Buying a Boise Home

With The HELP Program, buying a Boise home has never been easier! Right now is the time to buy Boise real estate, there is a large inventory of Boise homes to choose from, and prices have never been better!

In this market you need experienced Boise real estate agents that understand today’s local market. The HELP Program has a team of “In House” Boise real estate professionals to handle every aspect involved in finding you the perfect Boise home, getting the sale closed, and you moved in!

Regardless of the slowdowns in the Boise housing market, housing remains a good long-term investment. Buying smart is an investment in your future and long-term value. Just a few immediate benefits of owning Boise real estate is that your money is invested in your future instead of being thrown away in rent, you will have tax deductions that you don’t have with renting, and you have control over you monthly payments as opposed to being at the whim of a landlord.
Buying a home in not the same process in all states, and changes over time as well. Knowing what you will go through may make the experience more comfortable and may save you from making some costly mistakes.

How We Can HELP

HELP You find the right home
HELP you shop for the best Mortgage
Initiate and close the sale
Provide Financial Analysis
Assess your credit situation
Help you amass $6000 in savings (for closing costs and reserves)
Manage a one year lease to own contract

Eagle Rock Properties and The HELP Program offer a free presentation… to explain the key issues to consider before purchasing a home. The presentation will be customized based on your:

In this meeting we will also:

• Explain the four criteria lenders will consider before approving you for a loan
• Analyze your credit report and, if necessary, a plan for restoring your credit
• Identify the home price for which you can qualify
• Show you homes that meet your criteria
• Create a budget and expense tracking system you can use to reduce debt and save for a down payment
• Identify loan opportunities and down payment options
• Outline a rent-to-own strategy if you cannot qualify for a loan

We will introduce you to a member of our lender team who will get pre-qualified for a loan so you know which price range of homes to shop for.

Based on our initial consultation and your pre-qualification, I will take you to look at homes.

When we find the right home, we will make an offer using the standard Purchase and Sale Agreement used by licensed Realtors in the State of Idaho. Depending on your situation, this offer will be either for a traditional purchase or a purchase on a rent-to-own contract.

Earnest money amount

Although the amount varies based on the price of the home and the specific deal, the amount usually ranges from $500 to a few thousand. A check for the earnest money will need to be received by the agent writing the offer at the time you sign it.

The earnest money (depending on how it is written in the contract) will remain in the brokerage office until the offer is accepted, then it will be deposited in a trust account. The Earnest money will apply to your amount at closing. Consider the earnest money like a deposit.

Closing date

When do you want to own the house? Usually, lenders ask for 30 days minimum for the loan.

Down payment amount

Are you pre-qualified? How much will you need to put down? What are the terms of the loan. (I rarely—if ever—recommend anything but a fixed interest rate. Although there is a place for adjustable rate mortgages, I’ve only had one time in hundreds of transactions that an adjustable rate mortgage was a good idea.

Terms

What terms do you want in the offer (seller paid concessions, items included with the sale of the home, closing costs, contingencies.)

The sellers have now 3 options:

They will accept, reject or send a counter offer to your offer.

• They reject your offer:
  Discuss with your agent if you want to resubmit an offer on the property or move on to a different property. Make sure you know the reason for the rejection (price, contingencies)
• They counter offer:
  That means that they accept your offer if you are willing to change a few things. You can then decide to accept their counter, reject it, or send them another counter offer. You can go back and forth with the sellers as long as you want until you reach an agreement or one party decides to reject.
• They accept your offer:
  Great, now a whole new set of deadlines are in place! You are one step closer to owning the property!

All the deadlines in the contract start at the time of acceptance.

The first thing that will happen (unless otherwise written in contract) is that your earnest money will be deposited into my brokerages trust account./p>

If you have an home inspection contingency, schedule it right away, or have me help you with that. There is no reason to wait until the last minute.

If you have not yet sent it to the sellers, you will have to submit a prequalification letters as per contract deadline.

Once the offer is accepted, I will send all paperwork to your lender and to the title company to open title and start on the preliminary title commitment.

If you miss a deadline, there are consequences. You may accidentally give the sellers a reason to cancel the contract if you don’t submit information in time. All deadlines are measured in business days, and they are all defined in the contract. I will keep track of all the deadlines to make sure we don’t miss any. It will be important for you to get needed information to me on time.

I always recommend conducting a home inspection. If the home inspection reveals something you don’t like about the home (ie, a cracked foundation or water in the crawlspace) you can terminate the contract and receive your earnest money back.

Each offer is unique. There may be some addenda written by either you or the seller to change certain parts of the contract, or to add or delete certain things. For example, if you need to change the closing date, or the lender requires that your names appear differently on the contract, to add a spouse or significant other, to ask seller to fix certain things after the inspection. Most contracts have at least one addendum, and some have as many as six or seven. I will draft these up for you, and you will have to sign, date and return them after deciding to accept them.

Be in constant communication with your lender. Most of the time, the lender needs docs from you (to prove income, address credit issues, or verify information you provided when you completed the application. It is in your best interest to make sure that you are in regular contact with your lender, your real estate agent, and the title company. These three entities really are a team at your service. The more we work together, the more efficient we are.

Insurance. Your lender will require that you get Home Insurance. Talk to them early about it. If you don’t have an insurance company, I can recommend several I trust and have worked with in the past.

A few business days after acceptance, you will receive a document called the Preliminary Title Commitment. This is a document drawn by the title company that ensures you that the sellers actually own the house and have the right to sell it (very important information!). It also shows you if there are any liens or judgments to cloud on the title. The best advice would be for you to review this document with your attorney. If you have any question, I or the title company may help you. You will have a timeframe as defined in the contract to review this document and communicate to the sellers if you have any problems with it.

The Title Company, your lender and myself are each responsible to take care of certain aspects of the process. At the end, we all need to come together for you to sign and become an owner!

The lender needs to submit their loan documents to underwriting—the entity responsible for loaning you the money. The underwriter will review everything, making sure that there are no issues. Once the lender receives the docs back, they will send them to the Title Company. As this point, your escrow officer will work the numbers, and prepare the settlement statement. This document will tell you if and how much you need to bring at closing. It also compiles all prorations (taxes, utilities and irrigation, if applicable). Early in the process, I can show you copies of this document from previous closings, so you can understand the various fees you will be paying at closing.

Once the escrow officer has reviewed the package and prepared the settlement statement, you can go ahead and sign. Both you and the sellers will have to sign, and in Idaho, each party signs separately, so you will not actually meet the sellers.

When you sign the documents, you will need your ID (drivers license), and the down payment amount. The title company can give you the details of how to pay. Typically, you will need to bring in a cashier’s check.

After you and the sellers sign, the documents will be sent back to the lender, and they will wire the funds to the title company. Sometimes, they require a certain amount of time for reviewing (24 to 48 hours usually) before they wire the money.

Once the funds arrive at the Title Company, they will bring paperwork to the County Assessors office to record the transaction. Once the transaction is recorded, the closing take place. This is when you become a home owner.

At this point, you can get the keys to the property, and move into your home!

Although the process is logical, it can be quite lengthy. My job as your realtor is to help you successfully manage each phase of the transaction and make sure each of the various entities working on the deal (the lender and underwriter, the title company, the inspector, the realtors, and the buyer / sellers) do their part at the appropriate times.

It will be Yours and Yours Alone – Owning your own home frees you from the restrictions that renters experience. You can paint the walls the color you like or hammer a nail where you want without hassle from the landlord!

Life Style – Homeowners are a different breed. When you live in a neighborhood or complex that is basically owner occupied your neighbors – like you, have invested in care about their property. They are willing to spend more time, effort and money to improve the property and the community, which in turn improves the value of your property.

Equity Build-Up – Once you have made them, rental payments are gone. But with each mortgage payment, you are buying something tangible and building up equity. The longer you own your own home, the greater will be your equity.

Keep up With Inflation – A home is an investment that helps you keep up with inflation. Not all homes appreciate in value at the same rate; some years are better than others, but real estate historically has kept pace, and usually exceeded, the rate of inflation.

Income Tax Benefits – All interest paid on a mortgage is deductible for state and federal income tax purposes. Moreover, state and locally property taxes also are deductible. Generally speaking, 90% to 95% of your house payment is income tax deductible during the early years of the mortgage.

Payback on Improvements – A renter who makes improvements on the home they occupy enjoys no financial benefits from them when they relocate. As a homeowner, you can recover all or part of the cost of the improvements when you sell the house.

Trade-Up Value – Even if your first purchase isn’t your “dream home”, you will be working your way up to that possibility when you buy a home. With appreciation you are building equity that, one day, will make your dreams a reality.

Security for Retirement – Unlike rent, which goes on forever, the mortgage on your home will someday be paid, providing you with “rent-free” living for your retirement.

Investment Property – For some homeowners, second houses or condominiums are proving to be good investments as income producers or tax shelters, or both. As the owner of investment property, you can enjoy not only extra income, but also additional tax benefits from the depreciation allowance that is provided under present tax laws.

Interest Rates may be Deceiving – Because the interest is tax deductible, the “effective” interest rate is lower than the note rate. For example, a mortgage interest rate of 12% becomes an “effective” rate of 8% after taking the tax benefits into account.

PRE-PURCHASE CONSULTATION: PRE-LOAN AGREEMENT
BUYER REPRESENTATION AGREEMENT
MARKET EDUCATION – FINDING A HOME
SELECT A HOME TO BUY – WRITE THE OFFER
OFFER PRESENTED TO SELLER
NEGOTIATION OF TERMS
RATIFIED PURCHASE CONTRACT
EARNEST MONEY DEPOSIT
SCHEDULE INSPECTIONS RECEIVE DISCLOSURES
BEGIN SETTLEMENT PROCESS DEPOSIT EARNEST MONEY
FINAL LOAN PROCESS STARTS
REVIEW DISCLOSURES RECEIVE DISCLOSURES
TITLE SEARCH PRELIM TITLE REPORT
PROPERTY APPRAISAL
REMOVE INSPECTION & OTHER CONTINGENCIES
CREDIT REPORT
VERIFICATION
ARRANGE FOR HOMEOWNERS INSURANCE – ARRANGE FOR MOVERS –
ARRANGE FOR HOME WARRANTY
FINAL LOAN COMMITMENT – REMOVE FINAL CONTINGENCIES
SUBMIT BALANCE OF DOWN PAYMENT TO TITLE COMPANY
SIGN CLOSING AND LOAN PAPERS AT TITLE COMPANY
LOAN RECORDING-RECORD TITLE
CLOSE – GET THE KEYS
WELCOME HOME!

Gross Monthly Income – This is your total stable and verifiable income before expenses, such as taxes, insurance premiums, etc., are deducted
Net Income – This is what is left of your gross income after taxes and insurance premiums. Essentially, this is your take home pay.
Monthly Installment Debt – This is an account which has a specific term (length of time to repay) and a set payment per month. Car loans and boat loans would be examples of installment debt.
Revolving Debt – Revolving debt included accounts where the balance may fluctuate each month and the monthly payment will also change. Charge cards would be examples of revolving debt.
Housing Debt Ratio – The Housing Debt Ratio is the percentage of gross monthly income that home buyers can allocate for principal, interest, taxes and insurance. Many lenders use percentages ranging from 25% to 28% as the maximum for the Housing Debt Ratio. Often referred to as the “front-end” ratio.
Total Debt Ratio – The Total Debt Ratio is the percentage of gross income that can be allocated to all monthly debts, including housing. This ratio would include things like car payments, finance company bills, credit card payments and any debt which has more than 11 payments left. The maximum percentages frequently used by lenders are 33% to 36%. Often referred to as the “back-end” ratio.
These are the fur parts of a mortgage payment commonly called “PITI”.
“P” – Principal
“I” – Interest
“T” – Taxes
“I” – Insurance (includes Hazard and Mortgage Insurance)

Types of Mortgages

A fixed-rate mortgage is a mortgage in which the interest rate does not change during the entire term of the loan. These mortgages are offered in various terms, with the most common being for 15 years or 30 years. The only change in payments a borrower may incur would be an increase or decrease in the amounts the lender collects for mortgage insurance, real estate taxes, or property insurance (escrow payments).

A Fixed-rate “amortizes” the money borrowed over the stated term by paying the interest due and reducing the principal a little each month. In the early years, most fo the monthly payment goes toward interest and very little goes toward the principal. In the later years, most of the payment goes toward principal and very little toward interest. For example:
$70,000 30-year mortgage, at 10%
First Payment Final Payment
Interest: $583.33 Interest: $5.08
Principal: $30.97 Principal: $609.22
Total Pmt: $614.30 Total Pmt: $614.30
A 15-year fixed rate mortgage reduces the total amount of interest paid over the life of the loan by accelerating the principal reduction. Compare the principal paid in the above example (first payment) with the principal paid in the example below:
$70,000 15-year mortgage, at 10%
First Payment
Interest: $583.33
Principal: $168.89
Total Pmt: $752.22
By choosing the 15-year term instead of the 30-year term, the borrower will payoff his loan in half the time and will save over $85,000 in total interest costs. Of course, the monthly payments will be higher than the 30-year fixed payments.

Some borrowers may choose a 30-year fixed-rate mortgage and prefer to “pre-pay” additional principal to reduce the loan balance faster. In the above example, let’s assume the borrower wishes to increase his monthly payment by and extra $50 every month:
First Payment
Interest: $583.33
Principal: $80.97
Total Pmt: $644.30
This additional $50 each month will shorten the term of the loan to just over 21 years and reduce the total interest paid over the life of the loan by almost $53,000.
As a borrower’s income increases over the 30-year period, the mortgage payment remains the same on a fixed-rate loan. This means that the borrower’s housing expense will become a smaller percentage of higher gross income over time.

An adjustable rate mortgage (ARM) is a mortgage in which the interest rate changes at predetermined intervals, usually every 12 months (1-year ARM). The interest rate will increase or decrease based upon an index which reflects the current money market rate. The most common ARM loans tie the interest rate to increases or decreases in the “One-Year Treasury” index. The change in the interest rate will also change the borrower’s monthly payment. The term of these loans is usually 30 years.

To protect homeowners from “payment shock” (huge increases in payments) almost all ARMs have payment “caps”. These caps limit the rate increases to either 1% or 2% per year. In addition, lifetime caps of either 5% or 6% provide maximum increase limits. For example, an 8% ARM with 2/5 caps would mean that the interest rate could not increase by more than 2% in any one year, or 5% over the lifetime of the loan. In this case the interest would never exceed 13%. If the index decreases, the interest rate on an ARM will decrease, resulting in lower monthly payments for the borrower.

ARMs are offered at a lower initial starting rate usually between 1% and 1.5% lower than a fixed-rate loan. This lower interest rate may help a borrower qualify for a mortgage, because the resulting monthly payment will also be lower. ARMs may be more economical if a borrower is planning on owning the home for only a few years, as they offer lower starting rates and lower monthly payments.

Large Down Payment – Thing of the Past, But May Be Coming Back

In the past, lenders typically required a 20% down payment on mortgage loans. The large down payment or borrower equity was required because it helped assure lenders that borrowers would make the monthly mortgage payments to protect the equity they had invested in the home.

Now, however, with private mortgage insurance (PMI), lenders are more willing to make loans with less than 20% down. This is because the mortgage insurance acts as a guarantor and shares some of the lending risk with the lender. If the borrower defaults on the mortgage loan and the lender takes title to the property, the mortgage insurance will reduce or eliminate loss to the lender. In other words, if the lender has to take the property back because the loan is not being repaid, the mortgage insurance company will absorb part of the lender’s financial loss.

For instance, some first-time home buyers may thing a 20% down payment is required and as a result will postpone their decision to purchase. Or they may buy a smaller house with the intention of moving up to a larger home sometime in the future. However, in many cases they could purchase a larger, more suitable home, simply by selecting a lower down payment loan.
Other buyers may delay purchasing home furnishings or landscaping because they think that making a 20% down payment is a standard practice. Again, by putting less money down, they will have more cash available for the extra “touches” that make a house a home.

The 1986 Tax Reform Act may also affect your home finance decision, as it began the phase out of the interest deduction on consumer loans. This means that the interest you pay on items such as your auto loan, education loans, etc., are no longer deductible. Because of this, you may choose to put less money down on your home and use the remaining cash to:
Purchase large consumer items
Save for future financial needs, like college expenses
Make investments
Purchase home furnishings
Pay off all other debt