Buying Your Home

We’re about to make your Ulster County home-buying dream easier! To make this amazing experience everything it’s meant to be, you’ll want to ensure you’re finances are in order.

First, know your credit score. There are three major credit reporting companies – Equifax, Experian and TransUnion. Each company maintains a separate report.

The down payment is the largest sum of money you’ll need when buying a house. This amount can vary from 3% of the purchase price (some lenders even offer 1%-down loans) to the ideal 20%. With a down payment of 20% or more, private mortgage insurance (PMI) will not be charged. PMI is a fee that safeguards the lender in the event that you default on the loan.

Lenders want to ensure that you have some money remaining in your account after paying the down payment and covering the closing costs. This doesn’t necessarily have to be a large sum, but it is beneficial to demonstrate that you have some financial cushion throughout the home-buying process and once you move into the house.

When you’re looking to purchase a home, it’s important to do your research, but you’ll also need the help of an expert. A buyer’s agent can assist you in navigating the home-buying process. They can even help you find a great house before it is made available on the market, giving you a competitive edge. This is a smart way to shop for a home. Moreover, when it’s time to make an offer, your agent will negotiate on your behalf so that you don’t end up paying more than necessary.

Ulster county buyer's guide

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Your overall debt should not exceed 40% of your income, and your housing debt should not exceed 32%. What 32% of your income will buy depends on where you want to live. In rural areas or fixer-uppers, for example, it can buy a very comfortable residence and ample acreage. However, it may not even buy everything on your wish list in highly sought-after urban areas.

Ulster County Buyer’s Guide

Having your finances in order and a robust home-buying team can go a long way toward ensuring you’re well-positioned to make a winning offer. This checklist walks you through how to prepare to buy a house, with ten steps you can work on right now to get off to a running start.

Review your credit scores
Your credit scores play a vital role in whether a loan officer will approve you for a mortgage. They also affect the interest rate lenders will offer for the specific type of loan you want.

Many banks and other financial companies offer free credit scores to customers based on data in their credit reports. You can get free copies of your reports from the three major credit reporting agencies at CreditKarma.com.

If your scores need a boost, make all your monthly payments on time, utilize no more than 30% of your available credit, and don’t apply for new credit you don’t need. Asking the credit agencies to correct any errors in your reports could also raise your scores.
Choose a mortgage loan officer
When you’re thinking about buying a home, it’s never too early to talk to a loan officer. In your initial conversation, you don’t have to share your financial situation, authorize a credit check, or even be ready to be pre-qualified or pre-approved for financing.

A loan officer can:

Educate you about the loan application and approval process.

Explain the down payment requirements for different loan programs.

Update you on interest rate trends and how your payment may be affected.

Help you figure out how much you can spend on buying a home.

Give estimates of your closing costs.

If you’re buying for the first time or haven’t owned a home for several years, ask your loan officer about special loan programs for first-time buyers in your area.
Review your debt and income with your loan officer
Having a lot of debt shouldn’t prevent you from buying a home if you have enough income to make your payments. If your income is stretched, paying off some debt could help you get approved for the loan you want.

Starting a new job, receiving irregular paychecks, or quitting your job to launch your own business can make it harder for lenders to understand, track, and verify your income. Keeping your income sources consistent before you purchase a home can make getting approved easier.
Get prequalified for a loan
A loan prequalification, or ‘prequal,’ is a step towards understanding how much home you might be able to afford. In most states, a prequal is based on your submission of stated income and assets, estimated down payment, desired loan amount, and possibly a credit check. A prequal isn’t a promise from the lender to give you a loan for a specific amount at a specific rate. Rather, it’s a first look or rough estimate of the loan amount and rate you may qualify for based on your stated financial information.
Set your price range
That amount — your home price range — is based on three factors:

The dollar amount of your down payment

The loan amount you’re prequalified for

The monthly payment you feel you can afford

You can shop for a house at the top of your price range. Or you can shop for a more affordable home to keep your payment lower if that’s more comfortable for you. Note that your price range may need to be re-evaluated after you’ve consulted with a buyers agent.
Set aside savings for closing costs and moving expenses
In addition to your down payment, you’ll need to save or set aside separate funds to pay closing costs when you purchase a home. These costs may include a home inspection, appraisal, title search, and insurance, loan origination fees, and escrow or attorney’s fees. You may also need funds to:

prepay a portion of your property taxes and homeowner insurance premium

make repairs to your new home

arrange for utility services

move household goods and belongings from your current residence to your new home

Closing costs typically range from 2 to 5% of the home’s purchase price.
Get pre-approved for a loan
Planning to buy a home within the next 90 days? It’s time to step up from a pre-qualification to a pre-approval. A loan pre-approval generally means your lender has verified your stated income and assets with documentation. The typical ask is two recent W-2s, two recent pay stubs, and two months’ recent bank statements. A loan officer may ask self-employed borrowers to release their income tax returns.

With pre-approval, your lender should give you a letter that states how much you’re covered to borrow. Most sellers want the letter before they start showing properties to ensure the borrowers are qualified. And most seller’s agents won’t accept an offer unless a pre-approval or pre-qualification letter is attached.

Once you have been pre-approved and completed the other action items, you’ll be off to a strong start in purchasing a home you’ll love for a lifetime.

There are multiple types of mortgage loans like conventional loans, Federal Housing Administration loans (FHA), veteran loans, fixed-rate loans, adjustable-rate loans, and more. Analyze your financial situation, talk to
your lender, and find the loan that will satisfy your needs.
The House Hunt
Now comes the fun part! It’s time to start searching for your dream home. In this stage, working with a buyer’s agent is vital. I’ll help you find properties in your area, decide how much to offer, submit the offer letter on your behalf, negotiate with a seller, and make sure that everything is in order during the closing stage. New listings come on the market daily, and having a buyer’s agent ensures you are the first to know.
Offers & Negotiations
When looking to purchase a home, it’s important to decide on an appropriate offer for the property. This is where a buyer’s agent comes in handy. To show that a buyer is making a serious offer, they make an upfront deposit called earnest money, also known as a “good faith deposit”. By doing so, the buyer is demonstrating their intention to purchase the property if their conditions are met.

Once a purchase agreement is entered into by both buyer and seller, the seller takes the home off the market while the transaction is processed to closing. The earnest money deposit ensures that the buyer stays committed to the home purchase, while also providing the seller with the confidence and assurance to stop accepting new offers.

It’s important to note that earnest money is not the same as the down payment. This deposit is typically cashed and held in a neutral third-party account, such as the title company’s trust account or the broker’s escrow company account, until the purchase agreement is either completed or terminated. Your earnest money deposit will stay in the escrow account until you officially close on the home. Assuming that the deal goes smoothly, the deposit is then applied to your down payment or closing costs. Essentially, you’re just putting up some of the money upfront.
Appraisals & Negotitaions
After you and the seller come to an agreement on an offer, it’s important to proceed with the appraisal and inspection. It is highly recommended to hire a professional to inspect the condition of your potential new home. If the inspection reveals any issues, you have the option to either get your deposit back or negotiate with the seller. This is the perfect time for a buyer’s agent to work their skills in building your case for a price drop. It is also essential to obtain an appraisal before purchasing a home with a loan. A home appraisal is a process that determines the current value of the property you intend to buy.
Closing
As you approach the final stage of buying your home, you should be prepared to handle some expenses such as closing costs. These closing costs may include attorney fees, pest inspection fees, appraisal fees, title insurance expenses, and discount points. To ensure that the closing process goes smoothly, bring your ID along with your closing disclosure, cashier’s check, or proof of a wire transfer for your down payment and closing costs to the closing meeting. A neutral third party will lead the process. As soon as you sign all of the necessary paperwork, you will officially become a homeowner!

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Ulster County Buyer’s Guide

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