Enjoy this FREE First-Time Home Buyers Guide! Filled with information on the home buying process and how to get pre-approved!
The Payne Team understands that your real estate needs are among the largest financial decisions you will make in your life. We take that responsibility to heart going the extra mile to ensure a smooth transaction. The Payne Team prides themselves with providing top notch real estate representation for our clients. We are local real estate experts specializing in residential, commercial, farms, and unimproved land. Having come together as a team in 2021 it didn't take long for The Payne Team to have an impact on the local real estate community. We have been constantly a Top 20 Performer in the Mid-Atlantic region. The Payne Team was also a finalist in Coastal Style magazine as the Best Real Estate Team in Wicomico County. MEET THE TEAM
Rob Payne Team Lead- REALTOR
Angela Payne REALTOR
Rachael Fritts Marketing Mgr/Admin
Ryan Basch REALTOR
Aaron Bergeron REALTOR
Scan to view our Digital FTHB Guide
RE/MAX ADVANTAGE REALTY 2023 RE/MAX VS. THE INDUSTRY
8245 Dickerson Ln Unit D. Salisbury, MD 21801 COME SEE US AT OUR OFFICE!
Price is Right Can you guess the price of each House Hold item?
Pack of 2 Paper Towels -----------------
Roll of foil ------------------------------
Laundry Detergent ---------------------
Pack of 6 Toilet Paper -----------------
Windex ---------------------------------
Dozen Eggs ----------------------------
Gallon of Milk--------------------------
Bandaids--------------------------------
Tool kit---------------------------------
12 Piece Pots & Pans Set---------------
16ct AA Batteries-----------------------
Trash Can-------------------------------
Why You Need an Agent
ATTENTION TO DETAIL
BETTER HOME PRESENTATIONS
PRIVACY, CONFIDENTIALITY,FIDUCIARY DUTY
THEY KNOW WHAT TO LOOK FOR
SUPERIOR NEGOTIATING SKILLS
SPEEDS UP CLOSING TIME
contract handling
When choosing The Payne Team to represent you, you’ll have someone by your side every step of the way, giving you the insights and information you need to have confidence in your decision.
The Payne Team will:
Meet with you to discuss your needs and goals, and to plan your property search. Help you get pre-approved and establish your budget Show you properties that meet your criteria Keep you informed of the new properties that come on the market Work with you until you find the right home Help you determine your offer Negotiate the offer and contract in your best interests Facilitate the home inspection and negotiation process Prepare you for closing and associated costs. Keep you updated on the progress of your transaction every step of the way.
Buying a home is one of life’s biggest investments and most exciting adventures. The Payne Team RE of Coldwell Banker is your partner in the process, guiding you along the way to make your experience smooth and successful. Your Home Search Begins
This First Time Home Buyer Guide includes helpful information to get you started:
The Purchasing Process Pre-Approval What loan is best for you Your home search Making an offer Closing on your home Close the deal
Renter vs. Owner
Buying is cheaper then renting in the long-term It’s an investment, where as renting is cash down the drain.
Mortgage payments build equity House payments never change
The Average Mortgage payment in Salisbury, MD For a 3 Bedroom 2 Bathroom home is $1,326 The Average Renting payment in Salisbury, MD for a 3 Bedroom is $1,595 Zumper.com
Don't Sign Your Lease Until You Do the Math Every mortgage payment builds equity in a home you own, where do your rent payments go?
MONTHLY RENT 1 YEAR 3 YEARS 5 YEARS 7 YEARS $1000 $1200 $1400 $1600 $1800 $12,000 $14,400 $16,800 $19,200 $21,600 $36,000 $60,000 $84,000 $43,200 $50,400 $57,600 $64,800 $72,000 $84,000 $96,000 $108,000 $100,800 $117,600 $134,400 $151,200
Benefits of Owning Your Home
Mortgage interest is tax deductible. *
Make any changes you want, without landlord approval.
Build equity every month, invest in your future.
Increase the value with home improvements.
Never worry about when your lease is up.
*Consult a tax advisor for professional tax advice
Conventional Payments example: If you choose a $250,000, 30 year loan at a fixed of 5.0% (APR 5.1655), with a loan-to-value of 80%, you would make 360 payments of $1,367.38. Payment stated does not include taxes and insurance, which will result in a higher payment.
Step by Step
PURCHASING PROCESS
PRE-APPROVAL
WHAT LOAN IS BEST FOR YOU
HOME SEARCH
MAKING AN OFFER
UNDER CONTRACT
MOVE IN!
CLOSE THE DEAL
Call us with ANY questions you have about the process! We are here to help! 410-936-0055
What to Expect When You Buy Your First Home
Make a plan. Figure out what your budget is for your monthly payment and what price range you can afford.
Apply with a lender for your preapproval letter that can be provided with an offer on a home. Income and assets documentation should be provided at this point to the lender.
Work with a real estate agent to receive valuable guidance and market expertise in order to make an informed offer on a home and negotiate a purchase and sale agreement.
I strongly suggest you hire a home inspector to evaluate the condition of the property. This is for your benefit of knowing what condition the home is in that you are buying.
Provide updated income and asset documentation at this point for submission into underwriting.
I strongly suggest a face to face appointment to go over the loan application disclosures so there are no surprises at the closing table regarding the loan program, payments or closing costs.
Your lender will order appraisal and preliminary title. Other than a VA loan, this is when you will need to pay for the appraisal fee.
An underwriter will review the loan file for approval. There may be additional conditions that will need to be met prior to closing.
This document will have your final closing numbers and must be acknowledged at least 3 business days prior to your loan signing.
The closing docusments will be sent to the settlement agent for closing. The signing appointments will be scheduled with both parties. The documents are then sent back to the lender and when the wire is sent to the settlement agent.
Once the wire is received, the Deed of Trust is sent for recording. Keys are typically given to the borrower at this point!
PRE-QUALIFICATION
PRE-APPROVAL VS.
When you hear Pre-Qualification and Pre-Approval, you may think the terms are interchangeable, but they have different meanings when it comes to the home buying process.
Here’s what you need to know:
Pre-Approval
Pre-Qualification
An actual estimate of how much you can afford Has been verified by an underwriter through documentation Significantly more reliable
A best guess of what you can possible afford Can be based off of a verbal statement of income May not always be reliable
While a Pre-Qualification may get you started thinking about your options, a Pre-Approval will tell you exactly what you can afford.
Understand your financial condition Know exactly how much home you can afford before you begin your home search Strengthen your purchasing power when making an offer The first step in any home search is finding out exactly how much home you can afford and securing the financing to make the purchase. While you can get a rough estimate through Pre-Qualification taking the extra step to obtain Pre-Approval will give you some added advantages. Pre-Approval helps you : When you find a home you love and are ready to make an offer, your mortgage Pre-Approval lets the seller know that you’re serious and fully prepared to buy their home, putting you in a stronger position than other potential buyers. Why Pre-Approval Matters
The Pre-Approval Process Here are some of the documents that you will need to provide your lender to get the Pre-Approval process started: Income : Current paystubs- usually for last two months, W-2s or 1099- usually for last two years Tax returns, usually for last two years Assets : Bank statements Investments/brokerage firm statement Net worth of businesses earned (if applicable) Debts : Credit card statements Loan statements Alimony/child support payments (if applicable)
Let's Talk Credit-Scores
Impact of Credit History and Credit Score Credit history and credit score impact a buyers financing options. For example, some buyers may have a short employment history. Others may have fallen behind on bills, damaging their credit and impacting their ability to save. Still others may have no credit history. This doesn’t mean buyers will never qualify for a loan, but it will effect what loan you get. The higher the credit score, the better! How credit Scores Can Cost Buyers- Literally! Example: Let’s imagine we have two buyers, Ted & Maureen, who use the same lender. Ted’s credit score is 620, and is offered a 5.08% interest rate. Maureen s credit score is 760, and she is offered a 3.49% interest rate. Each buyer takes a 30 year fixed rate mortgage on a $280,000 home. Over the life of the loan, Ted pays: $1,517 Monthly payment $266,055 Total interest paid
Maureen pays: $1,256 monthly payment $172,131 Total interest paid
Maureen pays $261 per month less than Ted, and saves $93,960 in interest paid out over her loan term.
Impact of Interest Rates on Homeownership Market fluctuations have given us mortgage interest rates as low as 3% in recent years, but interest rates at 5% and 6% (or even higher) shouldn’t stop anyone from buying. Interest rates do impact affordability. Here's what happens to borrowing power with just a 1% interest rate increase: 4.35%: $205,959 5.35%: $183,608 From a buyers standpoint, the silver lining to rising interest rates is that they tend to have a downward pricing pressure. Even when interest rates are on the rise, buyers should understand that they’re likely paying less for a home then they would be if interest rates were lower.
Different Loan Programs It helps to know that there are programs available to help reach your goal. These programs are designed to assist First-Time homebuyers achieve the American dream of ownership.
Conventional
USDA: Rural Housing Program
Up to 97% LTV Programs Home Ready Home Possible Renovation Loans
No down payment required Income limits and property eligibility apply
VA: Veterans Administration
FHA: Federal Housing Administration
Up to 100% financing for military veterans, active duty military or eligible reservists No PMI
Up to 96.5% LTV financing Loan amount limits apply Higher DTI Allowances
YOUR HOME SEARCH
Home Preference Checklist The more your agent knows about the type of home you want, the better. Take a minute to think about the future and your new home must haves, as well as what you would ideally like it to have, and talk it over with your agent.
THINGS I WOULD LOVE
Price Range: Bedrooms: Bathrooms: Lot Size/SqFt: Age of Home:
1. 2. 3. 4. 5. 6. 7. 8.
FEATURES
Interior:
THINGS I CAN'T LIVE WITHOUT
1. 2. 3. 4. 5. 6. 7. 8.
Exterior:
There are many factors that influence the market value of a home. Your agent will give you the insight and information you need to make an offer you’re comfortable with. Some of the factors to consider include:
How long the home has been on the market If the price has been reduced
How much the home is worth, your agent will provide a comparable market analysis Showing the list and sale prices for similar homes in your area if there are multiple offers Other items that might be included in the sale (furniture, hot tub, etc.) The list to sale price ratio, an indication of how competitive the market is for homes in this area Why the seller is selling Once the offer is written, your agent will present it to the seller agent. At that point the seller can accept your offer, reject it or counter it to start the negotiation process. Your agent will work with you to plan a strategy to ensure the most advantageous terms and acceptable pricing for you and your budget.
10 things that happen after an offer is accepted
Once your offer has been accepted, the closing process begins. Here are some of the typical steps involved.
Home inspection - most property sales are contingent on the result of a home inspection, which is paid for by the buyer. The inspection typically occurs within 10 days of offer acceptance, and includes a review of the homes exterior elements like the roof, siding, trim and windows, as well as kitchen and bathroom fixtures and appliances and major systems like heating and cooling, plumbing and electrical.
If defects are discovered during the inspection, you may exercise the remedy described in your offer or negotiate with the seller to determine what repairs will be made.
Title search - this is a historical review of all legal documents relating to ownership of the property to ensure that there are no claims against the title of the property. It is also recommended that you purchase title insurance in case the records contain errors or there are mistakes in the review process.
Appraisal - as a standard part of the mortgage process, your lender will order an appraisal report to ensure that the loan will be guaranteed by the homes value.
Final walk-through - if it’s requested in the contract, you’ll be given the chance to look at the home to make sure it’s in the same condition as when you signed the sales agreement.
Closing costs - In addition to your deposit and down payment, there are a variety of other costs involved in closing including:
o Loan origination fees, Appraisals, Surveys and Inspections o Mortgage Insurance o Hazard Insurance o Taxes o Assessments o Title insurance, Notary, Escrow Fees, Recording fees and Stamps
CLOSE THE DEAL
Congrats! You're a Homeowner!!
H A P P Y 1ST HOME
Glossary Adjustable rate mortgage (ARM) - A mortgage with an interest rate that changes over time in line with movements in a financial index.
Adjustment Period - The length of the time between interest rate changes. For example, a loan with an adjustment period of one year is called a one year ARM, meaning that the interest rate can change once a year.
Amortization - Repayment of a loan in installments of principal and interest, rather than interest only payments.
Appraisal - An estimate of the properties value.
Assessed value - The value placed on a property for purposes of taxation.
Assumption of mortgage - A buyers agreement to assume the liability under an existing note that is secured by mortgage or deed of trust. The lender must approve the buyer in order to release the original borrower typically the seller from liability.
Balloon payment - A lump some principal payment due at the end of some mortgages or other long-term loans.
Buy down - A permanent buy-down down is prepaid interest that brings the note rate on the loan down to a lower permanent rate. A temporary buy-down is prepaid interest that lowers the note rate temporarily on the loan, allowing the buyer to more readily qualify and increase payments as income grows. Cap - The limit on how much an interest rate or monthly payment can change, either at each adjustment or over the life of a mortgage. Cash reserves - The amount of the buyers liquid cash remaining after making the down payment and paying all closing costs. CC&Rs or Covenants, Conditions and Restrictions - A recorded document that controls the use, requirements and restrictions of a property.
Commission - An amount paid by the seller to the listing and buyers agent for handling the real estate transaction.
Commitment period - A period of time during which a loan approval is valid.
Condominium - A form of real estate ownership in which the owner receives exclusive title to a particular unit and shares ownership in certain common areas with other unit owners. The unit itself is generally a separate space whose interior surface serves as its boundaries. Contingency : A condition that must be satisfied before a contract is binding. For example, a sales agreement or offer may be contingent upon the buyer obtaining financing.
Conversion clause : A provision that enables some homebuyers to change to a fixed rate mortgage, usually after the first adjustment period. The new fixed rate is generally set at the prevailing interest rate for fixed rate mortgages. This conversion feature may involve an extra charge.
Cooperative : A form of multiple ownership in which a corporation or business trust entity holds title to a property and grants occupancy rights to shareholders by means impropriety leases or similar arrangements.
CRB for real certified residential broker : to be certified, a broker must be a member of the national Association of realtors, have five years of experience as a licensed broker and have completed required residential division courses. Debt ratios : The comparison of a buyers housing costs or his or her gross or net affective income and the comparison of a buyers total long-term debt to his or her gross or net affective income. The first ratio is the house in ratio and the second is the total debt ratio.
Deed : A document which, when properly executed and deliver, conveys title of real estate property.
Disclosure : Space to make known or public. By law, a seller of real estate property must disclose facts which affect the value or desirability of the proper. Discount points : A negotiable fee paid to the lender to secure financing to the buyer. Discount points are interest charges paid upfront to reduce the interest rate on the loan over the life or a portion of the term.
Due on sale clause : A clause that requires a full payment of a mortgage or deed of trust when the secured property changes ownership.
Earnest money : The portion of the down payment delivered to the seller or escrow agent by the purchaser, with a written offer as evidence of good faith. Easement : A right to use all or part of the land owned by another for a specific purpose. For example, an easement may entitle the holder to install and maintained sewer or utility lines. Encumbrance : Anything that affects or limits the ownership of real property, such as mortgages, liens, easements or restrictions of any kind. Escrow : A procedure in which a third-party acts as a stakeholder for both the buyer and the seller, carrying out both parties instructions and assuming responsibility for handling all of the paperwork and distribution of funds. An escrow fee, typically paid by the buyer, is charged by the title company to service the transaction and to escrow money and documents.
Equity : The difference between what is owed on the amount for which the property could be sold.
FHA loan : A loan insured by the Federal housing administration of the department of housing and urban development.
Fee simple : An estate in which the owner has unrestricted power do dispose of the property as he or she wishes, including leaving by will or inheritance.
Fixed rate mortgage : A conventional loan with the same interest rate for the life of the loan.
Fixtures : Personal property that is attached to real property and is legally treated as a real property while it is attached. Such as light fixtures, window treatments and medicine cabinet.
Foreclosures : The legal process in which mortgaged property is sold to pay the loan of the defaulting borrower.
Fully indexed rate : The maximum interest on an ARM that can be reached at the first adjustment.
Gift letter : A letter from a relative stating that an amount will be gifted to the buyer and that said amount is not to be repaid.
Graduated payment mortgage : A residential mortgage with monthly payments that starts at a low level and increase at a predetermined rate.
Home warranty plan : Protection against failure of mechanical systems within the property and usually includes plumbing, electrical, heating and cooling systems and installed appliances.
Initial rate interest : The introductory interest rate on a loan, which signals that there may be right adjustments later on in the loan. Joint tendency : An equal, undivided ownership of property by two or more persons. Upon the death of any owner, their survivors take the descendants interest in the property.
List to sale ratio : The ratio between the price at which a property is listed and the amount for which it is actually sold.
Loan commitment : A written promise to make a loan for a specified amount on specific terms.
Loan to value ratio : The relationship between the amount of the mortgage and the appraised value of the property, typically expressed as a percentage of the appraised value.
Margin : The number of percentage points the lender adds to the index rate to calculate the ARM interest rate at each adjustment. Mortgage insurance premium : The mortgage insurance required on FHA loans for the life of said loan. The MIP is either paid in cash at the time of closing or finance over the course as a line. Multiple listing service : The pooling in a central bureau of all properties for sale. The listings are held individually by members of a group of real estate brokers, with the agreement that any member of the group may sell the properties in the commission will be divided between the broker that sold the property in the broker who filed the listing. Pre-Approval : When a borrower has completed a loan application and provided debt, income and savings documentation which an underwriter has reviewed and approved. A pre-approval is usually done at a certain loan amount and making assumptions about what the interest rate will actually be at the time the loan is made, as well as estimates for the loan that will be paid for property taxes, insurance is others.
Repayment penalty or clause : A fee charged to a borrower who pays a loan in full before the stated due date.
Purchase agreement : A written document in which the purchaser agrees to buy certain real estate and the seller agrees to sell understated terms and conditions. Also called a sales contract, earnest money contract or agreement for sale
Rate gap : The difference between the current rate and the ratio to which it could adjust on an ARM
Refinance : A new loan with new terms, interest rates and monthly payments that completely replaces your current mortgage
Short sale : The sale of a home for less than the balance remaining on the homeowners mortgage
Tenancy in common : A type of joint ownership of property by two or more persons with no right of survivorship
Title : The rights of ownership recognized and protected by law. It is a combination of all elements that constitute the highest legal right to own, possess, use, control, enjoy, transfer and dispose of.
Tax Deductions Available to Homeowners
Interest: Interest on home mortgage debt may be deductible. When deductible, the interest is deductible in the year that its paid. Homeowners’ insurance: Homeowners’ insurance is not deductible unless your client runs a home business, or if the home is a rental property. Property Taxes: Real property taxes are deducted in full in the year they are paid. The “SALT” deduction is capped at $10,000 for the tax years 2018-2025. Home Equity Loans: Interest on home equity loans taken for home improvements may be deducted in the year its paid. Emphasize Benefits of Homeownership Pride of ownership: Owning one’s home and maintaining and improving it provides security, a built- in savings plan, and a sense of accomplishment. Real estate can be passed on to heirs; an apartment can’t. Pets aren’t an issue, and there’s no one telling you what you can and can’t do inside or outside the home. Hedge against inflation: Neither the principal nor the interest rate of a fixed rate mortgage change over 30 years. On the other hand, rental increases are common, and a 4% to 6% increase per year isn’t unheard of. Some areas cap rental increases, for instance, at 10%. But if your mortgage rose from $2,000 to $2,200, you’d feel it. In some areas, mortgage payments are less expensive than rent. Leverage: Where else can you obtain appreciation on 100% of an investment when you only own 10% to 20% fo it? Let’s say you’re deciding between financing a home and placing $20,000 in the bank. The bank may return 2% interest on your investment. But if you use $20,000 as a down payment on a $200,000 home, and housing prices rise 2%, you’ve just increased your return by $4,000. Tax Advantages: Taxpayers who itemize may be able to take advantage of mortgage interest deduction. Property taxes are deductible within limits. Homeowners who sell can also take advantage of the capital gain exclusion- up to $250,000 home for an individual or $500,000 for a married couple. Stability: In addition to stable housing payments, residents don’t have to worry about being ousted by a landlord who decided to convert apartments to condos. Since homeowners tend to remain in place longer than rents, its possible to build relationships with neighbors and create a sense of community.
Equity Loans: A home loan is more affordable than credit card debt.
Mistakes to Avoid
Miscalculation the hidden costs of homeownership Homeownership is much more than just a mortgage payment. As a new homeowner, you’ll pay for property taxes, mortgage insurance, homeowners insurance, hazard insurance, repairs, maintenance and utilities.
Looking for a home before applying for a mortgage Many first-time home buyers make the mistake of viewing homes before ever getting in front of a mortgage lender, In a competitive market, you could lose a property if you aren’t pre-approved for a mortgage.
Don’t do it alone The Payne Team real estate agents and Loan Officer Shawn Hunt have your best interest at heart.
Draining your savings Spending all or most of their savings on the down payment and closing costs is one of the biggest first time homebuyer mistakes
Being careless with credit Lenders pull credit reports at pre-approval to make sure things check out and again just before closing. Any new loans or credit card amount on your credit reports can jeopardize the closing and final loan approval
DON'T
Make any major purchases such as cars, boats, or furniture Open or close any credit or any accounts, including new loans Pay off any accounts or charge-off/ collections without discussion with a loan officer first Transfer money between accounts Receive & deposit a monetary gift without first discussing the transfer of those funds with your mortgage advisor
Change positions, employers or take a leave of absence Start home improvement projects or move residences Make cash deposits into your bank accounts
First-Time Home Buyer's Checklist
Make sure you're (really) ready
You have a stable job. You can see yourself living in the same town for the next 5-10 years You're prepared for the extra work that comes with homeownership
Create your home wish list
Determine what's most important to have right now- ex: location, # of bedrooms, a yard Check out the different neighborhoods, home styles and listing online to get a feel for what's most important to you.
Figure out what you can afford
Request your credit report from all threes credit bureaus- fix any errors right away Determine a down payment amount (ideally 20% to avoid paying private mortgage insurance) Calculate how much you'll need in an emergency fund for unexpected maintenance or repair costs.
Gather the necessary documents
Collect proof of employment, including pay stubs and past tax returns Print out bank and investment account statements from the past 90 days Compile your previous addresses and current landlord's contact information
Research mortgages
Request quotes form multiple lenders and comparison shop for loans Get pre-qualified for a loan Obtain a pre-approval letter
Beginning
Closing
Narrow Down Choices 1) 2) 3)
Find a Realtor Name: Agency: Fees:
Credit Score Check Current score(s): Need to Improve? Goal Score(s):
Pick Your House Choice: Choose a Lender With/Where:
Determine Affordability Home Cost: Monthly Mortgage: Other Costs: Down Payment Saved % to Save: Saving Goal: Time Unit Met:
Make an Offer
Offer Accepted
Have a Home Inspection
Get an Appraisal
Complete the Paperwork
Get Pre-Qualified With/Where:
Close the Sale
Research The Market Location(s) Desired:
NOTES
Get Pre-Approved With/Where:
Begin House Hunting
Scan the QR Code to learn more about us!
(410) 936-0055 ThePayneTeamRE.com The Payne Team Office 8245 Dickerson Ln Unit D Salisbury, MD 21801
Shawn Hunt LOAN OFFICER-THE HUNT TEAM
SVP, Area Manager NMLS ID# 1098459 M: (443) 783-0910
shunt@cmghomeloans.com www.HuntTeamMortgage.com CMG Home Loans | NMLS ID# 1820
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