Home Buying Guide

Tour Houses and Keep Track With This House Tour Checklist

by Floyd Brooks Last Modified: December 15, 2021

One of the fun things to do when it comes to buying a house is to actually go and tour houses with your agent.

Particularly, when the market is very competitive for buyers, it is important for buyers to know exactly what they are looking for in a home.

You may look at so many houses and have taken so many pictures and videos that you may easily find yourself being overwhelmed by all the properties you have seen.

You can keep track of houses you have viewed with this handy-dandy property walkthrough checklist. In addition, to that, you can even use this checklist to do your final walkthrough before closing or when you are viewing the property with your home inspector.

Please complete the form below to download a copy of the PDF House Tour Checklist

Want to Save Some Serious Dough? Consider Buying a House in Cash

by Floyd Brooks Last Modified: December 8, 2021

How to buy a house cash: The process

Paying cash for a house comes with pros and cons. If you are in the financial position to pay cash for a property, then you probably already know that doing so comes at an opportunity cost. You will appreciate that paying cash for a property ties up all that cash in that property.

Could that money have been used for other investments that could potentially make you more money? Well for some buyers, paying cash makes more sense.

There are also potential tax write-offs that are being missed by parking a significant amount of cash in a property. On the other hand, if you plan to stay in that building for a significant number of years, paying cash could end up saving you a lot of dough.

Step 1: Find a Trusted Real Estate Agent

The first step to purchasing a house with cash is to make sure you have a trusted team in place. An essential member of that team should be your real estate agent. This agent will help you make critical decisions and will handle all of the paperwork (and potentially) save you a lot of stress throughout the whole process.

Step 2: Decide on Where you Want to Purchase. Location. Location. Location.

Paying cash may potentially save you money with some of the fees that you would otherwise pay to a financial institution or investor. You may be able to improve your property’s curb appeal and drop in your dream kitchen. However, there is one thing that you will never be able to change about your property and that is where the property itself is located. Therefore, take the time to decide on where you truly want to live. Select your preferred location and visit that location at various times of the day to make sure that is where you want to be located.

Step 3: Obtain Proof of Funds From the Bank

After you have given your agent your location parameters, the next thing that the agent will need from you is proof that the cash that you have actually exists.

This information is necessary, because in a competitive market where houses are selling quickly, most sellers will ignore offers that do not have evidence for how the property will be purchased.

Get a letter from your bank and ask them to state up to what price you want to pay cash. That means that if you want to pay a maximum of $200,000 cash for a property, let the bank give you a letter to say that you can pay up to that amount. Getting a proof of funds letter will provide more privacy as opposed to a recent bank statement.

Step 4: Visit the properties that interest you and start making offers.

It is every sellers dream for cash offers at or above the property’s asking price. Some sellers may even be willing to sell a property for slightly less than the amount they are asking, because a cash buyer is much less risky compared to a buyer that has to finance a property.

A responsible agent will make sure that all offers include contingencies to protect you as a buyer. A contingency is a way of saying to the seller, “if certain issues arise, I have the right to walk away.”

From a cash buyer perspective, some of the contingencies that may be included in a cash offer would be an appraisal contingency and an inspection contingency.

Step 5: Choose a settlement agent

In Georgia, a real estate attorney will be your settlement agent. When your agent submitted your offer, they included information about how you were going to pay for the property. Most likely, your agent will encourage you to include earnest money with your offer. An earnest money is a way of saying “I am so serious about this purchase; I am willing to put x-amount of money on the line.”

Earnest money is not a requirement to submit an offer on a property in Georgia, however, most offers tend to include earnest money. This money is typically refundable once the buyers did not violate the terms of the contract.

Either the seller or the buyer may select the settlement agent. Typically, a closing agent will be selected that is easy for both parties to reach on closing day.

Step 7: Start submitting Offers

Once you have found the property that you want. Your agent will prepare and submit offers on your behalf.

Your agent will submit offers with your stipulations and contingencies until a seller accepts your offer, or at least makes a counteroffer to your offer. In real estate, a counteroffer is a response to an offer. That counteroffer is now the new offer to the buyers who submitted the initial offer.

A property listed for sale is the seller’s offer to potential buyers. Once a seller accepts an offer, by signing the offer to purchase documents and providing a copy of the signed offer back to the buyers, the house is officially under contract. The property is now one-step closer to being in the possession of new owners.

Step 7: Offer accepted

Once the offer is accepted, the buyer will now carry out their due diligence to fulfill all of the obligations that they stipulated in their offer. This period where buyers are allowed access to the property to carry out inspections is referred to as the due diligence period.

Step 6: Secure your earnest money check

Get your earnest money check to your settlement agent. The settlement agent will stipulate how you will pay your earnest money. No matter the way in which you deposited your earnest money, make certain to keep a copy for your records.

Your agent and the seller’s agent may also request a copy of the earnest money receipt as well.

Step 7: Get an inspection

One of the first things that your agent should suggest is that you get the property inspected. You can never be too sure when it comes to making a large purchase, such as buying real estate.

You do not want to have any major repair surprises soon after you have moved into your new property.

Step 8: Order a Property Title Search

One of the most important steps in real estate is to make sure that you carry out a title search, especially when you are paying cash. If you were financing your property, the bank will carry one out as a part of their underwriting and charge you for it.

However, when you are paying cash, it is your responsibility to make sure that one is done. The closing attorney or your agent may suggest title insurance companies for you to choose from and make a decision.

Step 9: Purchase Title Insurance

Title insurance should be a key part of your closing procedure. Make sure that one is purchased for the property that you are paying cash for. Even the most diligent title search institution may miss a critical issue with the title and you could find yourself on the losing end of a legal issue.

A very good way to protect yourself against a missed title issue is to purchase title insurance.

Title insurance saved me hundreds of thousands of dollars because the title company that my wife and I used for a house that we bought back in 2009 had title issues that were missed by the title search company. Thankfully, our agent at the time strongly encouraged us to purchase title insurance. To this day, we are very happy we heeded the advice.

Step 9: Consider getting a land survey

Getting the property surveyed is especially important if the property has not been surveyed in a long time or the borders are not well defined.

A survey may also highlight the parts of your property that may be in a flood plain or the areas that may have been encroached upon by neighbors.

The more knowledge you have about the property that you are acquiring before you take ownership may protect you for years to come.

Step 10: Get homeowner’s insurance

Even though you are paying cash for your property, it is a wise decision to purchase property insurance. Make sure that your policy is adequate to cover your potential liability. You do not want to see your hard-earned cash literally going up in smoke.

Step 11: Consider an appraisal

A licensed appraiser carries out an appraisal. This appraisal will highlight the fair market value of a property at the time the appraisal was carried out.

Especially in a sellers’ market, you do not want to pay more than you have to for your property. Therefore, this is a wise contingency to add at the time that you make your offer. This way, you can use this to potentially negotiate the price more favorably.

Step 12: Secure a check for the balance

Your settlement agent will disclose how they want you to bring your balance to closing. Most likely, they will not accept wads of cash at closing. You are paying for the services of the closing attorney, so make sure to consult them early and often about any questions and concerns that you have about your upcoming closing.

Step 13: Figure out what other funds you might need

Depending on where the property is located. You may have to pay other fees such as homeowners’ association fees, property taxes, etc.

Step 14: Conduct a final walkthrough

On the day of closing, you want to make sure that you do a final walkthrough with your agent. This final walkthrough is to make sure that the property is in the same condition as when you viewed it and made your offer. In addition, this is a time to make sure that all repairs that you requested to be carried out were actually done and you are satisfied with the work that was done.

Step 15: Show up for Closing

Today is the day that you close. Your closing attorney and agent will tell you all the paperwork and necessary identification that you will need to close on your property.

You will not sign as many documents. If you were going to finance the property, you would have had to sign many more documents. Therefore, your closing will not take nearly as long.

Step 16: Move into your home!

You have done it. You have bought a house with cash and you have less to worry about. Paying cash means that you will not be paying monthly to have a roof over your head and you may end up saving yourself tens of thousands of dollars in interest payments over the life of the loan.

Home Mortgage Loan Process

by Floyd Brooks Last Modified: December 8, 2021

First Time Homebuyer Guide

For most people, buying a house can appear very intimidating; this is especially true for first-time homebuyers. However, if you know what to expect when you are ready to purchase your first home, the process will be less stressful and more exciting.

From this guide, you will be better prepared. You will know how much house you can afford, how you will finance this house, and the steps that you will take to buy your first property in Georgia.

Are you ready to get started on your home buying journey?

Please keep these tips in mind when you decide to finance your home purchase

Shop Around for Mortgage Quotes

Do not just go with the first lender that you meet and they make you an offer that you can work with.

Do not make the common first-time homebuyer mistake of going with the first lender that gives you an offer. Contact at least three lenders or financial institutions and receive a quote from them. This could potentially save you thousands of dollars over the life of your mortgage. Generally, you should always know what your credit score is throughout the year.

Different Types of Home Loans.

There are different mortgage loans to choose from when it comes to buying a home. However, by speaking to your trusted real estate agent, or mortgage broker, you will discover the best path for you to take. In the United States, the vast majority of buyers finance their home purchase with either conventional loans, FHA loans, VA loans, or USDA home loans. A loan type out there will fit your lifestyle.

Price Range for Buying Your Home

Calculate your mortgage payment, including principal, interest, taxes, and insurance. Understand your mortgage rate as well as your budget. This will allow you to shop for a home and a mortgage with confidence.

Get Preapproved Before you Begin Your Home Buying Journey

Pre-approval is a guarantee from a lender to finance your home purchase after they have verified your income and expenses. You will need this preapproval when you start to make offers on your next home. Most sellers will ignore offers from potential buyers who fail to include an approval letter from a lender.

What is a Mortgage?

There are two main ways to purchase real estate: either you pay cash for the property or you borrow from a bank. This loan from the bank can be a portion of the asking price or the full amount of the asking price of the property. When you borrow money from a bank to buy real estate, the bank needs collateral as a guarantee for the loan.

The property that you buy will stand as a guarantee for the loan. So in essence, when you take out a mortgage on a property, you are telling the bank to buy the house on your behalf and then you will pay back that bank (the amount you borrow plus interest). The money that you borrow and have to pay back is called the principal. The interest is the fee that you pay to the bank for securing the loan on behalf of the borrower.

If you stop making your payments, typically the bank will ask that you vacate the premises as you have broken your promise to make timely payments. When a bank asks a borrower to vacate a property (due to a borrower no longer making payments) is known as foreclosure. When the bank regains ownership, it is now called a foreclosed property.

How Does a Mortgage Loan Work?

When you purchase a home with the help of a lender, the lender will give you a definite amount of money. You do not fully own the home until the mortgage is paid in full. At closing, the closing attorney will provide a schedule of payments over the life of the loan. This is called an amortization schedule. This document is given to the closing attorney to be presented to you.

When the seller accepts your offer, the bank will start working on securing the property for you. One of the first things that they will do is order an appraisal on the property. You will pay this money to the bank, but the bank will be in communication with the appraiser. The appraiser is there to find out exactly what the property is worth (fair market value) on the day that the property was appraised. The appraised value is very important to lenders, they will not lend more than what a property is appraised for.

The interest rate that the bank quotes you for your mortgage is directly correlated to your perceived risk. That is because the mortgage interest rate is equal to the market rate plus your perceived risk percentage. That means that if you are seen as a risky borrower, your interest rate will be higher than someone who is viewed by the bank’s underwriting terms as less risky.

What Parties are involved in a mortgage?

When it comes to securing a mortgage, only two parties are involved: the lender and the borrower. The lender is the institution or individual who will be securing the property and you make a promise to repay, with interest for securing the property on behalf of the lender.

The borrower is the person that is seeking the loan. A borrower can join with other qualifying buyers to buy a more expensive home.

What would my mortgage payment be each month?

Your monthly mortgage payment is the amount that you pay every month toward your mortgage. Your monthly payment constitutes your principal, interest, taxes, and insurance payments. These payments are typically combined.

Principal Payments

A loan principal is the amount of the loan that is outstanding or the balance.

Interest Payment

The interest payment on a loan is effectively a fee that is paid each month to the lender for securing the loan. This payment is in addition to the money that is paid back towards the principal payment. As the loan matures, more of the monthly payments will go directly towards the principal.

Taxes and Insurance Payment

Most loan servicers will create an escrow account on your behalf. In this account, they will keep money that goes towards your loan. In addition, they will keep the money for your property taxes and property hazard insurance. It is pretty much always required for homes financed by banks to carry property insurance. Failure to do so is typically a violation of the loan terms. That means that if the property is burned to the ground or severely damaged, you will be on the hook for the balance of the loan.

The Mortgage Process

Buying a house, even if you cannot buy it cash outright, is easier than it appears. However, there are several steps that you will go through as a part of that process.

Step 1: Get Approved

It is an excellent idea to be approved for a mortgage before you go shopping for a house. There is nothing worse than actually looking for a house, only to find out that it is out of your price range. This will save you and your agent plenty of time and emotional drain.

Once the bank verifies your financial and income information, they will issue you a preapproval letter. This letter will be used by your agent to submit offers on your behalf. Typically, sellers will ignore offers that fail to show how the property will be purchased.

Step 2: Shop For Your Home and Make an Offer

Now that you have your pre-approval letter in your hand, you will forward this letter to your agent. You can now go out and look at homes that fall within your price range.

Your agent will open doors for you and submit offers on your behalf. Once the offer is submitted, the agent will take care of all the paperwork for you and make sure that everything is done and scheduled promptly.

Step 3: Get Final Approval

Once the seller has accepted your offer, your agent will submit a copy of the completed paperwork to your bank. Your bank will then bring your mortgage through the necessary underwriting rules that they have established.

As a part of the approval process, the bank will arrange for an appraisal, title search, and so forth. Once they have completed what needs to get done through their underwriting department, and they are willing to stand behind your loan, they will notify you and your agent about their approval and set a date to close escrow, and give you your keys.

Step 4: Close On Your Loan

In Georgia, it is required that an attorney handles all closings. Closing on your loan is also known as closing escrow. On this day, you will go to the lawyer’s office with your agent. You will sign a lot of paperwork before you are given your keys. In addition, the lawyer will take your down payment or acknowledge receipt if it was sent electronically.

Georgia First Time Homeownership Dream Program

by Floyd Brooks Last Modified: December 8, 2021

In the state of Georgia, first-time homebuyers are buyers who haven’t owned a home in three years. Buyers may qualify for the Georgia Dream HomeOwnership program.

What is the Georgia Dream Homeownership Program?

The Georgia Dream homeownership is a homeownership assistance program for eligible low and moderate-income Georgians. This program provides affordable financing options, down payment assistance, and homebuyer education.

Do Recipients Have to pay Back the Downpayment assistance loan?

Yes. The down payment assistance is a 0% interest loan with no monthly payment. A second mortgage lien is placed on your property. It is due when you sell, refinance or no longer occupy the home as your primary residence.

Georgia Dream Program Highlights and Eligibility Requirements

Georgia Dream loans are available to:

First-Time Home Buyers, OR
Homebuyers who have not owned a home** in the past three years, OR
Those who purchase a home in certain areas

Who Also:

Have a household income up to the maximum
Have liquid assets of no more than $20,000 or 20% of the sales price (whichever is greater)
Meet mortgage loan credit requirements

Maximum Household Income & Home Sales Price

If you purchase in one of these Georgia counties (Barrow, Bartow, Carroll, Cherokee, Clayton, Cobb, Coweta, Dawson, DeKalb, Douglas, Fayette, Forsyth, Fulton, Gwinnett, Heard, Henry, Jasper, Newton, Paulding, Pickens, Pike, Rockdale, Spalding or Walton):

The purchase price cannot exceed $250,000
Household income cannot exceed:

1 or 2 persons: $80,000

3 or more persons: $92,000

Any county not listed above, the purchase price cannot exceed $200,000

Household income cannot exceed:

1 or 2 persons: $69,000

3 or more persons: $79,000

How long does the Georgia Dream process take?

The average Georgia Dream process takes about 60 days from application to closing.

How To apply for a Georgia Dream loan?

You will contact a Participating Lender in the Georgia Dream Homeownership Program. Based on the type of loan that you are trying to obtain, these lenders can take your mortgage loan application for an FHA, VA, USDA-RD, or conventional uninsured loan and process all paperwork required by the Georgia Dream program.

Mortgage Down Payment: Tips for Saving for a Down Payment

by Floyd Brooks Last Modified: February 4, 2022

There are many ways to save for a down payment to buy your home, even while you are renting. Many people chose to rent for a couple of years and save as much money as they can before purchasing a home. The more money you have for your down payment, the lower your mortgage loan, and payment will be. Ultimately, you will save yourself a lot of money in the long run on interest payments.

Remember, the down payment is not the only cost associated with buying a home. If you are not getting a VA Loan or down payment assistance, you will need to plan for closing costs. Closing costs are the costs associated with paying for title searches, appraisals, insurance, taxes, and other fees when buying a house. These fees can add up quickly.

Plan to save as much as possible

The best down payment on a house is one that is at least 20% of the purchase price. This will definitely give you a good shot at the best rates possible on your mortgage. If your down payment is less than 20% of the purchase price, your mortgage may require that you purchase private mortgage insurance.

Here are some simple ways to maximize the benefits that can be obtained when getting a mortgage to buy your home, especially as a first-time homebuyer.

Determine how much house you can currently afford.

Based on your current income potential, determine how much you would be comfortable paying for a mortgage. As far as mortgages are concerned, you want to try and keep your gross payments less than 30% of your gross income. That means that if you earn $3000 per month before taxes, you want to look at homes where your payment will be less than $1000 per month. That will give you a good cushion and not overexert yourself.

Create a budget and stick to it as much as possible

One of the first things you want to do when creating a budget is to figure out your fixed costs and variable costs. Your fixed costs could be things like your insurance payments and students loans. Your variable costs include things like electric and gas bills. You want to create a way for you to pay those bills automatically and track their payments. Now you will be able to analyze your payments and see what can be trimmed or eliminated. What is left over is your savings. Based on your savings, you may want to create an account dedicated to your down payment.

Get a roommate or move in with family

It’s nice to have independence, but if you have the ability to live with a trusted friend or family member for as long as is necessary to buy a home, you will save yourself a lot of money. This will allow you to save for your down payment that much faster. Do not go on a vacation or an expensive honeymoon.

If you are really serious about saving for your down payment, you will skip that expensive trip. The average trip for a single individual can cost thousands. If you going to be buying the house with a partner, together you are a stronger force. If you are getting married before buying your home, you could cheap out on the wedding and honeymoon and even come out on top, saving a lot of money for your down payment to buy your dream home.

Pay off higher interest credit cards.

When you go to apply for your mortgage, the mortgage agent will be taking a look at your debt-to-income ratio. They want to know how much of your spending potential is going towards servicing debt. The higher the amount you owe on high interest credit cards, the less you are able to save. Try and pay off those credit cards, but do not close any of your credit card accounts. As a matter of fact, I would encourage you to ask your credit card issuers to increase your credit limit, but do not use it. This will help to boost your ratios in your favor.

Borrow from your retirement plan.

I have a friend who borrowed from his 401 (k) to pay off his mortgage. Some companies allow this. Speak to your HR department and your accountant to see how that may affect your bottom line, but it is definitely an option that could save you a lot of money on interest payments.

Get a second job.

If you have time in your schedule, consider getting a second job or picking up gigs here and there. After I left college, one of the things I did was advertise myself on Craigslist (back when Craigslist was king). People would call me to help them move. I even had a few clients where I cut their lawn (seriously, cutting lawns in Georgia’s heat is no joke). The profits from these odd jobs should go directly into your down payment savings account.

Consider an up and coming area

If you do not care where you live and your main goal is to just not pay rent, you may want to consider an up and coming area where less buyers are looking. This may give you an opportunity to profit from a potential upswing in prices in the area and gain equity. This will allow you to sell when the prices have appreciated or when your goals have changed. This will allow you to potentially use the equity from that sale to make an even larger down payment in your newly desired neighborhood.

Look into down payment assistance.

Many states and government agencies offer down payment assistance to qualified buyers. In Georgia, the Georgia Dream program is available to first-time homebuyers. This program basically offers, among other things, a zero percent down payment assistance loan. The Veterans Administration (VA) also offers loans to qualified buyers. This program will allow you to buy a home with 100% of all closing costs financed.

Plan for additional reserve savings

Furthermore, your lender’s underwriting department is going to be looking at all the liquid assets that you are going to have to remain after all your closing costs have been calculated. They want to make sure that you have a couple of months of savings remaining to pay your mortgage in the event you unexpectedly lose your income-producing potential for a short period of time.

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