To Purchase A Home, You’ll Need The Following, in this order:
- Money For The Home, or Mortgage Loan Secured in Place –
You’ll either pay Cash, or you’ll get a Mortgage Loan in addition to your own down-payment.
– If paying Cash for the entire home, you’ll simply need to secure a Proof-of-Funds letter that we can submit with any offer we make on a home so the Sellers know how to address your offer. Without a “POF Letter” they are naturally uncertain of your ability to fulfill the contract, and therefore are likely to ask for unfavorable terms to protect them more.
– If needing a Mortgage Loan, I can set you up with a great Mortgage Lender who we can trust to do a good job during your transaction and not leave you in a bind on acquiring the funds to fulfill your offer. A good Lender is important!
The Mortgage Lender will discuss types of loans available to you, based on your qualifications and home-purchase needs, including how much money is needed as a down payment, if any.
- Money For Inspection, Option-Period, and Appraisal –
It’s wise for Cash-Buyers to get your dream-home inspected to see what (if anything) needs to be addressed before purchasing the home; the same goes for all Buyers who are financing through a Mortgage Loan, and most loans require a home inspection be performed, as well as an appraisal.
– $400+, and depends on the type of inspection(s) you want done. This is done during your “Option-Period” (see next)
– $100+ is the typical cost for an Option-Period cost, which allows you a “Period” of time (6-10 days typically) to get your inspection(s) done and decide if you still want the home, while allowing you the “Option” to walk away without penalty. This money goes toward the purchase of the home later, unless indicated in the contract not-to. Competitive Buyers often submit higher Option-Money as just one way to win the Seller’s attention. The Option-Money goes directly to the Sellers as a payment for giving you this “Option” to buy or not-buy their home while taking it off the market to all other home-buyers so you can make your decisions. If you decide not to purchase the home within the Option-Period, the Seller(s) keep the Option-Money.
– $400+ is the typical cost for an appraisal which tells the Mortgage Lender a non-biased, professional evaluation of what the home is worth so they can determine if the price you have agreed-on with the Sellers is worth the money they are lending you. Cash-Buyers don’t have to do an appraisal if they don’t want to, however, it’s a common practice to do so to ensure the home is worth what you are paying, or acceptable to you.
- Earnest Money –
1% of the sales price+ – This is money used for showing the Sellers that you are not-only qualified to purchase their home, but you promise to do-so with this colateral money. This money goes to the Title Company (from you) once you get a home “under contract” (whereas you and Sellers have agreed on a sales price).
After the Option-Period, if you fail to purchase the home for personal reasons (not Lender-required reasons) then you can expect to lose your Earnest-Money. This is rare because you have the “Option-Period” to change your mind for any reason.
This Earnest Money goes toward your down-payment of the home at closing.
- Down-Payment –
If you are financing the home through a Mortgage Lender, most loan-programs require a down-payment of 3.5% or higher, depending on your qualifications. This will be discussed with the Mortgage Lender before doing anything else. As an example, a 3.5% down-payment is $3,500 for every $100,000 borrowed, therefore a $300,000 home using a 3.5% down-payment loan would require $10,500 down. Cash-Buyers naturally don’t have a down-payment, as they pay in-full.
- Closing Costs –
Closing Costs are due at the closing, and are often rolled into the sales price/loan if agreed on by the Sellers. This is so the Buyer doesn’t have to pull out as much money. These costs are typically costs associated with obtaining the Mortgage Loan and “Pre-Paids” such as Property Taxes because Lenders require taxes to be rolled into the Loan to ensure they get paid. Your Mortgage Lender will go over this information with you at the very begining so you understand your options.
Cash-Buyers have small closing costs because there isn’t a loan involved, however, cash-buyers have to pay their taxes on their own, not according to a monthly mortgage note.
Because your initial expenses to shop for a home (and get it under contract) are about $500, this is what it takes to retain my Buyer-Representation services, and the money will go directly back to you at closing, or as-needed based on which option you choose below to get started:
- OPTION 1: Receive an electric-bike “Pedal-Party” in your new neighborhood for you and up to five of your friends after closing! This is an extremely fun experience that makes your “house-warming” party an event your friends will rave about. Electric Bikes are delivered to your new home, or your location of choice in Austin, and you’ll have them for a four-hour fun fest!
- OPTION 2: Go house-hunting on an electric bike! This is fun! Due to policy, this is restricted to availability and a set number of uses, determined upon request and hiring me.
- OPTION 3: Mileage Reimbursement + a FREE Electric-Bike Rental. – Most Buyers prefer to be in the comfort of their own vehicle when house-hunting, so I offer a mileage-reimbursement program upon closing and funding of your new home! Anytime I ride with you, we track the amount of miles I ride with you, and I reimburse 40 cents per mile. This is a great option for people who don’t care to ride bikes much, but still want to support my Green business without costing any money. Plus, you’ll still receive a “FREE Electric-Bike Rental For Two” after closing and funding on your new home. This is the best-of-both-worlds!
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