Start with Open Houses
You’re ready to start thinking about, thinking about buying a home, but not quite sure where to start. We at the Lisa DiNoto Group believe starting with your local Open Houses is the absolute best place to get started. As an Open House Home Hunter, as we like to call it, one can explore different neighborhoods, compare unique home features, and get an understanding of Real Estate values in different subdivisions. It’s safe to assume there will be countless weekend Open Houses available for viewing in Rancho Cucamonga and the surrounding areas. Viewing Open Houses does not require one to, be “pre-approved”, have an appointment, or be accompanied by a Realtor®. This process can take the stress out of making an immediate decision to put in an offer on the home or not. As a pre-home buyer, you are really “just looking”. A great practice is to list out 3-5 houses that are showing this weekend, and take an hour or two to visit these Open Houses. Write down your favorite neighborhoods, what your future home has to have, and general questions you have about the home buying process.
Get Pre-Approved for a Mortgage Loan
So now that you’ve seen a few Open Houses, you are excited about the next step! During the Open House process, you noticed the “listed price” of each home, but what kind of down payment is required, and what is your monthly mortgage payment going to be? These are great questions, and can be answered by a local lending institution. It is recommended to seek advice from at least two lending institutions before deciding on one.
We at the Lisa DiNoto Group suggest starting at the most obvious place, your current banking institution. Most bank branches will have a loan officer on site, or at least one available for an upcoming appointment. The loan officer will explain the different type of loans (FHA, Conventional, VA, etc…) that are available to you as buyer, and current interest rates. The loan officer will be able to help narrow down the perfect loan type for your current financial situation.
Next is applying for a loan, or being pre-approved.
Here are a few steps you can expect during this process.
Buyer can expect to:
1. Submit a loan application, for each potential buyer.
2. Receive a “Good Faith Estimate” from loan officer with a breakdown of estimated closing costs.
3. Submit bank account statements.
4. Submit current pay stubs.
5. Submit two years of tax returns.
6. Submit explanation of any credit inquiries.
Once the loan officer has reviewed the complete financial position, they will issue a loan commitment letter, or pre-approval letter.
Keep in mind; this is not a full loan approval letter. The loan approval will not be issued until there is an executed offer on a property, and all contingencies of the offer have been satisfied. We always remind our buyers to keep their current financial situation the same during the entire home buying process. This includes but not limited to, not purchasing a new car, applying for student loans, changing jobs, or maxing out any credit cards.
Hire a Realtor®
Now that you are armed with a pre-approval letter and have a good idea of what you are looking for in a new home, it’s time to hire a Rancho Cucamonga Realtor®. The Realtors® at the Lisa DiNoto Group will set you up with exclusive access to the MLS listings that meet your specific needs, review the Residential Purchase Agreement, and will accompany you on a guided tour of the homes as they become available.
You have found the perfect home, presented a great offer, and the Seller’s have decided to move forward with opening escrow with your offer! That’s great news, but now what? What is the escrow process? This is often the question we get right after our Buyer’s offer is accepted and escrow is set to open.
Buyer and Seller have agreed to all terms in the RPA (Residential Purchase Agreement) and escrow is ready to open. Typically a third party escrow office is chosen by the Seller or Seller’s Realtor® and an escrow officer is assigned to the new home purchase transaction. The escrow office and officer take on the fiduciary duty of transferring the property from Seller to Buyer and act as a neutral third party. The escrow officer will generate Escrow Instructions based on the agreed upon terms in the RPA. Buyer and Seller will then approve these terms.
Buyer Submits Deposit Fund
The earnest money funds, or deposit, agreed upon in the RPA will then be delivered into escrow. This can be a personal check from the buyers mailed in or hand delivered, or a wire transfer can take place. The earnest money funds need to be delivered to escrow by the third business day of opening escrow. This is a crucially important step in the event the earnest money funds do not make it to escrow on agreed upon time; Seller does have the option to cancel transaction. The escrow office will then hold the funds in an escrow account for safe keeping. The deposit should never go directly to the Seller or the Seller’s Realtor®.
Every escrow transaction will naturally have a contingency period for both Buyer and Seller to satisfy certain aspects within the RPA. A contingency is a future event or circumstance that is possible but cannot be predicted with complete certainty. As a Buyer, you may open escrow on a home that appears to be in good condition and you are committed to moving forward with the escrow transaction. However, you will most likely be granted a contingency period to completely satisfy yourself with the true condition of the property through various inspections, reports, and disclosures. On the contrary, the Seller will also most likely have a contingency period on the Buyer, allowing time for appraisal to be completed, proof of closing funds to be delivered, and full loan approval. Contingencies are in place to protect both Buyer and Seller from the “unknown” aspects of the sale of the property.
Review Seller’s Disclosures
Buyer will now review all pertinent information Seller has provide regarding the property. Seller’s property disclosures along with a Natural Hazard Disclosure, Title Report, and other agreed upon reports should be delivered to buyer within 7 days of opening escrow. At which point, buyer typically has until the 17th calendar day of opening escrow to review and approve all disclosures and reports. This is the optimal time to figure if there is anything negatively affecting the property, currently or in the past.Click on Picture for details
Call around for a Homeowners Insurance Quote
Lenders will require that homeowners obtain sufficient insurance before funding their mortgage loan. There are different types of insurance, but most basic policies will include covering damage to the house caused by fire, vandalism, hurricane, lightning, and other certain events. Often times, basic policies will not cover earthquake damage, which may be desired when living in California. When calling around, be sure to ask about your insurance about:
- Earthquake Coverage
- Flood Coverage
- Mold Coverage
- Any Exclusions
- Optional, additional, or extended coverage
Do a Home Inspection
Al Buyers are recommended to hire a certified professional to conduct a thorough home inspection of property. Although Seller will provide disclosures of the home’s condition based on their current knowledge, a Seller may not always know every circumstance affecting the property. A certified professional will conduct a detail investigation of the property and will then deliver a detailed written report to Buyer. It is recommended that Buyer be present during home inspection, to become familiar with the property and its current condition. Buyer is now able to make informed decisions about the property, and request recommended repairs if necessary.
A Buyer can expect to pay anywhere from $300 -$500 dollars at time of home inspection. Rates can vary based on size and location of the home, and if there is a pool and spa to be inspected as well. Although it is not mandatory for a Buyer to have a home inspection completed, it is encouraged and will be a benefit moving forward through the escrow.
Assuming Buyer will need a mortgage loan to purchase their new home, an appraisal will be necessary. During the Buyer contingency period, typically 17 days of opening escrow, the Buyer’s lender will simultaneously complete a property appraisal. The property appraisal will determine how much money the lender is willing to loan the Buyer in order to purchase the specific home. A certified California licensed professional will conduct an appraisal on the property and report their findings to Buyer’s lending institution and determine a value for property. Purchasing a home will most likely be contingent upon the appraisal coming back “at value”.
The appraisal not only protects the lending institution from loaning out more money than the property may be worth, but it also protects the Buyer from purchasing a home above the current market value. The desired outcome for all parties involved is to have the appraisal value come back at the exact agreed upon purchase price from the RPA.
Some appraisals may require specific repairs be made to the property before the Buyer’s loan can be approved. This will vary heavily, based on the type of loan that is being obtained, and the current condition of the property. These repairs will need to be satisfied, before the loan can close.
Now that all Seller’s disclosures, property reports, home inspection, and property appraisal have been reviewed, Buyer is able to submit to Seller a Request of Repairs based on the findings. This request should typically be present to Seller before the 17th calendar day of escrow. This will give Seller time to review and respond. Although this is a formal request submitted to Seller, it is merely a request. Seller is not contractually obligated to make any repairs beyond what has already been agreed upon in the RPA. The RPA naturally reads that the home is being sold in “AS-IS” condition in the state of California. Should Buyer not be satisfied with Seller’s response, Buyer may cancel escrow transaction assuming they are within their agreed upon contingency period. Should Buyer and Seller agree to terms, escrow will continue as laid out in the RPA.
Ready to Close Escrow
Now that Buyer and Seller have satisfied themselves with the transaction and all contingencies have been removed, escrow is ready to close! The escrow agent will now make a request for the Seller’s “Demand
for Pay-off” with their mortgage holder (assuming there is still a mortgage on the property) and request remaining closing funds from Buyer. The escrow officer will do a final audit of the file confirming all funds are in place and that both parties have complied with all escrow instructions.
Once the Buyer’s loan has funded, escrow will request confirmation of Title Recording (transferring of title from Seller to Buyer). When Title Recording is confirmed, escrow is closed! Buyer should receive their keys as soon as title is recorded.
This is a quick summary of the home buying process from A to Z. We know starting the process can seem overwhelming, but we at the Lisa DiNoto Group are here to help guide you every step of the way.Check out our Open House Weekend List, call us for lender referrals, and let us know when you’re ready to take a guided home tour. We look forward to connecting with you soon.
Now that you’ve moved in…don’t forget to set up your utilities!