Buyers Home Purchasing Guide

Buyer's RESOURCE GUIDE

A GUIDE TO PREPAR YOU FOR YOUR HOME PURCHASE

HOME BUYING PROCESS

Steps for Home Buyers

Pre-Approval 1.

- Speak with a lender - Address any credit issues - Determine the right mortgage

Home Shopping 2.

- Discuss your criteria with a buyer’s agent - Tour listings in your price range - Adjust criteria if necessary

Offer & Negotiation 3.

- Research comps with agent - Submit offer to seller - Negotiate and sign a contract

Due Diligence 4.

- Home inspection - Appraisal - Survey

- Negotiate repairs - Begin title exam - Finish loan process

Pre-Closing & Title 5.

- Confirm repairs are complete - Pre-Closing walk-through - Send funds to title company

Closing 6.

- Review closing statement - Sign closing documents - Receive keys

BENEFITS OF HOME OWNERSHIP Join a Community- When you move into your new home, you become part of a new community. Get to know your neighbors, and build a lasting network.

Invest in an Appreciating Asset- real estate has the tendency to appreciate over time on average 3%-5% each year.

Escape the Volatile Rental Market- It costs more to rent than own in almost every city and state. Avoid skyrocketing rents and benefit from the stability of monthly mortgage payments instead and gain the tax benefits.

MORTGAGE PROCESS Steps for Home Buyers

1

Do Your Research - Pull your credit report so you can see your credit score.

- Look into credit repair programs if needed.

- Research homebuying assistance programs in your local area.

2

Get Pre-Approved - Provide your financial documentation to a lender.

- Receive your pre-approval letter confirming the amount you can borrow.

3

Find Your New Home - Work with a real estate agent to make your search more efficient.

- When you’re ready to make an offer, make sure the seller knows you’re pre-approved. This will make your offer more appealing because the seller will know you can get the financing to close.

4

Notify Your Lender to Begin the Underwriting Process - Respond promptly to all requests for additional information and documentation from your lender.

- Don’t change jobs, apply for a new loan (not even a credit card), or make any major financial moves until after you close on your new home.

5

Clear to Close!

- Once the underwriting is complete, your lender will give you the “clear to close.”

- Ask for a copy of your loan docs before your signing appointment so you can take your time reviewing them.

- Sign your docs in front of a licensed notary.

- Wire your closing costs as instructed.

- Sign the closing docs for your new home and collect your keys on closing day!

MORTGAGE LOAN TYPES 1. Conventional Loan a. As little as 3% down b. Requires good credit (at least a score of 620 for most lenders) c. Can be used for primary residences, second homes, and investment properties

2. FHA Loan a. As little as 3.5% down b. Typically requires fair credit (at least a 580) c. Can only be used for a primary residence (but you can use it for a multifamily property of up to 4 units as long as you live in 1 of them)

3. VA Loan a. Available only to qualified military service members, veterans, and spouses b. 0% programs available c. Typically requires fair to good credit d. Can only be used for a primary residence (but you can use it for a multifamily property of up to 4 units as long as you live in 1 of them) e. No PMI required

4. USDA Loan a. Available only for properties in qualified geographic areas outside of major cities b. 0% programs available c. Typically requires fair to good credit d. Can only be used for a primary residence (no multi-family or investment property options)

ADDITIONAL MORTGAGE LOAN OPTIONS In addition to those primary loan types, there are also ways to customize mortgage loans to best fit your situation. Some of the loan types offer more customization options than others, but you should be aware of these options and how they affect your loan:

Different payment periods: 30-year mortgages are standard, but 15 and 20-year loans are also available. A shorter loan term comes with higher monthly payments but saves you money in the long term by reducing the amount you need to spend on interest.

Interest rates: “Fixed-rate” means your interest rate will stay the same through your entire loan term. “Adjustable-rate mortgages” (also called ARMs) allow your rate to fluctuate with the market. Fixed-rate mortgages are standard when interest rates are low. Adjustable rates offer lower introductory rates, but then rates could go up or down depending on market conditions.

Jumbo loans: Loans for larger amounts of money than the standard conventional loan will cover. These are only for people with exceptionally high incomes.

Balloon loans: Loans with a lower monthly payment, but a much larger payment due at the end of the loan. These work best for real estate investors who have a plan to raise enough money to cover that final payment.

LOAN DOCUMENTS Checklist PROOF OF ID FROM ONE OF THE FOLLOWING: Driver’s license

State ID card

Passport

Military ID card

PROOF OF INCOME FROM ONE OF THE FOLLOWING: 2 months of paystubs

2 years of W-2 forms

Year-to-date profit and loss statement (if self-employed) 2 YEARS OF INCOME TAX RETURNS (TYPICALLY FORM 1099)

2 MONTHS OF BANK STATEMENTS FOR ALL CHECKING AND SAVINGS ACCOUNTS

2 MONTHS OF STATEMENTS FOR ALL INVESTMENT ACCOUNTS, INCLUDING: Retirement accounts (401(k)s, IRAs, SEPs, etc)

CDs

Brokerage accounts (showing stocks, bonds, and fund investments) IF YOU HAVE INCOME FROM A RENTAL PROPERTY: The most recent appraisal

Proof of receiving rental payments

Proof of property debt and expenses BALANCE STATEMENTS FOR ALL DEBTS INCLUDING: Student loans

Personal loans

Auto loans

Credit cards

Medical debt

DOCUMENTATION OF OTHER ONGOING EXPENSES, SUCH AS: Alimony

Child support

ACCUMULATED CASH VALUE FROM LIFE INSURANCE, IF APPLICABLE

DOWN PAYMENT GIFT LETTERS, IF APPLICABLE

www.GrayGroupRealEstate.com

ALIMONY AND CHILD SUPPORT, IF APPLICABLE

PRE-APPROVAL

Checklist

01 IDENTIFICATION Have a government-issued photo identification ready

02 INCOME & ASSETS Last two years of federal tax returns ready to present to the mortgage lenders Last two years of corporate tax returns if applicable Last two years of W-2 or 1099 statements Paystubs from the previous 30 days Name and address of all employers for the last two years

Prepare an asset statement, providing the lender with information about your current assets including bank accounts, retirement accounts, and investment portfolios Information for any existing mortgages Home insurance policy information Divorce or separation agreement, including alimony or child support payment terms in which you receive income

If you're a business owner, you will need to provide profit and loss statements Alimony or child support income documentation

03 LIABILITIES List of all current loans: name, address, account numbers, balances, and monthly payments

If you currently own a property, have your property tax statements available

The lender will want to look at your credit score. Be prepared to explain any late payments, recent credit inquiries, collections, or judgments

Bankruptcy papers, if filed within the past seven years

HOME INSPECTION

Checklist

HOME INSPECTION OPTIONS Home Inspection Pest Inspection-Dry rot, termites, wood beetles Roof Inspection Sewer or Septic Inspection HVAC Inspection Tree Inspection Pool / Spa Inspection Chimney Inspection Home Insurance: falls under inspection Contingency Other: ___________________________

We have an accepted offer, now it is time to plan for inspections! Be sure to calendar all contingency removal dates on your calendar.

We will assist you in scheduling the appointments to fit all parties availability and you will be billed directly from the companies. All inspections must be paid for before the release of any reports.

The options provided here are suggestions only.

Other: ___________________________ Other: ___________________________

Your contingencies are tied to your EMD. We don’t release these contingencies unless we are absolutely sure it is time to do so. Your lender will advise us on the appraisal and loan contingency as things progress. If we decide to negotiate over any findings we will do a request for repair and once all items are agreed upon we can release that contingency.

CONTINGENCY REMOVAL DATES Date of contract acceptance: ___________________ ___ Days: Date of Inspection Contingency: ___________________ ___ Days: Date of Appraisal Contingency: ___________________ ___ Days: Date of Loan Contingency: ___________________

Notes: ______________________ ______________________ ______________________ ______________________ ______________________ ______________________

HOME INSPECTION

01 PROPERTY EXTERIOR Exterior walls appear straight with no sagging Windows and door frames appear square The siding appears in good condition Bricks appear in good condition

Checklist 03 BATHROOMS The visible plumbing under the sink is in good condition and shows no signs of water damage There is adequate water pressure for hot and cold water at all fixtures

The paint is not flaking or stained

The tub, shower, and sinks drain smoothly

Roof shingles are not missing or damaged

The toilet flushes and fills properly

Gutters are in good repair and drain properly

The toilet is stable, with no rocking or stains at the base

The chimney appears straight and undamaged

The toilet is stable, with no rocking or stains at the base

The ground slopes away from the house with no standing water The ground slopes away from the house with no standing water All outdoor structures (garage, shed, fence, deck, etc.) appear in good condition with no rotted wood or evidence of termites The septic tank doesn’t show any leaks

02 ELECTRICAL SYSTEMS

04 KITCHEN The visible plumbing under the sink is in good condition and shows no signs of water damage The exhaust fan works properly The garbage disposal is operational

There are no exposed electrical splices

The sink taps have adequate water pressure

The wiring is in good condition

The sink drains properly

The service panel has normal capacity Cables are secured and protected

Appliances that will stay with the house operate properly

HOME INSPECTION

05 INTERIOR ROOMS Floors, walls, and ceilings appear straight and level without visible stains, cracking, or damage Doors open easily and latch properly when closed Lights and switches operate properly There are an adequate number of electrical outlets in each room

Checklist

07 PLUMBING Visible pipes have no damage or evidence of leaks The water heater shows no signs of rust Water pressure falls within an acceptable range

08 BASEMENT There is no evidence of moisture

Heating and air conditioning vents are present in all rooms

There is no evidence of water damage to the floor above

The fireplace appears in good condition

The sump pump operates properly

Smoke detectors and carbon monoxide detectors are working and located properly Stairways appear solid

09 ATTIC There is no evidence of staining from the roof The structure shows no damage or decay

06 HEATING AND COOLING SYSTEMS

There is adequate ventilation throughout Insulation is sufficient and installed properly

Heating And Cooling Systems Air conditioning and heating operate well Air filters are clean Flues have no open seams The cooling unit has no visible rust

Electrical splices are contained

STEP 1

DETERMINE HOW MUCH YOU CAN AFFORD: Lenders typically recommend homes with a cost no more than three to five times your annual household income, with a 20% down payment and moderate amount of other debt.

GET PREQUALIFIED AND PREAPPROVED: Initially you'll provide some financial information to your lender - such as your income and amount of savings.

For preapproval, your lender will need W-2 statements, paystubs, bank account statements and to run a credit check.

PREVIEW HOMES & WRITE OFFER After touring homes in your price range, I'll assist you in writing an offer on the right home. We'll present a fair offer based on the value of comparable homes in the area. We may need to negotiate this offer with the sellers until accepted.

STEP 2

APPRAISAL

TITLE SEARCH Title is the right to own, possess, use, control and dispose of property. When purchasing a home, you are actually buying the seller's title to the home.

Before the closing, a title search will be conducted by your title company for any problems that might prevent you from a clear title to the home.

You will also want to determine how you wish to hold title to the property especially if you're buying with a spouse, a partner, family member, or colleague.

An appraisal is an estimate of the value of a property done by the bank through an appraiser. Although the primary goal is to justify the lender's investment, the appraisal can also protect you from overpaying.

Your lender will hire the appraiser and charge you a fee for the service at the closing. This should be done in the first week.

HOME WARRANTY A home warranty can be purchased to cover repairs and replacements on systems and appliances in your home, usually for a period of a year.

This is different than home insurance which would not cover the replacement of appliances. This may include coverage of your home's electrical, plumbing, heating, and air conditioning systems as well as other home appliances.

STEP 3

HOME & OTHER INSPECTIONS

REQUEST FOR REPAIR AGREEMENT

CONTINGENCY REMOVALS

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STEP 4

HOME INSURANCE Lenders also require proof of insurance on a home before issuing a mortgage. Payments toward a homeowners insurance policy are usually included in the monthly payments of the mortgage.

FINAL COMMITMENT LETTER OR CLEAR TO CLOSE (CTC) After the lender approves your loan, meaning it is fully underwritten, you will get a commitment letter that stipulates the loan term and terms to the mortgage agreement. This final commitment letter will include the annual percentage rate and the monthly costs to repay the loan. It will also include any loan conditions prior to closing.

FINAL AMOUNT FOR CLOSING You won't know your final exact cost for closing until the last couple of days, however you will be given estimates at the beginning of the escrow. You'll find the summary of costs on the final statement you receive at your signing. You will then wire your funds for closing to the title company.

STEP 5

A FEW THINGS TO BRING AND NOTE FOR CLOSING Bring a valid government issued photo ID You will be given the wiring instructions for your down

Closing THE CLOSING PROCESS FINALIZES THE PURCHASE OF YOUR HOME AND MAKES EVERYTHING OFFICIAL. ALSO KNOWN AS SETTLEMENT, THE CLOSING IS WHEN YOU RECEIVE THE DEED TO YOUR HOME. PRIOR TO CLOSING, YOU SHOULD CHANGE ALL UTILITIES INTO YOUR NAME, AND BEFOREHAND COMPLETE A FINAL WALK THROUGH TO CHECK FOR ANY OUTSTANDING ITEMS.

payment It is a good idea to bring a second photo ID Plan on approx 1 hour to sign all documents

WHAT TO EXPECT By now he escrow officer has looked over the purchase contract to: identify what payments are owed and by whom, prepare documents for the closing, make sure taxes are prorated and hired the notary to conduct the signing. Your title search has also been done, real estate commissions and other closing costs are earmarked for payment. Your escrow officers will ensure that the buyer's title is recorded with the county and ensure the seller receives any money due.

YOUR COST Some of the most common fees include: Escrow fees Recording and notary fees, if applicable Title search and title insurance Origination, application and underwriting fees from lender Appraisal fees Local transfer taxes Homeowners Insurance Home Owners Association fees, if applicable

AFTER CLOSING Make sure to keep copies of all closing documents for tax purposes as well as a copy of your home warranty and all reports and inspections handy should you need them.

: r o f tips

MORTGAGE FINANCING Always check with your lender before doing any of the following prior to closing on your home:

Making a big purchase: Avoid making major purchases, like buying a new car or furniture, until after you close on the home. Big purchases can change your debt-to-income ratio that the lender used to approve your home loan and could throw the approval into jeopardy.

Opening new credit: Do not open any new credit cards or get a loan without speaking to your lender first.

Missing any payments: Pay your bills on time to keep your credit score from dropping.

Cashing out: Avoid any transfers of large sums of money between your bank accounts or making any undocumented deposits - both of which could send "red flags" to your lender.

Changing job: Be kind to your boss and keep your job. Don't begin looking for new work right now, unless it's a second job to make extra money.

Real Estate Dana@graygrouprealestate.com

Terminology Common Terms

Dana Gray

Dana@graygrouprealestate.com (916)247-2349

THE DECISION TO BUY A HOME IS AN EXCITING ONE.

AS YOUR AGENT, I GO ABOVE AND BEYOND TO HELP consistently providing you with the expert guidance you deserve throughout the home buying process.

When it comes to buying or selling a home, you want the best team on your side. That's where the Gray Group comes in. This powerhouse trio is made up of Stacey Friedman, Dana Gray, and Mandy Scott, each bringing their unique skills together to help you.

Dana Gray, Team Lead & REALTOR Dana Gray is an accomplished Realtor with a decade of experience and multiple awards and certifications. Her fearless faith and dedication to providing exceptional service sets her apart from the competition. Dana enjoys hiking, gardening, lifting weights and spending time with her family.

She approaches each transaction with a commitment to building lasting relationships with her clients and helping them achieve their real estate goals.

Stacey Friedman, REALTOR Stacey Friedman is a marketing guru and experienced home renovator. As a former marketing exec she has the skills to market everything from rockets to real estate. But Stacey's not just a marketing whiz. When she’s not working, she's probably finishing a DIY project. Let's just say if HGTV ever needs a new host, they should give Stacey a call. A 34-year resident of Sacramento, Stacey is familiar with Sacramento's unique neighborhoods, suburbs, and foothill communities.

Mandy Scott, REALTOR Mandy Scott is the master of logistics and relocation. She could probably organize a cross country move while cooking dinner for her twin boys and planning her next book club meet up. Mandy is a former management consultant with McKinsey & Co and has lived in four time zones. She knows how to get things done and has the expertise to make any relocation or move a breeze. Not only is Mandy efficient, she's a strong negotiator and goes to bat for her clients 100%.

The Gray Group Real Estate consistently receives five star reviews from our clients for our professionalism, work ethic, expertise, and real estate market knowledge. We take pride in exceeding our clients’ expectations and satisfying their real estate needs.

JUSTIN HIGLEY, BUYER Dana made the experience of buying a house absolutely great. She came highly recommended and didn’t disappoint. Dana was there 24/7 whenever I had questions or needed to talk about different houses. She handled everything so that I just showed up and everything was ready for me. Dana will not push you to buy anything, she really wants you to have the best house. Dana cares about her clients and works extremely hard to get the best deal. I was a first time home buyer and had no idea the amount of things that went into buying a house. Dana made the process very easy and enjoyable. I would recommend her to all my friends and family. I will have Dana represent me for any future buying/selling of properties. Dana is the absolute best!

ANTHONY BENVENISTE, BUYER We moved to Sacramento from the Bay Area during the pandemic. Naturally my wife and I were nervous about the relocation to a new area. Thankfully, we had a great experience working with Stacey Friedman while searching for our forever home.

Stacey was professional, knowledgeable, and very hard working during our search. There were no surprises and she resolved and navigated the all the little and big concerns to both our and the sellers satisfaction. It was truly the best real estate transaction we have accomplished. I would recommend Stacey to anyone looking to buy or sell a home in the greater Sacramento area, her friendly demeanor and professionalism is what I valued most about working with Stacey.

ALSTYN BENNETT, BUYER Dana helped me find a house earlier this year. I immediately felt comfortable with her. She was knowledgeable, picked up on my wants and needs quickly, was responsive to any questions or concerns, made great suggestions, and helped me feel confident in my first home purchase. She made looking for homes fun, easy, and seamless. Her knowledge of the Sacramento area, including down to neighborhoods and even streets, is unparalleled. Not being from the area, it was a huge plus for me. I genuinely enjoyed spending time with her and knew she wouldn't lead me astray. I recommend her to anyone searching for a home, and can't wait to work with her again in the future.

MARK YOUNG, BUYER & SELLER Stacey was all around Wonderful! We were looking for a rental income property in the Sacramento area ; I am not familiar with Sacramento as I do not live in the immediate area. Stacey was invaluable in navigating the different areas of the city as well as being very knowledgeable about the demographics of the areas. She listened to what I was telling her and she worked hard to show me properties that met our criteria and made the sales transition smooth! Stacey is not only an accomplished agent; she is also warm, charming and an absolute delight to work with!!!

CHELSEA, BUYER I can't say enough great things about working with Mandy at RE/MAX. She is simply amazing! Attentive, knowledgable, superb communication. She works fast and hard but is detail-oriented and thorough. Nothing slipped by her! When we worked with Mandy we really felt like her priority and she helped us secure the home of our dreams in this crazy market. I would recommend Mandy to anyone looking for a realtor!

JND SAWTELLE, BUYER

Mandy Scott worked hard for us from day one. She provided us with professional service and was a tenacious advocate throughout the whole process. We highly recommend her!

Client advantages We look forward to building a long lasting relationship with our clients!

Invites to client social events throughout the year Advice on upgrades that will enhance your property's resale value Offer up-to- date information and statistics on local the real estate market Recommend places to eat and fun things to do Assist with moving and relocation services Refer our trusted home service providers, such as contractors, landscapers, house cleaners, and more Communicate and support long after the sale Advice and market analysis on future real estate transactions

First and foremost, The Gray Group is honored to receive accolades from our clients who work with us daily and appreciate our commitment. We also take great pride in our achievements, our numerous industry awards, professional recognition that demonstrate we are always striving to improve for our clients.

LIFETIME MEMBER

we're here to help with all your real estate needs!

Dana Gray Team Lead/REALTOR 916-247-2349 Stacey Friedman REALTOR 916-425-3113 Mandy Scott REALTOR 801-808-8737 Roxanne Springman Transaction Coordinator

Farin Pacheco Administrative Assistant

Notes