Buyer Guide

Your Guide to Home Ownership Everything you need to know about buying a home

Compliments of Maria Borea Puccella The "Lunachik" Realtor

WHAT'S INSIDE Your Home Wish List How Home Buying Works Loans Pre-Approval Credit Score Offer/Negotiation My Promise My App Glossary Get In Touch

VISUALIZE YOUR DREAM SCENARIO FOR BUYING YOUR HOME.

TO BEGIN

Who will be living in this home? Let’s list adults, children, and pets that will inhabit the space.

What are the non-negotiables for your home?

If you had to name your top five non-negotiables, what would they be?

Beyond your top five needs, what is something you want?

Do you have a preference for the year the house was built?

Do you want a house in move-in condition or are you willing to do some work on it?

Are there any specific features that would make your next house feel instantly like home?

Will you require accessibility options?

NEIGHBORHOOD What neighborhoods or areas would you enjoy living in?

Are there any specific streets or characteristics in these neighborhoods you're drawn to?

If applicable, what school districts do you prefer?

Where do you work?

Where are your favorite places to shop? What other conveniences would you like nearby?

What do you like to do for fun? Are there any recreational facilities that you enjoy?

Any other considerations I should be aware of as we find your ideal neighborhood?

EXTERIOR What type of home are you looking for (e.g. singlefamily, condo, townhouse, etc.)?

Approximately what square footage would adequately cover your living space?

How many stories do you prefer?

What lot size are you looking for?

What architectural styles are you drawn to?

What type of exterior siding appeals to you?

Do you want a porch, deck, or both?

What are you looking for in terms of a garage [e.g., attached, carport, etc.]?

What type of driveway or vehicle entrance and/or exit will you require?

Do you want a swimming pool or a hot tub?

Are you looking for any structures such as a greenhouse or shed?

Do you need special outdoor arrangements for pets? (e.g., a dog run, fenced-in yard, etc.)

What other exterior features are important to you?

Bathrooms How many bathrooms do you need?

What are your needs for each of the bathrooms?

What style do you envison?

Will any bathroom need to serve a specific purpose (powder room, swimming pool access, fit for small children, accessibility specifications)?

Bedrooms How many bedrooms do you need?

How will each of those rooms be used?

What are your preferences for the owner’s suite?

Kitchen What are your general What features must appliances, etc.)?

preferences for the kitchen? your kitchen have (e.g., breakfast nook, types of

What finishes do you like (e.g., countertops, flooring,cupboards, sink, appliances, etc.)?

Will your kitchen need to accommodate anything with custom measurements (beverage cooler, island, farmhouse sink, butcher block countertop)?

Living Room

What are your general preferences for your living and family room(s)?

What size room(s) do you have in mind?

Do you prefer your living and family room(s) to be separate and intended for different purposes?

Do you want a fireplace?

What other living areas are you looking for? (i.e. playroom for children, studio, mudroom) What else do you see for living areas?

Would you like the dining room to be part of the kitchen configuration?

What about the living room how should it be situated with regard to the dining room?

What size dining room table do you have? Is there other dining room furniture I should take into account?

Dining Room

How Home Buying Works 1. PARTNER WITH AN AGENT Absorb their local insight Get to know neighborhood inventory levels See what's about to hit the market Gain access to off-market properties

4. MAKE YOUR OFFER AND NEGOTIATE THE TERMS Review contract terms and time limit for offer Negotiate purchase price

Prepare for down payment, earnest money

Set up your utilities to be activated or transferred

Complete needs assessment

Sign the offer

Determine your monthly mortgage payment Understand your debt ratio Prepare for escrow

Deliver escrow check Stay in close contact with your agent

5. UNDER CONTRACT Secure a home loan Acquire home insurance and send proof to your lender

Obtain a pre-approval letter

Request a list of what conveys with the property

3. FIND YOUR NEW HOME

Schedule home inspection and negotiate repairs

Compare home and neighborhood averages, then narrow down the neighborhoods you want to live in Favorite homes and save them to collections Nix homes that don't meet the mark Schedule home tours and plan an itinerary with your agent Decide on your dream home

Reserve a moving company and set a moving date

Shop home insurance options

Choose a target closing date

Understand what you can afford

Transfer funds for closing

Change your address through USPS, your bank, and other instances

Choose a title company

Review market averages

2. GET PRE-APPROVED FOR A LOAN

6. BEFORE YOU CLOSE

Order an appraisal Acquire a property disclosure from the seller Neutralize any contingencies and input any contingencies that may be specific to your area Conduct a title search Choose your title company Schedule your closing Solidify both contract effective date and allowable move-in dates Certify funds for closing Stay in close contact with your agent, lender, and title company

Confirm that all contingencies are resolved Schedule the final property walkthrough Designate a safe, dedicated space to save your final paperwork Stay in close contact with your agent, lender, and title company

7. CLOSING DAY Bring a printed confirmation of your wire transfer from your lender Government issued photo ID(s) and Social Security numbers Your copy of the contract Your checkbook

8. FINAL STEPS Sign closing disclosure, promissory note, and all other documentation Title transfer/deed delivery Get your keys-congrats, it's all yours!

LOANS

HOME LOANS AT A GLANCE

Get pre-approved for your loan Apply for a mortgage Get your home appraised

Your loan goes through underwriting You're cleared to close!

Congratulations! You're Approved for a Loan!

Do's:

Notify your lender of any address change, whether it's your home address or another listed on your application Notify your lender of any salary or wage changes Be prepared to provide proof of significant bank deposits Acquire homeowner's insurance immediately after going under contract Keep all forms of debt paid and in check

Dont's:

Make large purchases using existing credit without first talking to your lender Apply for or acquire any additional lines of credit Pay off, transfer, or close credit balances unless your lender instructs you to do so Change jobs without first talking to your lender Co-sign for another person seeking to obtain a line of credit or to make a purchase Pay off collections before conferring with your lender

Pre-Approval Process: What is it and Why is it Important?

We always talk about how important it is to speak with a mortgage lender before starting your search for a new home. That’s why going through the pre-approval process is critical to the experience. But what is pre-approval, how do you get pre-approved, and what does it do for you as you buy a home? Here are some helpful things you need to know about getting pre-approved and its benefits.

Like an Annual Check-Up

Going to the doctor each year to ensure your health is still on point is always a good idea and that’s kind of what the pre-approval process is like for your finances. When you talk to a lender about becoming pre-approved for a mortgage, they’ll look at some key factors, including: Credit history; Credit score; Debt-to-income ratio; Employment history; Income; Assets and liabilities Lenders review your information to give them an understanding of your ability to pay the loan once you’ve purchased a house.

When Should You Get Pre-Approved?

Pre-approvals do expire, which is why you want to talk to a lender to determine the best next steps for your process. Getting pre-approved can help you identify problems in your finances that may make it difficult to get a mortgage and allow you to fix any issues before you make an offer on a home. Many experts recommend that you go through the pre-approval process up to a year before looking for a home. You will be able to make any improvements before the next pre-approval process, and you can save money for a down payment or closing costs. Most mortgage pre-approval letters will expire within 30 to 90 days because your financial picture can change rapidly. Once that happens, you’ll need to go through the process again.

What to Expect in the Process It’s helpful to know what to expect in the pre-approval process. Various factors can make a few differences, but for the most part, you’ll begin with filling out an application that includes all of the vital information for determining your financial picture, including your social security number. If you’re buying with another person, both of you will have to fill out the information.

A standard application will include: • The type of mortgage and terms • The purpose of the loan • Your identifying information, including social security number, date of birth, and address history • Employment information and history • Monthly income and combined household expenses

What Documents Do You Need?

You’ll also want to be prepared with the proper documents throughout the preapproval process. A good reference is this Mortgage Document Checklist which includes: • 60 days of bank statements • 30 days of pay stubs • The previous two years of form W-2 tax statements • Income tax returns • Asset account statements, including retirement, stocks, etc.

• Picture ID If you’re divorced, you will also need those papers, or if you’re receiving a gift for your down payment from a relative, a gift letter. If this is the case, your lender will give you guidance or what information to supply.

• Assets and liabilities • Estimated purchase price and down payment • Declarations regarding judgments, liens, bankruptcies, and foreclosures in the past Regarding the purpose of the loan, that will cover if it is a primary, secondary, or investment property or whether it’s for an existing home or new construction.

There are a lot more details for each of these categories, which is why we always encourage you to talk to a mortgage lender as early as possible in your process.

They can work with you to determine a strategy moving forward and help you position yourself to buy the house you love. Keep in mind that sellers are more willing to negotiate with buyers who can prove that they can get financing to buy the home.

Pre-Approval Decisions

Once your application for pre-approval is submitted, you will receive one of two decisions: • Pre-approved • Denied outright If you’re denied, your lender will need to explain why and may point you toward resources to help you become preapproved in the future.

This is one of the reasons it’s recommended to get pre-approved six months to a year ahead of the serious buying process. If there are issues, you’ll have a chance to sort them out and apply again when you’re ready.

CREDIT SCORE

So, why is credit important when you buy a home?

Having good credit is as crucial as choosing your dream home. Your credit score determines whether or not you’ll be able to qualify for a home loan. If you’re planning to purchase a home through a loan, a strong credit score will help you secure the best mortgage from a bank.

The importance of credit score Keep in mind that banks or financial institutions won’t lend money to just anyone. Therefore, they determine the most eligible borrowers and their creditworthiness by looking at their financial history through the FICO credit score. Borrowers with higher credit scores are more likely to get better How loan lenders view interest rates and lower down payments. If your credit score? borrowers with bad credit somehow manage to secure a home loan, the mortgage rates are much Lenders see borrowers with excellent credit as a low-risk higher, meaning higher monthly payments. investment — thereby offering Good credit reflects your capacity to pay your them a lower interest rate. debts. So, whether you can qualify for a Conversely, if your score is low, mortgage loan, a credit card, an auto loan, or rent lenders see you as a risky an apartment — is determined by how good your investment. Any loan approval, credit score is. Therefore, knowing and improving if at all, comes with higher your credit score is an important first step toward interest rates in exchange for successful homeownership. the perceived risk.

What factors go into a credit score?

If you’re trying to understand the what’s and when’s of your credit score before beginning the mortgage process, the first step is to review your credit report. Your credit score represents your credit profile, and your creditworthiness — based on factors such as your financial situation and how you’ve dealt with any type of credit in the past such as credit cards, home loans, etc. In order to have the best chance of qualifying for a good mortgage, you need to positively impact your credit score or maintain it if it’s a good score.

What credit score do I need to buy a house?

While credit scoring models may vary from one lender to the next, the standard FICO® Score certified by credit bureaus is often used as a base. The scores range from 300 to 850.

The credit score is compiled on the basis of factors such as payment history, the amount owed, types of credit borrowed, length of credit history, and any existing credit.

Needless to say, the lower the score, the lesser your chances of loan approval and increases the interest.

Most lenders have a baseline credit score to approve or deny a mortgage applicant, there is generally no exact qualifying score. The reason is that some lenders do look at other factors apart from your credit to see if you qualify for a loan. These may include your income, employment history, debt to income ratio, property type, loan amount, assets, debt levels, and the amount of down payment you’re willing to make.

Having said that, any score in the 700s or higher will most likely get you a loan with a low-interest rate.

A score of 680 may still be considered good for a conventional fixed-rate mortgage, but anything lower than that may render a mortgage loan program off the table for you. Of course, it all depends on a particular lender and their required loan qualifications. The lower the score, the higher the interest rate and chances of denial. Moreover, it also depends on the type of loan you apply for.

For example, some types of mortgages, such as the FHA home improvement loans (Federal Housing Administration) or VA loans (issued by the Department of Veterans Affairs) are easier to get and are designed for borrowers with credit scores as low as 500.

Can I buy a house with bad credit?

If you’re a candidate for a bad credit home loan or a subprime loan, with a credit of 500 or less, you need to be aware that your loan interest rates will be a couple of percentage points higher than those for prime borrowers. Furthermore, sub-prime loans also come with additional fees. So, although you might be able to buy a house if you have bad credit, it will cost you more money each month and over the life of the loan.

How do I improve my bad credit score?

If you have bad credit, don’t lose hope, there are ways to improve it and thus your creditworthiness. The best way to go about it is to look at your financial habits and make positive changes. Work toward paying your bills on time or limiting any hard inquiries against your credit. Pay down your debt if possible. Also, review your credit reports and dispute any errors. Once you’ve taken the steps to improve your credit in each of the main factors that go into your credit score, you can make yourself eligible for a better loan, at a better interest rate.

Ideally, before you apply for a mortgage or home loan, it’s always a good idea to begin the loan process on a sound footing. A good credit score yields a good home mortgage!

It’s also a good idea not to open new credit or close any credit accounts, add to your credit cards’ credit limit or cosign a loan with anyone. More importantly, do not quit your job, lenders want to see a steady income. This will also help you avoid any complications during the closing process.

Not only that, good credit lets you live comfortably — be it in choosing the type of house you buy, your auto loan, student loan, business loan, or credit checks for employment.

So before shopping for a new home, make sure you have a strong credit score. Good credit is crucial in building a solid financial foundation for you. Most importantly, mortgage lenders show greater confidence in your financial decisions before qualifying you for a mortgage.

And, you get to enjoy more favorable terms and lower interest rates.

So, now you understand why is credit important when you buy a home.

OFFER/NEGOTIATION What to include when making an offer Your purchase offer, if accepted as it stands, will become a binding sales contract—also known as a purchase agreement, an earnest money agreement, or a deposit receipt. Therefore, it’s important the offer contains every element needed to serve as a blueprint for the final sale.

These Purchase offers should include the following : • Address and sometimes a legal description of the property • Sale price • Terms—for example, if this is an all-cash transaction, or the deal is subject to you obtaining a mortgage for a given amount.

• Seller’s promise to provide clear title (ownership) • Target date for closing (the actual sale) • Amount of earnest money deposit accompanying the offer—whether it’s a check, cash, or a promissory note—and how the earnest money will be returned to you if the offer is rejected (or kept as damages if you back out of the deal for no good reason) • Method by which real estate taxes, rents, fuel, water bills, and utilities are to be adjusted (prorated) between buyer and seller • Provisions about who will pay for title insurance, survey, termite inspections, and the like • Type of deed that will be granted • Other requirements specific to your state, which might include a chance for attorney review of the contract, disclosure of specific environmental hazards, or another state-specific clause • A provision the buyer may make a last-minute walk-through inspection of the property just before the closing • A time limit (preferably short) after which the offer will expire • Contingencies (these are extremely important matters and discussed in detail below)

Contingencies If your proposal says, “This offer is contingent upon (or subject to) a certain event”, you’re saying you will go through with the purchase only if that event occurs.

The following are two common contingencies contained in a purchase offer: • Financing: You, the buyer, must be able to get specific financing from a lending institution. If you can’t secure the loan, you will not be bound by the contract.

• Home inspection: The property must get a satisfactory report by a home inspector “within 10 days after acceptance of the offer” (for example). The seller must wait for 10 days to see if the inspector submits a report that satisfies you. If not, the contract would become void. Again, make sure all inspection conditions are detailed in the written contract.

Negotiating the price Is the listed price the right price? A REALTOR® can give you a Comparative Market Analysis (CMA) of the home’s value, or you can check local listings on realtor.com® to see what similar properties are sold for. Based on the home inspection, you might also ask for a lower price or repair contingencies if the home needs fixes.

You’re in a strong bargaining position—meaning you look particularly welcome to a seller—if the following conditions apply to your situation: • You are an all-cash buyer; • You have been pre-approved for a mortgage; • You don’t have a house that must be sold before you can afford to buy.

In those circumstances, you may be able to negotiate discounts from the listed price.

On the other hand, in a hot seller’s market, if the perfect house comes on the market, you may want to offer the full list price (or more) to beat out other early offers.

It’s very helpful to find out why the house is being sold and whether the seller is under pressure.

Keep these considerations in mind: • Every month a vacant house that remains unsold represents a considerable expense for the seller.

• If the sellers are divorcing, they may just want out quickly.

• Estate sales often yield a bargain in return for a prompt deal.

Earnest money Earnest money is a deposit you put down with your offer on a house. A seller is understandably suspicious of a written offer not accompanied by a cash deposit to show good faith. A REALTOR® or an attorney usually holds the deposit. The amount varies from community to community, and it becomes part of your down payment.

Buyers: The seller’s response to your offer You will have a binding contract if the seller, upon receiving your written offer, signs an acceptance just as it stands, unconditionally. The offer becomes a firm contract as soon as you are notified of acceptance. If the offer is rejected, that’s that. The seller cannot change their mind later and hold you to the deal.

If the seller likes everything except the sale price—or the proposed closing date or the basement pool table you want to leave with the property—you may receive a written counteroffer with the seller’s preferred changes.

You can accept or reject it or even make your own counteroffer—for example, “We accept the counteroffer with the higher price, except we still insist on having the pool table.”

Each time either party makes any change in the terms, the other side is free to accept or reject the offer or counter again. The document becomes a binding contract only when one party finally signs an unconditional acceptance of the other side’s proposal.

Buyers: Withdrawing an offer Can you take back an offer?

In most cases, the answer is yes, right up until the moment it is accepted—and in some cases even if you haven’t yet been notified of acceptance.

If you want to revoke your offer, be sure to do so only after consulting a lawyer who is experienced in real estate matters. You don’t want to lose your earnest money deposit or get sued for damages the seller may have suffered by relying on your actions.

MY PROMISE From the day you partner with me, and even past the day you step foot in your new home, consider me your dedicated real estate adviser. Whatever you need, I have the resources and expertise to guide your decisions. Throughout your transaction, you can come to me for both the little things and the important steps, like comprehensive home insurance and competitive financing - I have the inside edge on both.

After your purchase, ask me to recommend fully-vetted service specialists or about how you can care for your home. Further down the road, should you ever want to sell, I'll be your trusted point person. You'll always have my number, and I'll always be ready to spring into action-just say the word!

To consistently and communicate with you in the manner and frequency that you prefer To treat you and your family with straightforwardness, integrity, and respect at all times To answer your questions, ease your concerns, reduce your stress, and expertly handle the entire real estate transaction To hold myself accountable for finding the perfect home for you-after all that is what my business is built on To serve the community as a leader in the real estate industry and as a friend and neighbor To always do the right thing, even if it isn’t what is easiest To take care of your needs at the highest level through unparalleled professionalism and attention to detail. No request is too small To serve as a trusted local expert and adviser by your side

My App: Finding Your Way Home Has Never Been Simpler Guide When middle-of-the-night questions come up or you want real-time information about the status of your transaction, Guide gives you the tools to anticipate and act on every step of the buying process. Paired with my expertise, you'll have everything you need to light your way home.

Search Find your dream home in whatever way works best for you.

Whether by neighborhood, school district, ZIP code, and more, my app has the tools to flex with your needs, even when your search extends nationally

Neighborhoods Get real-time stats on specific communities and go deeper to see what makes them tick. From the locals' favorite coffee shop to the book club that meets once a week, you'll get an idea of what it's like to actually live there.

Collections Your search results will be filled with homes you want to save...and some you'd rather forget. My app lets you “favorite” the homes you love and hide the ones you don't.

Create Collections to organize your favorites so you can share and find them with ease and discuss with whomever you please.

My app makes achieving your homeownership goals more accessible than ever before. So much more than search, its industry-leading feature set and rich insights will prepare you to handle (and enjoy) the entire journey. Get to know my favorite features before you take it for a spin.

READY TO DOWNLOAD MY APP? HEAD TO: app.kw.com/mpuccella

GLOSSARY ANNUAL HOUSEHOLD INCOME

Collective income from everyone in your household before taxes or other deductions are taken, investment income or dividends, Social Security benefits, alimony, and retirement fund withdrawals.

APR

APR refers to the annual percentage rate, which is the interest rate you'll pay expressed as a yearly rate averaged over the full term of the loan. APR includes lender fees in the rate, so it's usually higher than your mortgage interest rate.

APPRAISAL

A written justification of the price paid for a property, primarily based on an analysis of comparable sales of similar homes nearby.

APPRAISED VALUE

An opinion of a property's fair market value, based on an appraiser's knowledge, experience, and analysis of the property. Since an appraisal is based primarily on comparable sales and the most recent sale is the one on the property in question, the appraisal usually comes out at the purchase price.

CLOSING COSTS

Generally 2 to 5 percent of the purchase price includes lender fees, recording fees, transfer taxes, third-party fees such as title insurance, and prepaids and escrows such as homeowner's insurance, property taxes, and HOA fees.

CLOSING DISCLOSURE

A document that provides an itemized listing of the funds that were paid or disbursed at closing.

DEED

The legal document conveying title to a property.

DOWN PAYMENT

A cash payment of a percentage of the sales price of the home that buyers pay at closing. Different lenders and loan programs require various down payment amounts such as 3 percent, 5 percent, or 20 percent of the purchase price.

EARNEST MONEY DEPOSIT

Also known as an escrow deposit, earnest money is a dollar amount buyers put into an escrow account after a seller accepts their offer. Buyers do this to show the seller that they're entering a real estate transaction in good faith.

ENCUMBRANCE

Anything that affects or limits the fee simple title to a property, such as mortgages, leases, easements, or restrictions.

EQUITY

A homeowner's financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage and other liens.

ESCROW

Putting something of value, like a deed or money, in the custody of a neutral third party until certain conditions are met.

HOME OWNERS ASSOCIATION (HOA)

A fee required when you buy a home located within a community with an HOA that typically pays for maintenance and improvements of common areas and may include use of amenities.

HOME OWNERS INSURANCE

Insurance that provides you with property and liability protections for your property and family from damages from a natural disaster or accident. Lenders usually require borrower's to buy homeowners insurance

HOME WARRANTY

A contract between a homeowner and a home warranty company that provides for discounted repair and replacement parts on a home's major components such as furnance, A/C, plumbing and electrical systems

LENDER FEES

Part of the closing costs of a home purchase that may include an application fee, attorney fees, and recording fees. The lenders underwriting or origination fee is usually 1 percent of the loan amount.

LOAN TYPES

Mortgages have different terms ranging from 10 to 30 years and are available with fixed or adjustable interest rates.

Your lender can discuss down payment, insurance, credit requirements, and other specific loan types.

MORTGAGE

A loan from a bank, credit, union or other financial institution that relies on real estate for collateral. The bank provides money to buy the property and the borrower agrees to monthly payments until the loan is fully repaid.

MORTGAGE INSURANCE

Insurance that protects the lender and repays part of the loan if the borrower defaults and the loan can't be fully repaid by a foreclosure sale. Usually required on loans with less than a 20 percent down payment.

PROPERTY TAXES

Typically imposed by local governments on the real property including residential real estate. The tax rate can change annually, and the assessed value of your property is usually recalculated annually.

PREPAIDS

Prepaids are expenses at the closing for bills that are not technically due yet, such as property taxes, homeowner's insurance, mortgage insurance, and HOA fees.

THIRD-PARTY FEES

Any closing costs charged by someone other than your lender, typically including fees for an appraisal, a property survey, a title search, owner's and lender's title insurance, and sometimes an attorney.

Real estate is complicated.

That’s where I come in.

At the closing table, my goal is for you to feel that the purchase of your home exceeded all of your expectations, so throughout our interactions–from search to close I’ll work hard to achieve that goal.

When you choose me as your partner, you are not just getting a trusted, respected agent, you are getting a local expert who is passionate about serving our community and those who call it home.

Let’s get started.

HERE'S HOW YOU CAN GET IN TOUCH WITH ME: Keller Williams NY Realty 120 Bloomingdale Road Suite 101 White Plains, NY 10605 (914) 715-0948 (C) (914) 437-6100 (O) mpuccella@kw.com https://mpuccella.kw.com My app: app.kw.com/mpuccella