HOME BUYING 101 FROMThe Gaillard Group

Introduction

Often times we come across people who are just plain "realtor ragged". They have seen the tactics of some real estate agents and are very wary of the service we provide. We can assure you. We understand!

We have seen realtors push and prod their clients into previewing their listings without any consideration for the BUYER'S needs. It makes you wonder - are they really working on your behalf? Or are they just trying to sell their listings no matter what? We have to admit: We would love to sell our listings to every buyer we come into contact with however we realize that not every listing of ours will meet the needs of our buyer clients. Our goal is to have each real estate transaction we are involved with be a successful one - for all parties. We receive such satisfaction when we are able to find that “needle in the haystack” of a dream house for our buyers! We can assure you, it's not about us - its all about you and your wants and needs. Our personal attention to our client's needs is what makes our service differ from others.

Finding and buying the right home is a highly personalized process, and it all begins by identifying your wants and needs. We have access to virtually every property for sale in this market, and will show you the homes that best match your requirements. We know the area and the market trends and provide our clients with information such as past property sales history, current, past and future market value trends, and area information that may have an effect on the property's value. To save you time, hassle and duplicate effort, call us for additional information on properties you see, regardless of the listing company - even if it is a For Sale By Owner. We can obtain important facts about homes you see advertised in newspapers, buyers' guides, on the internet, or for sale signs.

Discovering the right home should be an exciting event. As professional REALTORS, Our commitment is to make your home search as stress-free and efficient for you as possible. We know the importance of the decision to buy a home and will walk you through the process ensuring your final decision is made with educated confidence.

It is our sincere desire to serve you and your home buying needs with diligence, integrity and results!

1. Begin the Home Buying Process

Discovering the right home should be an exciting event. As your REALTOR®, our commitment is to make your home search as stress-free and efficient for you as possible.

Identifying up-front what is affordable will save time and frustration in the home-finding process. It is important to consider the financing options available and to begin the mortgage pre-approval process as soon as possible.

From the multitude of properties currently on the market, we will select those that most closely meet your unique needs and interests. It is best to preview only a few homes at a time. We will schedule time to look at homes and neighborhoods and arrange showing appointments with the sellers or their brokers. If the seller or their real estate professional is at the property when we are there, it would be best for you to limit your conversation with them. You can use the Homefinders Worksheets we will give you to evaluate each property. In order to help us find the right home for you, we will ask you to tell us your thoughts about each property you see - the

positives and the negatives. We will continue to assess your needs and buying criteria defining "HOME" (the property you buy will be much more than a house; it will be your home).

The following questions can help you describe the things that are most important to you in your ideal home and neighborhood.

1 - For some people, "home: means a hub of social activity; for others it might be a place to retreat from the pressures of daily life. What does "home" mean to you?

2 - Who will be living in your household? Will you often have other family members of friends visiting for more than a few days at a time?

3- If you will be working outside your home, what would you consider a comfortable commute (in time or distance)? Will you be working at home?

4 - What are the most important activities for the members of your household? For example, hobbies, recreation, school, entertaining, religious or cultural activities.

5 - What are one or more features you liked most about homes you have lived in previously? This might include style, floorplan, yard, view and neighborhood.

6 - What is something you disliked about the house or neighborhood where you have lived previously, and that you would want to avoid in your next home?

7 - What are the most important "must have" features of your ideal home and neighborhood? Why are they important?

8 - How far along are you in the home-finding process (just thinking about the possibility of buying a home, or definitely committed to making a move)?

9 - How long have you been looking for a home?

10 - Why are you contemplating the purchase of a home at this time?

11 - What is your time frame? Is there a definite time by which you must be settled in your new home?

12 - Who will be included in the home-finding and buying decisions?

13 - Have you ever purchased a home before? If so, how many, and how recently?

14 - Thinking of previous home-finding experiences, what were the most positive features of those experiences? If you have never bought a home before, what are you looking forward to most in the experience?

15 - Were there any unpleasant features of your previous home-finding experiences that you hope to avoid this time?

16 - If you are buying your first home, are there any problems or concerns you are worried about?

17 - How do you plan to handle the financing of your new home? Are you aware of your financing options?

18 - What are your expectations of me as your real estate professional?

19 - What specific services and support do you expect?

By taking the time to ponder these thoughts and questions, you will have a better understanding of what you want both in a home and a real estate professional. Also, if you are purchasing a home with a spouse or jointly, its important that we know ALL of the considerations in order to provide the best service to everyone involved. There are some homes that will be perfect for one and not the other. Our goal is to make sure that everyone thinks of their new home as their perfect find in the midst of a broad array of selections!

2. Offering to Purchase a Home

Once you have found the right property, the next step is to make a purchase offer to the seller.

DETERMINE THE PRICE YOU WANT TO OFFER:

The price the seller is asking may or may not reflectrealistic market value. The best way to determine market value is with a Comparative Market Analysis (CMA) showing similar properties that sold recently, those that are currently active on the market and those that failed to sell. We will discuss with you an estimate of costs associated with purchasing this property.

DECIDE ON FINANCING:

We will review together the status of your loan pre-approval. We will work together with your loan officer to explain financing options and help you determine the mortgage plan that best fits your requirements.

DECIDE ON OTHER ISSUES THAT ARE IMPORTANT TO YOU, SUCH AS:

• Items of personal property you want included with the house.• Warranty, inspections, repairs or other home enhancements by the seller.• Closing date and possession.

WE WILL PRESENT YOUR OFFER

The seller will have three choices:

• Accept your offer as it is presented; • reject it completely; • or propose adjustments to your offer (counter offer).

If there is a counter offer, you can choose whether to accept it, reject it or counter it.

RATIFICATION

Once you have reached an agreement with the seller, you will have a firm contract (ratified contract) to purchase the home. Congratulations!

3. The Time-line you can Expect

The home-finding process typically includes many of the following elements:

INITIAL CONSULTATION:

Determine your priorities and needs.Review "agency" choices and select appropriate working relationship.Discuss financing options.

FINDING THE RIGHT HOME:

We will work together in previewing properties based on your criteria.We will evaluate each property's merits.After our research and evaluation, we will settle on the right home.

PREPARING AN OFFER:

Review comparable sales to determine offer price.Review progress of loan pre-approval; decide on financing.Decide on other terms (inspections, possession date, personal property, etc.)Prepare earnest money deposit.

REACHING AN AGREEMENT WITH THE SELLER

We will present your offer to the seller's agent.Negotiation of terms and possible counteroffers.Agreed-upon sales contract with seller.

COMPLETING THE SETTLEMENT PROCESS

Deposit of earnest money.Review seller's property disclosures.Review preliminary title report.Roof, termite and other inspections.Remove any remaining contingencies.Arrange for homeowners insurance.Arrange for home warranty.Arrange for movers.Final walk-through of property.Provide balance of down payment and closing costs.Sign documents.Loan funding.Recording of title.Receive keysMOVE IN!

FINANCING TIME-LINE

• Find a mortgage company.• Consult with a loan officer.• Pre-qualification.• Complete loan application.• Obtain loan pre-approval.• Provide requested documentation.• Once a contract it ratified, the lending institution will

initiate: Property appraisal, Loan processing and Final loan approval.

COMPLETING THE DEAL

Many details need to be taken care of in order for a home purchase to be completed. It can take 15-90 days to complete all the steps involved in a home sale, depending on the complexity of the transaction. We will work closely with everyone involved in the transaction to help ensure that it moves ahead as smoothly as possible. We will:

• Explain to you in detail all the steps that will occur, and answer any questions you might have.• Work with the seller's broker to see that they fulfill their responsibilities under the contract.• Stay in touch with the settlement officer, title officer, lender and others to help coordinate their

activities and to help keep the transactions moving forward.• Communicate with you on a regular basis so that you can stay informed and as worry-free as

possible.

A WORD ABOUT INTERIM INTEREST

Can you really save money by closing at the end of the month?

A little background first. Let's compare a mortgage payment to renting. You generally pay rent at the beginning of the month for the upcoming month - paying in advance. But your mortgage payment generally takes care of the interest that was accrued on the principal balance during the month that just passed. This is sometimes called paying in arrears.

You can close on a house any day during a month. Let’s say you close on September 15; your initial mortgage payment would be due November 1. That payment includes interest for October. What about the remaining 15 days of September? This interim interest (sometimes called pre-paid interest) is paid at closing. The closer your closing is to the end of the month, the smaller this amount will be.

Renters who are buying a home save money on a late-month closing because they are out of the rental and into their new home before the next month's rent is due. This is what makes closing near the end of the month so appealing to home buyers. You bring less money to closing. In many cases, home buyers are really strapped for cash and they are counting every penny right around closing. Closing near the end of the month can help with immediate cash needs, and it can give the illusion of saving money – but you really don’t save any money in the long term, because the mortgage is still for 30 years (or 15 - whatever your term happens to be) to the day in either case.

Some home buyers aren’t so sensitive to that one-time interim interest payment at closing, and instead love the fact that their first mortgage payment isn’t due for well over a month. If you are one of these people, then closing just after the month begins is right for you. Interim interest can play a role when it comes to refinancing a home.

Many times a homeowner will calculate the amount needed on a refinance based upon their current mortgage balance plus costs involved. The one calculation most borrowers miss is the accrual of interim interest on the old mortgage. Many times a borrower will call their current mortgage holder at the beginning of a month to find out the amount of their current principal balance - a payoff.

If they wind up closing on their refinance closer to the end of the month, they may be shocked to learn the amount needed to pay off the old mortgage is greater than the original quote - sometimes close to a full mortgage payment greater.

Sometimes individuals who are refinancing won’t make the mortgage payment that is due just prior to closing on a refinance. So if the closing on a refinance were scheduled for September 15, many borrowers do not make the payment due September 1, since most mortgage payments are not late until the 15th. (by the

way - we don't recommend this ) Since that payment would pay interest due for August, they now wind up owing interest for the full month of August and half of September at closing.

This can be an unpleasant surprise at the closing table. In order to avoid this, a good rule of thumb is to expect settlement costs (closing costs plus pre-paid interest and escrows) at the time of closing to be higher than expected by the equivalent of one monthly payment.

Many lenders will often give an "interest credit" in the first 5 days of the month, which is actually a credit for interest during those first five days which is going to be included in the upcoming payment. Assuming you can obtain such a credit, the first 5 days of the month would then require the least amount of cash to close.

With regard to refinancing an FHA loan. FHA loans accrue interest to the end of the month regardless of the date they are paid off. Therefore, when paying off an FHA loan, it is important to time the funding in order to not have to double pay interest.

4. The Credit Impact of Buying a Home

Today, more than two-thirds of the country owns their own home. Before you become a proud homeowner yourself, your first step is to determine if you are really ready. Your decision to buy a home is a big one -- maybe one of the biggest financial decisions you'll ever make. That makes it especially important to arm yourself with the facts about home buying.

This page shows you some helpful tips to help you decide if you are ready. Once you know that buying a home is the right choice for you, read on. This section is loaded with lots of great guidance to make buying your home a fun and rewarding experience!

Is Your Credit in Order?

It's critical that you get a copy of your credit report and credit score a few months before making such a major purchase. Check your report thoroughly to make sure there isn't any negative or incorrect information that could hurt your chances of getting a favorable mortgage. Spend this time to get things in order -- for example, catch up on any overdue payments.

Can You Afford It?

Do you have the down payment? The down payment is a percentage of the value of the property that you are required to pay up front. Down payments can range from 3 - 20% of the property value, depending on the type of mortgage and the area where you are buying the house. if your down payment is less than 20%, you may be required to purchase mortgage insurance.

Do you have the closing costs? Closing costs include points, taxes, title insurance, financing costs, and other settlement costs. These costs generally range between 2 - 7% of the property value. You will receive an estimate of these costs from your lender after you apply for a mortgage.

Can you prove you have the money? If your money is in a savings account, the lender will need proof that the money's there, for how long, and that it wasn't borrowed. Some communities have special programs that allow first-time buyers to accept gifts towards the down payment. But some lenders require a certain amount of the down payment come from savings you have accumulated personally. In almost all cases, the lender requires a gift letter verifying that the gift does not have to be repaid.

Other Questions to Answer

Have you been employed regularly for the past two years, receiving dependable and adequate income? Do you always pay your bills on time? Is your total debt, including credit cards and car loans, manageable? After you pay the down payment and closing costs, can you afford the mortgage and other expenses, such as electric, water, and repair costs? Do you plan to live in the house for at least two years so that it builds some equity?

If you can answer yes to at least most of these questions, now is probably a great time to consider buying!

Understanding Credit Scores

A credit score is a number lenders use to help them decide: "If I give this person a loan or credit card, how likely is it I will get paid back on time?" It is generated through statistical models using elements from your credit report; however, your score is not physically stored as part of your credit history on the credit file. Rather, it is typically generated at the time a lender requests your credit report, and is then included as part of the report. Your credit score is a fluid number, and it changes as the elements in your credit report change. For example, payment updates or a new account could cause your score to fluctuate. There are many different credit scores used in the financial service industry. Your score may be different from lender to lender (or from car loan to mortgage loan), depending on the type of credit scoring model that was used.

History of credit scores

Credit scores came into wide use in the 1980's. Long before credit scores, human judgment was the sole factor in deciding who received credit. Lenders used their past experience at observing consumer credit behavior as the basis for judging new consumers. Not only was this a slow process, but it was also unreliable because of human error.

Lenders eventually began to standardize how they made credit decisions by using a point system that scored the different variables on a consumer's credit report. This point system helped to eliminate much of the bias that previously existed; however, it was still tied to intuitive measures of creditworthiness and was not based on actual consumer behavior.

Credit granting took a huge leap forward when statistical models were built that considered numerous variables and combinations of variables. These models were built using payment information from thousands of actual consumers, which made scores highly effective in predicting consumer credit behavior. When combined with computer applications, scoring models have made the credit granting process extremely fast, efficient and objective, facilitating commerce and helping consumers quickly get the credit they need

Improving Credit

Top 10 Ways to Improve Your Score

10. Learn what your current FICO® Credit Score is and what appears on your credit report.

9. Don't open new credit cards that you don't need just to increase your available credit. This approach could backfire and actually lower your score.

8. Try to keep your total account balances as low as possible. High outstanding debt may negatively affect your score, as you have a greater chance of missing payments.

7. Correct any incorrect information that might appear on your credit report.

6. If your credit is severely damaged, or you have a very short credit history, there are still ways to improve your credit over time. Consider opening new accounts responsibly and paying them off on time.

5. If you fall behind on paying a bill because of illness, unemployment, or family issues, write a short explanation to the credit reporting agencies. They will add it to your credit report. Also, call your creditor to explain the circumstances and, if possible, work out a payment schedule you can meet.

4. If you need help managing your credit, contact a reliable nonprofit agency, such as:

Consumer Credit Counseling Service (CCCS) 800/388-2227www.cccsinc.org

3. To minimize the number of inquiries on your credit report, don't apply for multiple credit cards over a short period of time, or for a card you're not likely to get. Apply for new credit accounts only as needed.

2. Make all of your payments on time. If forced to miss a payment, be sure to pay the following month. Accounts more than 60 days past due will be indicated on your credit report.

1. Continue to check your credit report regularly, correcting errors and inaccuracies that can damage your credit score.

Credit Reporting AgenciesExperian – www.Experian.comEquifax – www.Equifax.comTransunion – www.Transunionc.om

5. Financing Your New Home

Unless you are in a position to pay cash for your home, you will need to obtain a home loan (mortgage) to complete the purchase. We will assist you in this process to help ensure that you obtain the financing that meets your needs.

Being pre-approved for a loan before you submit an offer will put you in a stronger negotiating position and can save time in the loan approval process. We can put you in touch with experienced loan officers at leading mortgage companies. Your loan officer will be your principal guide through the financing process. Various financing options may be available to you, including:

• Fixed Rate Mortgage

• Adjustable Rate Mortgage (ARM)

• Government-assisted (FHA or VA) financing

• Seller-assisted financing

You can expect the lender to ask for standard information regarding your income, expenses and obligations.

It's important to us to be able to refer our clients to other professionals who share our same core beliefs. Just as not all real estate agents are the same, not all lenders are the same. Each mortgage company has different programs to offer and each lender has different services and expertise to offer. All of the following lenders we have worked with personally in the past and can confidently refer them for your lending business:

• Brandon Buchardt, WR Starkey Mortgage (843) 478-3876 • Josh Feldman, Suntrust Mortgage (843) 364-5626• Rose Lawless, Bank of America Mortgage (843) 971-1835• Kathy McGhee, Wells Fargo Home Mortgage (843) 571-1636 X 12

Even if you have less than perfect credit, a new home is not out of reach. There are several programs to assist people who are serious about purchasing a home and wanting to get their finances in order.

6. Home Inspections - A Must Do

There are several ways to help support a trouble-free home purchase.

• A written property disclosure statement from the seller will reveal any problems with the house and the surrounding area that you need to know about.

• Professional inspections can reveal structural, roof, termite (CL100) and other problems with the property that the seller will need to remedy.

• A home warranty can give you peace of mind by providing repair-or-replace coverage of major home operating systems and appliances.

• A preliminary title report informs you of any problems with the property's title and a policy of title insurance protects your rights to the property.

• A walk-through before closing will allow you to make sure all required work has been taken care of and that the property is ready to become yours.

7. Time to Move In!

• The moving industry has a "peak" and "off peak" seasons. The "peak" season for movers is during the summer. Also the beginning and the end of the month or end of the year holidays are extra busy for movers. During that period of time the demand for moving equipment, vans, and personnel is heavy.

•Your move should occur at a time that is convenient for you. However, You should consider if you want to transfer your children during the school term as well as other factors involving your family. If your move can be rescheduled for another time when the van line agent will be able to accommodate your preferred delivery dates, you may be able to reduce your moving cost.

• Call or email the van line agents that you selected to set up a visual survey-moving estimate with a relocation consultant at home. The relocation consultant will prepare an estimate in writing and submit it to you.

• Decide what items you want to ship and what will be discarded. Inspect your home; check your attic to your basement, before the relocation consultant will arrive. Show the consultant everything that you will be moving.

• If you decide to do your own packing, get packing supplies and start collecting strong boxes suitable for moving. Complete all your packing by moving day.

• If your company is relocating you, find out what portion of your moving expense will be paid your company.

• Obtain a written appraisal of antiques to verify their value. Do not retouch, wax or oil wood furniture before moving. Some products may soften the wood, making it vulnerable to imprinting from furniture pads.

• Notify the post office that you will be moving. Provide them with a new address (permanent or temporary).

Personalized Service is the Foundation of Our Business - Working Together We Achieve Successful Results!