and videos will be worth of dollars in case of disaster and you need to prove the work you have done.

14.   Do home inventory at the time of move in, adding or purchasing new things. Photos and videos with model number and serial number.

15.   Click photo entire room first and then close shots, keep photos online or at safe place.

16.   Check for building codes and permits before remodeling or any work on property.

17.   If mortgage balance is same as home cost then get extended coverage policy.

18.   Components of home owner policy:

a.       Structure: add endorsements/ rider. For example, sewer clogs.

b.      Personal property (Basic plan pays 50-70% of policy amount).

c.       Keep tab on personal property, if value increases get extra coverage.

d.      Liability : normally policy comes with $100,000 if outsiders or clients come to your home more often then get extra coverage.

19.   In case of condo – coop, you will pay HOA fee plus HO-6.

20.   Ask policy agent what improvements we can do to reduce premiums.

21.   Check if your home is in flood zone then get flood insurance from FEMA also check NFIP (National flood insurance program) also check www.floodsmart.gov/floodsmart

22.   If you need earthquake insurance, It can be obtained from private companies.

23.   Compare policies at www.opic.state.tx.us

HOME WARRANTY

1.       It covers electrical heating and plumbing problems.

2.       It covers built in appliances like dish washer, dispenser, oven, compactors.

3.       It doesn’t cover refrigerator, air conditioner, washer dryer but these can be included by paying extra cost.

4.       Normally home warranty comes $300 to $500 per year.

5.       Check per service call fees to handle small repairs or fixes.

6.       Read policy carefully for service fees inclusions and exclusions.

7.       Verify company financial stability.

8.       Check preexisting conditions.

9.       Check if insurer requires pre-sale home inspection.

10.   Following websites can give more information :

a.       www.nationhomeprotection.com

b.      www.americanhomeshield.com

c.       www.nationwidehomewarranty.com

MORTGAGE LIFE INSURANCE

1.       This is not PMI (Private mortgage insurance)

2.       PMI insures lenders but mortgage life insurance insures borrowers.

3.       This protects borrowers in case of sickness, disability or death.

4.       Check for plans and options (Decreasing term insurance, standard term insurance)

TITLE INSURANCE

1.       It guarantees, you are getting a good and clear title with no problems to the house.

2.       Ask seller to furnish an American land title association. (ALTA) home owners policy or one with extended coverage that protects from mechanical liens, zoning issues, building permit violations and encroachment of improvements.

MISCELLANEOUS 

1.       Mortgage interest paid plus property taxes are deductible.

2.       Private mortgage insurance (PMI) plus points (Prepaid mortgage interest) you paid to reduce the interest rate.

3.       Two types of tax break available for home owners.

a.       Tax credits.

b.      Deductions.

Check on www.iris.gov and with tax professionals.

4.       Property tax depends on county’s assessed value. If county’s assessed value and purchase price are different especially when county’s assessed value is higher, then protest it because it will increase your property tax.

5.       Every property has its parcel number like everybody has SSN.

6.       New or existing home owners should always check for county’s assessed value every year and if you think that is more than the property value then appeal for reduction, for that you have to prepare documentation to present your case to county assessor officer.