Terry's Homes in Sonoma County
Knowing what you want out of a home is not always an easy process. In fact, it can be incredibly overwhelming. It is my hope that in this page, I can give you some helpful hints on home buying, choosing a home that's right for you, and what to look for.

If you have any specific questions, feel free to email me and I can try to address them here (or perhaps in my blog).....

How and why to get pre-approved in a mortgage

Your first step in making an offer on your new home is to obtain a "pre-approval letter" from your mortgage lender. The reason for this is to give you an idea before starting to shop for that perfect home what price range you will qualify for so you can limit your search realistically. Additionally this will prepare you so that you can quickly and easily make an offer, if you do happen to see the perfect place on your first outing! If you don't have a lender to work with right now, I will be happy to give you some suggestions of banks and brokers to contact.

Do not confuse a pre-approval letter with a prequalification letter. A pre-approval letter from a lender is much more significant than a prequalification letter. Let me explain....

Prequalification is quick and easy, and many lenders provide this service at no cost to you. However, a prequalification letter is a nonbinding offer by the lender to provide you a loan for a certain amount of money. The problem, and what is lacking with a prequalification letter, is that the lender hasn’t verified your financial information. And this is what is so important! They are only indicating that if everything you stated can be verified and your credit rating is solid, they will provide you with this loan. But this does not guarantee anything! And this does not guarantee that your loan will go through.

Pre-approval, what you actually want, involves your lender actually verifying the financial information you provide. The lender will contact anyone they need to receive verification of your income, assets, debts, and credit history. After they verify your information, they issue you a letter stating that you are approved for a certain home price, and what your down-payment and mortgage payments will be. (Some lenders charge a small fee to provide a pre-approval letter to cover the credit check; however, this fee is generally refunded to you at closing.)

Here are 2 good reasons for obtaining a pre-approval letter prior to entering into any negotiations:

  1. Your mortgage company has done a thorough review of your financial information and has provided you with the letter stating that they will give you a loan for a certain amount of money. It’s obligating itself to provide you with this loan. A potential buyer who already has a pre-approval letter from a lender stands a much better chance of having his purchase offer accepted than someone who is making their offer contingent upon obtaining financing.
  2. The pre-approval letter provides you with confirmation of how much money (loan plus your down payment) you have available to spend on your new home.

Pre-approved borrowers are very attractive to potential sellers. Sellers don’t need to worry that if they accept your offer, you could be turned down for a loan. Also, you may be able to close more quickly than another competing buyer, because you have already completed the time-consuming process of being approved for your mortgage. This puts you a step ahead of most other buyers. Which could be the step ahead that makes the difference in you getting your dream home!

Contact me if you're interested in getting a pre-approval letter and I can help you collect the information you need and get this started today!

After your offer is accepted... what happens next?

Or in other words.... "The value of home inspection!"

After you have found the perfect house, submitted an offer with your pre-approval letter, your verification of funds, and perhaps your offer is even accepted as is (very unusual - more likely you received a counter offer which you either accepted or countered)... after all the dust has settled from negotiations, your "clock is now running" for the inspection time and loan approval time. This is before you have to remove your contingencies. Most of the work by you has already been done, due to getting your pre-approval process going, but inspections are now something you must think about, and soon! And you may not realize it, but inspections are something you should definitely consider!

Depending on whether this is a regular sale, short sale or bank REO forclosure, you should discuss with your agent and read all the disclosures given to you which recommend and advise you about inspections. Regular sales and short sales mandate that the owners have to give you written disclosures and explanations of the condition of the home. Regular sales usually have the owners pay for a pest inspection.

At the very least, you need to get a pest report done to determine the amount of termite, dry rot and other issues that the weather and moisture have done to damage the home, and what any costs are in repairs. Many of these damages are not visible to you but may affect the integrity and structure of the home.

Pest inspections are usually limited to only these issues, and so you should also highly consider a regular "home inspection." This involves having an inspector do a complete report of the roof, appliances, electrical system, furnace, and everything functioning and part of the home. If it is country property, or has other unique features, you will also want to consider specialized inspections such as for fireplaces, septic tanks, wells, pools, spas, air conditioning, etc.  

While the cost of inspections may seem expensive at this time, in the long run, it is always beneficial. Besides, if you find out something is a problem early on, then you are still able to negotiate cash back for repairs, lowering the price or other options, which may make the inspection well worth the money and effort. You do not want to find out later after the house is in your hands, that something is wrong! This can be very costly, and you cannot go back to the seller to complain. It's so important to find these things out early!

Also it is important to think about purchasing a homeowner's policy to cover the cost of repairs for appliances, the furnace, water heater and air conditioner, at least for the first year, so you don't have to worry about replacing anything immediately.  Most traditional sales have the seller paying at least part of this policy.

Thinking about these things early on and protecting yourself can save time, money and loads of stress. It may seem an inconvenience to do these extra steps, but it's well worth your time and energy, and you will be happy you did. I can assure you this!