The Home Buying Process
“The Cooke Real Estate Team”
Moving and purchasing a new home can be an exciting adventure, but can also present challenges. With so many significant decisions to make it’s important that you find qualified, honest partners to enhance the home-buying process. We at “The Cooke Team” provide the knowledge, experience and contacts to help your home-buying process go as smoothly as feasible.
To purchase a home, you’ll need a qualified Real Estate agent, an honest mortgage broker, a knowledgeable title officer, qualified and candid inspectors, and in some instances a genuine Real Estate Attorney.
Financing & Mortgages
With so many financing options available, it's important to be educated in the process to ensure you're making the best, most cost-effective long-term decisions that fit your lifestyle and financial goals. We at “The Cooke Team” utilize our math and poker backgrounds to help you ascertain the risks and rewards of every type of mortgage and determine what program is right for you.
Creating a Housing Budget
“The Cooke Real Estate Team” can help you ascertain a housing budget based on your income level, mortgage amount available, money available for the down payment, interest rate, other debts and your total budget. We’ll help you determine the maximum price you can afford to pay for a home, factoring in taxes, insurance and any needed renovations or new furniture in order to provide you with a firm budget from which you can plan. Making the right decisions before you buy can save you a lot of time and money. Time and money you’d rather spend making your new house, your home.
Finding the Right Financing
“The Cooke Real Estate Team” will provide you qualified lenders to evaluate your financial situation and specify the maximum mortgage amount you qualify for. Before you start looking at homes, obtain a pre-approval letter. This lets potential sellers know that financing is in place and that you're serious about the transaction as well as defining the homes truly available to you.
At the start of the loan qualifying process, lenders request a list of documents furnishing them an outline of your current economic condition. Be realistic in setting your housing budget before you start house hunting and be prepared to provide detailed financial, tax and employment paperwork during the process.
Standard Documentation required by mortgage lenders includes:
- Employment Information (for all those applying-last two years.)
- Dates of birth for all borrowers
- Address for two full years
- Gross monthly income
- Proof of pensions, retirement, disability or Social Security
- Proof of income
- Proof of child support or alimony
- Year-to-date pay stub
- Two most recent bank statements (all accounts)
- Last Two years tax returns. If self-employed, two years 1040 tax returns and current year profit and loss statement
- Each creditor's name, address and type of account
- Account numbers
- Monthly payments and approximate balances
- Lender will ask for authorization to obtain credit report
- It will be a three bureau report with FICO scores exhibited
- Lender will not accept a credit report from the client. Report must be made in the lenders name
- Amount of child care expenses
- Names and addresses of banking and savings institutions
- Account numbers for all accounts
- Type of accounts and present balances
Other Possible Information Needed
- List of assets in stock, bonds and land
- Last quarterly statement 401k or IRA
- Life insurance value
- List of Real Estate owned and any rental agreements
- Copy of sales contract
- Social Security numbers of all parties
- Email addresses
- Previous addresses if current address is less than two years
- Complete bankruptcy filing and discharge
- Divorce decree (complete)
- Short sale and/or mediation documentation
- Discharge documentation of any liens
- Veterans - Certificate of Eligibility & DD-214
- Cash or check to pay for application fee
- Estimated purchase price
- Estimated property value
- Loan amount
- Estimated down payment
When you apply for a home loan, have a copy of your credit report. This eliminates any surprises, and allows you to verify the credit report information and clean up any errors prior to loan application. Your FICO score is a number that the lender uses to assist them in deciding your credit worthiness. A high score demonstrates a solid repayment history, while a low score sends up red flags.
What is your FICO score? Get copies of you most current credit report with one of three major credit reporting agencies:
Interest rates fluctuate daily depending on market conditions, the loan amount, the length of the loan, and the credit worthiness of the buyer. Your interest rate is significant in making your home affordable. A huge benefit of applying for your loan prior to selecting your home is providing the time to give the buyer the opportunity to perform credit cleaning tune-ups that may lower their interest rate.
Many mortgage lenders offer homebuyers the option of "locking in" an interest rate and points for a period of time after loan application. As a buyer, you need a clear and precise understanding of the rules under which the lender will “lock” or “float” a loan. This information should ALWAYS be provided in writing.
Some lenders charge a “point” to cover the expense of making a loan. One point equals one percent of a mortgage loan. A buyer can also lower the interest rate of their loan by paying upfront points for a lower interest rate. Points paid are sometimes eligible for federal income tax deductions for the year in which they are paid. If the seller pays any of the buyers points both the buyer and seller need to agree on who takes the deduction prior to filing their taxes.
Different Types of Loans
Conventional: The traditional 15 or 30-year home loan. Variations include jumbo loans (loans for more than $417,000), conforming loans and adjustable-rate mortgages (ARMs).
Below are some of the basic guidelines that are used by underwriters to approve or deny a conventional loan:
1. 5% minimum down payment.
2. A down payment of 20% may be gifted from a family member but any amount less than that must be traced from your own funds. That said, funds can be “seasoned”.
3. A mortgage insurance premium will be added to your payment with down payment of less than 20%.
4. Closing costs can add another 3 to 4 per cent of the purchase price. Mortgage companies that offer “no closing cost” options add these costs to their interest rate making for a higher interest rate loan.
5. Total closing costs or any portion of them can be paid by the seller.
6. There is a mandatory appraisal that protects you from overpaying for the home.
7. A portion of the closing costs are paid to a licensed and bonded title company that provides title insurance which guarantees that all previous liens have been retired and you actually own what has been sold to you.
VA: The VA has recently expanded its qualifying criteria to include more veterans. For further information regarding eligibility requirements or programs, go to www.benefits.va.gov/homeloans for the most current information.
Below are some of the VA’s loan program guidelines:
- No money down.
- No mortgage insurance required.
- Buyer must be an eligible veteran and have a DD214.
- Interest rates identical to FHA rates.
- Closing costs are commonly paid by the seller.
- A veterans spouse can be on mortgage, but no other cosigner is acceptable.
- The appraisal and title company duties are all identical with VA.
FHA: The Federal Housing Administration (FHA) meets the special needs of certain Americans. These loan programs help lower income buyers acquire loans with lower down payments and lower credit scores. Special loans are available for teachers, policemen, firemen, senior citizens, and people with disabilities, first-time homebuyers, religious groups and emerging markets.
Some of FHA’s loan program guidelines are:
- 3.5% down payment.
- A mortgage insurance premium is always a portion of the mortgage payment regardless of the down payment.
- The total down payment and any portion of the buyer’s closing costs can be gifted by a family member.
- A member of the family can cosign if necessary, subject to FHA guidelines.
- The closing costs, appraisal and title company duties are all identical with FHA.
Once a contract is negotiated, “escrow” is opened by a title company. An escrow consummates the transaction for all parties. An earnest money downpayment is deposited to insure the buyer is participating in good faith. Funds are transferred into this account and disbursed according to any contracts. The properties title is insured and recorded giving the buyer clear title and ownership of the property. An escrow company is a neutral party and favors no one, but processes the funds and legalities of the contract from inception to title transfer.
Title companies are responsible for researching abstracts or actual deed records, lawsuits, tax records, liens and other documents to make sure no one else has an ownership claim against a property. Once the title company determines that the title is clear, it will issue an insurance policy to the mortgage company and the buyer to protect against any title defects that might appear after closing.
Title insurance protects against:
- Forged deeds, releases or wills
- Undisclosed or missing heirs
- Liens for unpaid estate, inheritance, income or gift taxes
- Instruments executed under invalid or expired power of attorney
- False impersonation of the true owner of the property
- Mistakes in recording legal documents
- Deeds by minors or by persons supposedly single but, in fact, married
- Misinterpretations of wills
Writing the Offer
Once we’ve found the right home, The Cooke Real Estate Team will prepare your written offer to be negotiated with the seller and give a good faith estimate of your costs associated with that offer.
The purchase agreement (offer), if accepted as it stands, will become the binding sales contract. Any verbal statement is not enforceable, so we need to make sure everything pertinent is addressed in the offer.
Some things to be included are:
- Address and a legal description of the property
- Sales price
- The terms of the offer, including financing
- A requirement for seller to provide title insurance to buyer
- A closing date
- An earnest money deposit accompanying the offer
- Methodology of how real estate taxes, rents, fuel, water bills and utilities are to be adjusted (prorated) between buyer and seller
- Who will pay for which closing costs
- How sellers disclosure of any known defects (SRPD) is to be handled
- The time limit and extent of any and all inspections
- A time frame for the offer to expire
- Any contingencies or additional terms the buyer wishes to include
Negotiating the Transaction
As a buyer, you want your agent to be a tough, yet gracious negotiator who will procure the best price and terms for you. At The Cooke Real Estate Team, we research the similar homes in the same area to give our buyers an understanding of what a prospective home is worth. Roy is a CREA (Certified Real Estate Appraiser) and has valuable abilities in making price adjustments of homes based on differing amenities. An important additional component of negotiating home purchases is incorporating issues other than price into the negotiations. Concerns such as moving twice, timing, contingencies, repairs etc. often have importance to one party and not the other. The experienced Cooke Real Estate Team will prioritize and incorporate all your needs into the negotiation.
Once we find a home you like, The Cooke Real Estate Team will present your offer to the real estate agent representing the home seller. This is an area where a quality agent makes a large difference. How the offer is presented and negotiated can not only make a large difference in the price, but also if the offer is even accepted. Both Roy and Bea have taken extensive negotiating courses as well as having logged many hours in the tough world of Las Vegas poker. With The Cooke Real Estate Team negotiating the contract of your home is in very good hands.
The Cooke Real Estate Team has experienced home inspectors available to conduct a thorough evaluation of the property. We advise that home inspections be utilized not only for resale homes, but for new homes as well. Knowing exactly what you’re buying is an important component of the buying decision. Should you have an inspector you wish to use, we’ll happily facilitate them.
An inspector may recommend further examination of your home’s components. Specialized inspectors can provide specific information on any questionable and provide an estimate of repair costs. In the event repairs are needed, The Cooke Real Estate Team will negotiate a reasonable price adjustment or have the sellers fix the issues.
Nevada Property Taxes
In Clark County, the county's tax assessor values all taxable property. The taxes collected pay for schools, roads, police and fire protection, along with the other government and public services.
Escrow will make sure that taxes are current at close of escrow. In mortgage transactions the taxes will be paid through your mortgage company. In cash transactions or when you own your property free and clear you are responsible for any tax payments. You can set up an electronic funds transfer through the assessor’s office of pay as billed. The assessor does send out tax bills, but should you not receive them, you’ll still be liable for the taxes and any penalties incurred.
Nevada tax law (NRS 361) entitles qualified individuals to an exemption of a specified amount of assessed value, according to the Clark County Tax Assessor's Office. Blind persons, surviving spouses, disabled veterans and veterans of certain wars may be eligible. For more information on property taxes in Clark County, visit the county assessor’s office at http://www.clarkcountynv.gov/depts/assessor/Pages/default.aspx