Valuable Info for Buyers
Buying a home is an exciting and fun process! And yet, at any time, any real estate transaction can be complex, challenging and even frightening, especially those involving historic homes. Nashville Bungalow is here to simplify the process and make it rewarding for you. Our goal is for you to be 100% satisfied when the process is complete. Each year, a great deal of our business comes from past clients and referrals from past clients and friends. Our clients turn to us time and time again because they trust that we will provide the best service possible.
Regardless of whether this is your first home purchase or you are a seasoned veteran, it is essential that you meet with us face to face (or at least converse by phone) before the house hunting begins. Below are some steps that explain how the typical purchase process works.
Initial Client Meeting:
Meeting face to face with your future Realtor is essential so they can discover what your needs and wants are, explain the process, and have a better sense of how you will work together as a team in finding your next home. In this meeting, plan to discuss a few questions with us:
- What is your timeline for purchasing your next home?
- Do you have a home that needs to sell prior to buying another?
- What is your financial situation and have you met with a mortgage lender yet?
- What style of home and what neighborhood are you looking for?
- Narrow your search over internet/email
- Search narrowed properties in person
- Decide on an appropriate offer
- Negotiate the offer to reach a contract
- Hire home inspector to examine the property
- Negotiate repairs (if needed) with seller
- Sign all closing papers
- Deed and title transferred into your name
Things To Do
Entertainment and Culture
Nashville Public Library
Nashville Children’s Theatre
Tennessee Repertory Theatre
Tennessee Performing Arts Center
Frist Center for the Visual Arts
Scarritt Bennett Center
Sarratt Gallery at Vanderbilt University
Country Music Hall of Fame and Museum
Tennessee Central Railway Museum Private
Tennessee State Museum
Lane Motor Museum
Travellers Rest Plantation and Museum
Adventure Science Center
The Nashville Zoo
Grand Ole Opry
Hatch Show Print
Zanies Comedy Club
-Municipal and Public
Hillwood Country Club
Richland Country Club
Brentwood Country Club
Old Natchez Country Club
Old Hickory Country Club
The Governors Club
Temple Hills Club
Nashville Golf & Athletic Club
Vanderbilt Legends Club
Bicentennial Capitol Mall
Long Hunter State Park
Shelby Bottoms Nature Center
Warner Park Nature Center
Edwin & Percy Warner Parks
Radnor Lake State Park
Bells Bend Outdoor Center
Harpeth River State Park
Narrows of the Harpeth
Montgomery Bell State Park
J. Percy Priest Lake
Parks and Recreation
Official Site of Tennessee Government (includes education, drivers services, parks, etc)
Nashville Area Chamber of Commerce
The Produce Place
Tennessee Vacation, Middle Tennessee
Nashville Farmer’s Market
Bed and Breakfast Association of Tennessee
The Turnip Truck
Nashville International Airport BNA
East Nashville Farmer’s Market
Pick Tennessee Products: local foods and goods
Nashville Business Journal
Nashville City Paper
Sports & Entertainment Magazine
The East Nashvillian Magazine
Nashville Lifestyles Magazine
Private Schools (ranked by total enrollment K12)
David Lipscomb Campus School
The Ensworth School
University School of Nashville
Battle Ground Academy
Father Ryan High School
Goodpasture Christian School
Christ Presbyterian Academy
Franklin Road Academy
Donelson Christian Academy
Ezell Harding Christian School
Montgomery Bell Academy
The Harpeth Hall School
Middle Tennessee Christian School
Pope John Paul II High School
Friendship Christian School
Oak Hill School
Nashville Christian School
Mt. Juliet Christian Academy
Lighthouse Christian School
Holy Rosary Academy
St. Henry School
Do I need a Realtor
WHY USE A REALTOR®?
Seven main roles of A Buyer’s Real Estate Agent:
- Educates you about your market.
- Analyzes your wants and needs.
- Guides you to homes that fit your criteria.
- Coordinates the work of other needed professionals.
- Negotiates on your behalf.
- Checks and doublechecks paperwork and deadlines.
- Solves any problems that may arise.
Can a real estate agent really help me in buying and selling property? The answer is YES!
When you’re ready to think about buying or selling your property, you need to ask yourself the following questions: Do you have the time, energy, sources of information, and contacts to do the job yourself? If you were one of the ‘doityourself’ people, would the results be as good or better than they would be if you had professional assistance? Would it have gone smoother? Would it have given you more personal time? Would you have purchased for less, or sold for more, if a real estate agent was involved? Read the following information and learn how a real estate agent can help you understand everything you need to know about a real estate transaction.
THE BUYING PROCESS
The process of buying a home or investment generally starts with determining your buying power: that is, your financial reserves plus your borrowing capacity. If you give a real estate agent some basic information about your available savings, income and current debt, they can refer you to lenders best qualified to help you. It will be necessary to provide a preapproval letter from the lender along with any offer you present for a home.
Finding a Realtor®
Once you know how much you can and want to invest, the next step is to find a real estate licensee to represent your interests, if you haven’t already done so. When choosing a real estate agent, look for one who is also a REALTOR®. A REALTOR® is a member of the NATIONAL ASSOCIATION OF REALTORS®, a real estate trade association, and all members agree to abide by a 17 article Code of Ethics. Once you find a REALTOR®, you will be asked to sign a Buyer’s Representation Agreement with that agent, employing him/her to represent you. This, in return, will require a commitment from you to work solely with that Realtor. It is important to remember that you must feel comfortable with your agent, and have a high level of trust. A REALTOR® has many resources to assist you in your search, and you will find that a commitment to work together will be mutually beneficial for both.
Selecting a property
Your job is to make the final selection of the right property for you. This is when excitement and emotion run high. Your real estate agent can assist you in the selection process by providing objective information about each property. Agents who are REALTORS® have access to a variety of informational resources. REALTORS® can provide local community information on utilities, zoning, schools, etc. There are two things you’ll want to know. First, will the property provide the environment I want for a home or investment? Second, will the property have resale value when I am ready to sell?
Negotiating the offer
There are a myriad of negotiating factors, including, but not limited to price, financing, terms, date of possession, and often the inclusion or exclusion of repairs and furnishings or equipment. The purchase agreement should also provide a period of time for you to complete appropriate inspections and investigations of the property before you are bound to complete the purchase. Your agent can advise you as to which investigations and inspections are recommended or required.
With a negotiated agreement in hand, it is time to complete the evaluation of the property. Depending on the area and property, this could include inspections for termites, dry rot, asbestos, faulty structure, roof condition, electrical, plumbing, septic tank and well tests, just to name a few. Your agent can assist you in finding qualified responsible professionals to do most of these investigations and provide you with written reports. The title company or closing attorney will conduct a report on the title of the property. Title indicates ownership of property and can be mired in confusing status of past owners or rights of access. The title to most properties will have some limitations; for example, easements (access rights) for utilities. The title company or closing attorney can help resolve issues that might cause problems at a later date.
Closing or Settlement
Finally, there is the closing, or settlement, as it is known in different parts of the country. Every area has its own unique customs. In some areas, the title or escrow company will handle this process. In other parts of the country, an attorney does it all. Again, your real estate agent can guide you through this process and make sure everything flows together smoothly.
Selecting the best financing package is nearly as important as finding a home that meets your needs. In fact, determining how much you can afford before you begin your home search will save you valuable time in choosing the right home in the right
neighborhood.There are three factors to consider in figuring how much you can afford:
- your down payment
- the mortgage payment you qualify for based on credit score, income and debts
- closing costs
Choosing A Loan
Typically loans require a downpayment of between 3.5% (FHA) and 20% (conventional) of the home price. Most lenders prefer that your total monthly mortgage payment, including principal, interest, taxes and insurance, not exceed 28% of your gross monthly income. They also look for your total installment debt (regular scheduled payments of 6months or longer), including the proposed monthly mortgage payment on your new loan, to not exceed 38% of your gross monthly income. They also look at a composite credit scoring service, usually called your FICO score. Scores over 700 are preferred by lenders. These are only guidelines, however, and you should discuss your specific circumstances with a loan officer to determine your qualifications.
The most common conventional loan is amortized over 30 years (though others
programs exist from 15 to 50 years). Historically you’ve needed a 20% downpayment
to qualify but most lenders now offer two types of alternatives.
- High Loan To Value (LTV) – some lenders offer 85% to 95% financing in one loan. However, because this type of loan is considered risky, you will probably have to pay a higher interest rate and PMI or MIP (Mortgage Insurance). This is an insurance policy that covers the lender, NOT YOU, in the case of default. Often you will pay an upfront fee as part of your closing costs as well as monthly payments until your loan reaches 78% of current market value. Occasionally you might see “Lender Paid PMI” as part of a promotion. If that is the case, trust that you are paying higher closing costs or a higher interest rate – those fees must be accounted for somewhere.
- 80% First Mortgage with Home Equity Line of Credit (HELOC) – To avoid paying PMI, some lenders may offer an 80% First (or Primary) loan supplemented by a 5% to 15% HELOC. In this case, you will typically pay two separate monthly bills. Because HELOC rates are typically tied to the (now low) federal prime rate, these loans are becoming more popular. Here are a few things to keep in mind when considering this type of loan: HELOC rates can and do fluctuate. HELOC interest payments are typically tax deductible, but that hasn’t always been the case – the policy could change. HELOC payments amortize much like a credit card; minimum payments may not reduce principal balance. There may be yearly membership fees or prepayment penalties on HELOCs.
FHA is a great tool for FirstTime Buyers or those with limited downpayment funds. The standard FHA loan only requires a 3.5% downpayment, it also requires monthly mortgage insurance as well as an upfront mortgage insurance fee that is rolled on top of the loan balance. This downpayment must either be personal cash from savings, a cash gift from a family member, or perhaps a gift from your employer. The seller is NOT allowed to pay any portion of your downpayment. However, the seller can assist with closing costs if the contract is negotiated with those terms. FHA says that they offer loans for borrowers with credit scores as low as 580 however, most reputable lenders have additional inhouse requirements they lay on top of the government guidelines. Most local lenders now require a minimum 620 credit score.
FHA Facts and Tips
- Closing costs can be slightly higher with FHA loans and underwriters now require full income, credit, and employment verifications.
- FHA buyers must be owneroccupants, investors are not allowed.
- An individual can not have more than one FHA loan at a time. If you plan to keep you current residence as an investment property, you will likely need to refinance it to a conventional loan before buying a new property.
- FHA is not encouraged for properties in need of substantial work or repairs, although they do make a special loan product for this purpose called 203k.
- Because FHA is partially underwritten by the federal government these loans can take a bit more time to close with lastminute
- requests for paperwork; I would recommend at least 45 days from contract date to the closing date.
- If purchasing a condominium with an FHA loan, make sure the development is on the HUD-Approved Condo Development List.
- If you are unable to put 3.5% down, there are still a couple of loan programs for you, but understand that the interest rate and closing costs may be a little higher. It’s not an ideal scenario.
Closing costs can vary greatly depending the type of loan and the borrower’s credit score (from 2% to 5%). ALWAYS, ALWAYS, ALWAYS get a Good Faith Estimate (in writing) from your lender outlining the costs you will be expected to pay. Here are some fees you might see on that GFE:
- Origination Fee (usually around 1% of the loan amount). This is how the mortgage broker gets paid for selling you a loan. The low rates you see in any advertising almost always include an origination fee. If there is no origination fee, typically the interest rate will be slightly higher.
- Appraisal Fee. Sometimes required as an upfront fee. This typically runs $400 to $500. If you have an appraisal done and don’t close on the property for some reason, you will forfeit this charge.
- Credit Check Fee. $15 to $50
- Flood Certification Fee. $10 to $25
- Attorney Fees. $250 to $450. Sometimes separated into two categories (closing fee & document prep).
- Courier Fees. $20 to $75
- Power of Attorney. $25 to $100 if needed.
- Title Insurance. Though negotiable, the seller typically pays for the title insurance policy in Davidson county, EXCEPT in the case of new construction when the buyer becomes responsible. Samples (100k = $595, 200k =$901, 300k =$1375)
- Tax Stamps/Transfer Tax. Typically one of the buyer’s largest closing costs. These fees are based on sales price and set by the state & city.
- Filing Fees/Recording Fees. Varies by number of pages in the property deed
- Discount Points – if buying down the rate.
- Tax Service Fee. $50 to $100
- Processing/Underwriting Fee. Varies by lender
- Document Review.
- Prorated Taxes.
- Prorated Mortgage Interest (varies by closing date).
- HOA StartUp or Transfer – $100 to $495
- HOA Reserve Cushion – two months is typical.
- Lender Required Reserves – When setting up a monthly escrow account, most lenders require 36 months worth of taxes and/or insurance be placed in reserve.
Other Fees To Consider:
- Home Warranty. If ordered ~$500
- Various Inspections (Formal Home Inspection, Radon, Air-Quality, Lead-Based Paint, etc.usually paid in advance) ~$400+
- Interest Rate Lock Fees (applied as a credit at closing).
Earnest Money Deposit (applied as a credit at closing). I recommend between one and two percent as a base earnest money deposit. A larger deposit usually conveys a stronger offer.
1. How do I know if I’m ready to buy a home?
You can find out by asking yourself some questions:
- Do I have a steady source of income (usually a job)? Have I been employed on a regular basis for the last 23 years? Is my current income reliable?
- Do I have a good record of paying my bills?
- Do I have few outstanding long-term debts, like car payments?
- Do I have money saved for a down payment?
- Do I have the ability to pay a mortgage every month, plus additional costs?
If you can answer “yes” to these questions, you are probably ready to buy your own home.
2. How do I begin the process of buying a home?
Start by thinking about your situation. Are you ready to buy a home? How much can you afford in a monthly mortgage payment? How much space do you need? What areas of town do you like? After you answer these questions, make a “To Do” list and start doing casual research. Talk to friends and family, drive through neighborhoods, and begin your search on our website.
3. How do I select the right agent?
Start by asking family and friends if they can recommend an agent. Compile a list of several agents and talk to each before choosing one. Look for an agent who listens well and understands your needs, and whose judgment you trust. The ideal agent knows the local area well and has resources and contacts to help you in your search. Overall, you want to choose an agent that makes you feel comfortable and can provide all the knowledge and services you need.
4. What is the most effective way to search online for a home?
FIRST, you should meet with your lender to find out what kind of a loan you will be qualified to get. Unless you have been saving your money religiously or have recently come into a great deal of cash, you will most likely need to get a loan to purchase a home. Only your lender will be able to tell you “how much house” you can afford. If you do not already have a great relationship with a lender, ask your Realtor, they will have a network of lenders with whom they have done business and know to be trustworthy and will look out for your best interests.
THEN and only then, you will know what price range to search. This will be only the beginning of the criterion for your search. Once you know where to look, you will need to answer some of these questions to narrow down that search. In what part of town do you want to live? Do you want to be near schools, near work, near social activities?
- How many bedrooms and bathrooms do you need?
- Do you need a yard for a dog or perhaps kids?
- Do you want something new or do you want to do some work yourself?
- Do you need a garage?
- Do you want a house or a condo?
- Is a fireplace a must have?
Once you have answered these basic questions, you can begin to search online. First, check out your Realtor’s website. In all likelihood, they have a great search that you can register with and save favorites and get new listings sent to you as they are listed. And since we all know that one search is never enough when you are hot to buy a house, you can also check out Realtor.com and Realtracs.com. I mention only these three search options because they are the most reliable and are the only search engines that are directly tied to your local MLS (Multiple Listing Service) and thus are the most accurate.
Popular searches like Zillow and Trulia and very well known because those companies spend an awful lot of marketing dollars to get you to their site. Unfortunately, the information found there is oftentimes inaccurate and outdated. I can’t tell you how many times a client has contacted me with great urgency in their tone because they have found “the perfect home” on Zillulia and could I please get them an appt to see it, only to find when I look up the address that the “perfect” price seemed so fantastic because it was the listing for that home when it was actually on the market SEVEN year ago… and that it is NOT currently for sale. Of course it seemed perfect! No matter what the year, the price for a house ten years prior is always fantastic! Stick with the sites with accurate information!
5. What should I be looking for when viewing homes?
In addition to comparing the home to your minimum requirement and wish lists, use the HUD Home Scorecard and consider the following:
- Is there enough room for both the present and the future?
- Are there enough bedrooms and bathrooms?
- Is the house structurally sound?
- Do the mechanical systems and appliances work?
- Is the yard big enough?
- Do you like the floor plan?
- Will your furniture fit in the space? Is there enough storage space? (Bring a tape measure to effectively answer these questions.)
- Does anything need to repaired or replaced? Will the seller repair or replace the items?
- Imagine the house in good weather and bad, and in each season. Will you be happy with it year round?
Take your time and think carefully about each house you see. Ask your real estate agent to point out the pros and cons of each home from a professional standpoint.
When I start visiting homes, what should I be looking for the first time through?
The house you ultimately choose to call home will play a major role in your life. A home can be an excellent investment, of course, but more importantly, it should fit the way you really live, with spaces and features that appeal to everyone in your family. As you look at each home, pay close attention to these important areas:
▪ Is there enough room for you now, and in the near future?
▪ Is the home’s floor plan right for your family?
▪ Is there enough storage space?
▪ Will you have to replace the appliances?
▪ Is the yard the size that you want?
▪ Are there enough bathrooms?
▪ How much maintenance and/or decorating will you need to do right away? Later?
▪ Will your present furniture work in this home?
Brainstorm some of these questions and others will surely arise. The easiest way to find your
dream home is to have at least a rough idea of what you want before you start looking. An initial meeting
with us will help you sort through the wants and needs of your home purchase.
I want to be in my new house in 4 months, when should I begin looking?
Once you find a house and write an offer on it, it typically takes 30-45 days to complete everything before you can move in (assuming you need a loan to buy the home). How long you need to actually find the home depends on what you’re looking for and what is available. Our question to you would be, “even if you feel like you’re six months out, if you found the home of your dreams tomorrow, would you be prepared to write an offer on it?” If the answer is yes, then it’s time to begin looking now. If the answer is no, then it’s best to have an initial consultation with us and we can begin sending you properties, but we don’t want to waste your time seriously looking until you are in a position where you are ready to buy. You don’t want to find your dream home and not be able to buy it yet!
How many homes should I see before making a decision?
There is no set number of houses you should see before you decide. Visit as many as it takes to find the one you want. On average, homebuyers see roughly 15 houses before choosing one. Sometimes a client will see “the ONE” very early on in their search and then undoubtedly they will compare every other house they see to it. If that happens, you know it’s the ONE and hopefully you are prepared to move! Just be sure to communicate often with your real estate agent about everything you desire in a home. It will help avoid wasting time.
How do I make an offer?
Your real estate agent will assist you in making an offer, which will include the following information:
- Complete legal description of the property
- Amount of earnest money
- Down payment and financing details
- Proposed move-in date
- Price you are offering
- Proposed closing date
- Length of time the offer is valid
- Details of the deal
Remember that a sale commitment depends on negotiating a satisfactory contract with the seller, not just making an offer.
What is Earnest Money?
Earnest money is money paid by a buyer to show that you are making a serious offer to purchase a property. While there is no law as to a minimum or maximum amount of earnest money required, typically 1% of the offer price is considered a good amount. Earnest money is usually refundable if you back out of a property based on contingencies in the contract not being met. However, the seller often times has the right to keep your earnest money if you decide to default on a contract in which all contingencies have been satisfied. We will be able to better discuss the default process in a facetoface meeting when going through the contract to make an offer on a home.
What does a home inspector do, and how does it affect the purchase of my home?
An inspector checks the safety of your potential new home. Home Inspectors focus especially on the structure, construction, and mechanical systems of the house and will make you aware of any needed repairs. The Inspector does not evaluate whether or not you’re getting good value for your money. Generally, an inspector checks: the electrical system, plumbing and waste disposal, the water heater, insulation and Ventilation, the HVAC system, water source and quality, the potential presence of pests, the foundation, doors, windows, ceilings, walls, floors, and roof. Be sure to hire a home inspector that is qualified and experienced.
What are my closing costs?
There may be closing costs customary or unique to a certain locality, but closing costs
are usually made up of the following:
- Attorney’s or escrow fees (Yours and your lender’s if applicable)
- Property taxes (to cover tax period to date)
- Interest (paid from date of closing to 30 days before first monthly payment)
- Loan Origination fee (covers lenders administrative cost)
- Recording fees
- Survey fee
- First premium of mortgage Insurance (if applicable)
- Title Insurance (yours and lenders’s)
- Loan discount points
- First payment to escrow account for future real estate taxes and insurance
- Paid receipt for homeowner’s insurance policy (and fire and flood insurance if applicable)
- Any documentation preparation fees
What if something breaks in my home after I move in?
Home warranties offer you protection against many potentially expensive problems that not covered by your homeowner’s insurance. They’ve become increasingly popular in recent years, and for good reason: the coverage can save you thousands in the event of a major mechanical breakdown. At a time when your cash reserves may have been depleted by your down payment and moving expenses, a warranty can be a life saver. A one year home warranty can cost between $450 and $650, and sometimes you can ask the seller to purchase one for you as part of your negotiations. They will typically cover everything from your heating and air systems and your plumbing, to existing appliances like your stove and washer/dryer.
Below you should be able to find most of the information you need to move from one home to the next. Whether you are moving from down the street or another state, use this page as your one source for all your relocating needs.