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    Email: bruce@aspenmtg.com

    Celebrating 25 years

    Serving the State of Utah

    New Conforming Loan limit for 2019 - $484,350

  • The Home Buying Process – Step by Step

  • Welcome to our Step By Step Guide to Home Buying. This Guide explains 12 steps of the Home Buying process, making life easier and saving you time & money.

  • Identifying Your Home Needs

    To help you narrow your search, separate everything into 3 categories:

    1. Must Have - The features that must be present in the house that you are about to buy (e.g. multiple bedrooms if you have children)
    2. Want to Have - The features that you would want to have in the house but are not absolutely necessary. 
    3. Would Like to Have - Optional features which may be an added bonus in the house, but you can do without. 

    Things to consider:

    • How far is your commute?
    • Can you access Public Transportation there?
    • Is there convenient access to Water, Electricity, Internet, Garbage pick-up, & Sewage?
    • How far are the Hospital, Police Department, & Fire Department?
    • Is it in a good neighborhood?
    • Are there enough families of a similar age?
    • What is the property tax rate?
    • Will your home likely hold its value?
    • How far are shopping centers & restaurants?
    • Are there recreational faciliies or a library near by?
    • Is it near the schools or churches you attend?
    • What other cities do you frequently visit?
    • Is is secluded?
    • Does traffic noise reach your home?
    • Is there a nearby source of dust, smoke, or other pollution?

    Home Requirements

    • Price Range: Identify an approximate price range
    • Type of Unit: Single Family, Multi-family, Condominium etc
    • House Type: Colonial, Split, Ranch, Contemporary
    • Size: Square footage of Lot, Living-space
    • House Age: Brand New Construction, Old house, etc
    • House Condition: Fixer-Upper, or Low-Maintenance
    • Total Number of Rooms: Bed, Bath, Other
    • Size of rooms: Especially living room and kitchen
    • Basement: Size, Finished/Unfinished
    • Attic: Finished/Unfinished
    • Storage: Master bedroom closet, Linen closet, others
    • Yards: Front & Back, Size, Wooded, Landscaped etc
    • Garage: Number cars, Attached/Detached
    • Appliances: Refrigerator, Microwave, Dishwasher, Washer & Dryer, Central Vaccum etc
    • Other Amenities: Fireplace, Central air-conditioning, Hardwood floors, Wall-to wall carpeting, Mud room, Skylight(s) etc
    • Security features: Automatic garage door opener(s), Deadbolt locks, Security system
    • Special Needs: Wide hallways, High roof, etc
    • External Features: Deck, Porch, Patio, Sun-room
    • Number of Levels
  • Identify Location

    Location! Location! Location!

    Location is very important when buying a home. Take a map and identify all the towns, cities or counties where you may potentially want to live. Start broad, and narrow your search after looking at a sample of homes in each location. After visiting a few, you will have a good understanding of price range, types of real-estate available, town/city information, school systems, & other factors that matter to you.

    You may have to refer to your Requirement Analysis you did in the previous step. Sometimes you will need to fine-tune your requirements after visiting some homes, to reflect what you've learned.

  • Selecting a Real Estate Agent/Broker

    Selecting a Real Estate Agent/Broker

    There are many ways to view real estate properties. One of the most popular is to use a real-estate agent. You don't directly pay for their services as most agents are Seller's Agents, unless otherwise specified. Their commission is included in the calculations & settlement during closing. So, it's important that you choose an agent/broker that understands your needs, makes recommendations, and is willing to show you real-estate until you find the one that you want to buy.

    Signs of a Good Agent/Broker

    • Knowledge of Area: Your agent should be knowledgeable about the local area. Information about the town/city, local community, and various neighborhoods is invaluable.
    • Price Range: Choose an agent who specializes in houses inside your price range.
    • Business Details: Experience counts. Know how long they've been in the business, the size/reputation of the Broker's office, & if they are skilled at searching for homes for you to preview on the internet
    • Buyer's Agent: A newer concept that eliminated the conflict of interest by having the agent work directly for the buyer. Buyer's are responsible for compensating their Agent for his work.
    • Doesn't force you to use their 'favorite preferred lender'. It is to your best interest to shop around and find a mortgage lender you trust.
  • Searching Homes

    There are many-many homes out there, but only some meet your needs. The idea is to get the best possible home that fits.

    Approach with the following steps

    • Get Set...Go! Start by viewing a handful of homes in different price ranges just to get a feel for what is out there. Based upon this initial feedback you may decide to alter your requirements.
    • View Houses Online: You can see prices, descriptions, & photos of houses in the area you want before you visit them. You can save a lot of time by ruling out homes that don't fit your tastes. Search at Utahrealestate.com or Zillow.com.
    • Browse Online with your Agent: Agents have access to a variety of online resources to view homes, and they are more than happy to help you in your search.
    • Visit Homes: There's no substitute for physically visiting a home, but it does take time. So, only go to homes meeting your requirements.
    • Analyze each House: Match each house against your requirements. If you've solidified your requirements, you can maximize your searching efficiency.
  • Get Pre-Qualified for Your Mortgage

    You can get pre-qualified for a mortgage loan before selecting a house or before knowing the actual sale price. During this phase, you can approach one or more mortgage lending companies and ask them to pre-qualify you for a mortgage loan. The mortgage company pre-qualifies you based upon some of the same criteria that they would otherwise use during real mortgage qualification.

    Why should I Bother?

    • Similar to an underwriter's qualification: In many instances the mortgage company evaluates your pre-qualification application based upon the same criteria as the underwriter. The advantage is that once pre-approved, you have a very good chance of getting final approval when your loan is sent to the underwriter.
    • Issues Resolution: Some of the issues associated with mortgage qualification may get resolved during the pre-qualification phase.
    • Mortgage Loan Amount: You will get a fairly good idea about an approximate mortgage amount that you can qualify for and a monthly payment amount you are comfortable with and meets your budget.
    • Pursue Other Mortgage Companies: If a mortgage company does not pre-qualify you or rejects your application for some reason then you have enough time to pursue other mortgage companies.
    • Pre-Qualified buyer: An offer from a pre-qualified buyer generally carries more weight than a similar offer from a non pre-qualified buyer. In fact, in today's market, many sellers refuse to show their property to unqualified buyers. 
  • Which Mortgage Lender

    Most of the home-buyers take a mortgage from a Mortgage Lender. Some of the important criteria that you should consider while selecting a mortgage company are:

    • Number of years in Business: This will give you some sense of their experience and commitment in the business.
    • Compare Costs: Different mortgage companies offer different products, and it generally becomes difficult to compare costs. Don't pick a mortgage company solely on the basis that it has the lowest closing costs. Low closings costs often translate to a higher interest rate. Trying to save $100 up front and going with the wrong firm could result in costing you $100's at closing and $1,000's over the life of your loan. Stay clear of gimmicks such as free T.V.'s or a free appraisal.
    • Mortgage Rate: Compare rates of different Mortgage companies. Most of the lenders in a geographic area offer similar rates. A lower rate means a lower monthly payment if all the other parameters are the same. If a company quotes a rate that is .25% or more lower than the average mortgage company, steer clear. It is probably a come on. For most loans, lenders ultimately go to the same source for their money, including banks and credit unions.
    • Closing Cost: Get a breakdown of all the possible Closing Costs. The lender should be able to offer you a detailed breakdown of the potential costs.
    • Stay away from lenders who primarily use high cost marketing media like radio or TV. The cost of this type of marketing is usually passed on to their borrowers in the form of higher closing costs and interest rates.
    • Fees: Different lenders have different fee structures. Some lenders offer discounts for first time home-buyers and discounts for employees of some companies (from where they get bulk business).
    • Closing Date: Ask the lender:
      • If they would be able to close the loan when you want to
      • Which day of the month would they close the loan
      • Location of closing
    • Servicing: Ask how they would service the mortgage. The mortgage may be sold on the secondary market. 
    • Mortgage Agent's Experience: It is important that the agent you interact with is able to offer you professional service, is sensitive to your needs and is thorough with documentation.
  • Analyze Home you Visit

    Your search for the perfect home may take you to a number of houses, some of which will interest you more than others. It is therefore important to track the features of each of these homes in a format that you can use for objective comparison. The very first step in the Home Buying process, as we have described earlier, is identification of your requirements. Please refer to it if you have not already done so, as you will need your requirements during this step.

    Comparison Example

     

       House 1  House 2  House 3
    Must Have    
     Commute <30 min  20 Min  30 Min  
     Nice Neighborhood Y Y  
     Quiet  
     In Good Repari OK   
    <$300,000  $280,000  $300,000   
     Lot aize >.25 acre .25  .30   
     Square Footage 1,800  1,800   
     Type: Rambler  Contemp   
     Bedrooms >3  
    Bathroom > 1.5 1 2  
    Want to Have
    Deck/Porch/Patio Deck N  
    Large Master Bedroom N Y  
     Large Kitchen  
    Private Backyard Y Y  
    Would Like to Have
    Hospital close by N N  
    Finished Basement N N  
    Worth Pursuing Maybe Y  
    Date 1st Visit      
    Date 2nd Visit      
    Date 3rd Visit      
    Address      
    City      

    Notes

     

     

         
  • Making an Offer

    By this time, you feel you are ready to make an offer on the house you have chosen. You need to determine what the initial offer should be. There are some things that you should consider when determining the amount to offer:

    • Sale price of similar houses in the neighbourhood for the past year or so. This gives you a pretty good estimate of the current market value of similar properties. But, bear in mind that no two houses are alike, even if they look the same.
    • Inspection results. Go over the inspection checklist and weigh the good points against the bad. Also, estimate the cost of fixing the problems. The severity of the problem and the cost of fixing it, may impact your offer amount.
    • Mood of the market in general, and the neighborhood in particular. If it is a seller's market, the houses are moving fast and close to the asking price, and you really want the house, consider offering close to the market value of the house. This will ensure that you are a serious contender, even if the buyer gets multiple offers. On the contrary, if the market is slow, or the house has been on the market for a while, or the seller is eager to sell, you might want to leave more room for negotiations after your initial offer.

    When you are ready to make an offer, you should prepare a written offer or a statement, to be presented to the seller. Typically there are forms that can be filled out to make a formal offer. The intent of the offer forms (also referred to as binders, sometimes), is to make the offer a bit formal, without signing a purchase contract. The form should contain a statement to the effect that the offer is subject to signing of a mutually acceptable purchase contract, within a specified number of days, that has been agreed to and signed by the buyer and the seller and any other relevant party. This ensures that the offer is non-binding.

    An offer usually includes an offer price, closing date, financing information, contingencies and earnest money as a token of buyer's commitment to buy the property. Earnest money could vary from $500-$1000, although it is usually $1000. You may make your offer contingent on some outstanding issues being resolved, for instance, sellers paying closing costs, sellers fixing some/all of the problems that surfaced during inspection, getting ownership of the house by a certain date, specially if there are tenants occupying the house, etc. At the time of making an offer, it could be an added advantage if the seller is aware that you have been pre-qualified for your mortgage. This may be especially useful if the seller has multiple offers.

    If you are going through a real estate agent, he/she should be able to facilitate the process of writing up the offer and presenting it to the seller.

    An offer is generally not open-ended. It is valid for a certain duration of time and expires at a documented date and time (as set forth in the written offer). This usually protects all the parties involved. Once the offer has been presented to the sellers, they should get back to you within the specified time. Generally this phase may be associated with some negotiations between the buyers and the sellers. Eventually, the deal either gets negotiated or not.

    If the deal has been negotiated and all the parties agree to the terms and conditions, then proceed with the remaining home inspection (if that was a condition) and prepare for the Purchase & Sale agreement.

    If the deal could not be negotiated then you may either continue to look at more houses or consider making an offer on your next choice.

  • Purchase and Sale Agreement

    A Real Estate Purchase Contract (or a REPC), also known as "an offer to purchase" or "purchase agreement", is a legally binding contract that sets forth the terms and conditions of the purchase and sale of the agreed upon real estate property. The terms and conditions must be agreed to and signed by both the seller(s) and the buyer(s). Buyers and sellers generally get legal advise while working on and accepting this agreement.

    It is important to know that there is no such thing as a "standard purchase contract" in the US. A purchase contract is essentially an agreement between the buyer and seller to purchase an agreed upon property on agreed upon terms, whatever they may be. Realtors typically use a printed form as a contract, but be informed that if there are contents that you do not agree with, would like to see modified or slashed out all together, you can do so, as long as the seller agrees.

    This contract contains information such as: the present owner's name(s) and address, buyer's name(s) and address, address and description of the real estate that is being bought/sold, purchase price, transaction dates such as the closing date, home inspection finishing date, issues resolution date, also, what is and is not in the property, terms and conditions acceptable to all parties, contingencies, issues regarding escrow monies, closing costs, and much much more.

    You can download a copy of the Utah Real Estate Purchase Contract (REPC) here: REPC

    You can download a copy of the Utah Real Estate Purchase Contract Addendum here: Addendum

  • After You Have a Contract to Purchase Your Home

    After you and the seller have signed the Real Estate Purchase Contract, send a copy to the Lender you have chosen as soon as possible so they can start the loan process for the home. 

    At this time the lender will prepare preliminary disclosures including a 'Loan Estimate' and 'Intent to Proceed'. It is important that you review and sign these disclosures in a timely manner so the loan process isn't delayed. 

    They will also provide a list of any other documents you might need to provide or update. 

    The timeline to closing should take 2 1//2 weeks to 4 weeks. 

  • Closing

    Closing is the last step before the house is yours. Closing accomplishes title transfer from seller to buyer and appropriate financial transactions (i.e. transferring of monies and related accounting). Closing will usually take place at a local title company. The closing will be conducted by an escrow agent who represents the title company. The escrow agent is an independent party in the closing transaction. The seller chooses the title company that will handle the closing. After closing the escrow agent will send the loan package to the Funder who will review the paperwork and then wire the funds to the Title Company. When the TItle Company receives the funds from the lender they will record the new deeds and the home will legally by yours.

  • Move In and Enjoy Your New Home!