Thou shalt not change jobs, become self-employed, or quit your job. Thou shalt not buy a car, truck, or van (or you may be living in it).Thou shalt not use charge cards excessively or let your accounts fall behind. Thou shalt not spend money you have set aside for closing. Thou shalt not omit debts or liabilities from your loan application. Thou shalt not buy furniture. Thou shalt not originate any inquiries into your credit. Thou shalt not make large deposits without first checking with your loan officer. Thou shalt not change bank accounts. Thou shalt not co-sign a loan for anyone. Stay in touch with your lender – Your most important job is to continue to get your documents into the lender. And during this process, here are a few things to keep in mind. (we could also just link to this.)

Buyer 10 Commandments - Stay Qualified!

Don’t forget the Buyer Ten Commandments. These ten things are common reasons buyers find themselves unqualified for a loan, and thus unable to purchase a home. Before making any big purchases, changing jobs, or transferring large sums of money into or out of accounts, run it by your lender just to make sure it won’t cause any issues.

Here are ten mistakes you must avoid if you’d like to get keys to your new home!

• Thou shalt not change jobs, become self-employed, or quit your job.

• Thou shalt not buy a car, truck, or van (or you may be living in it).

• Thou shalt not use charge cards excessively or let your accounts fall behind.

• Thou shalt not spend money you have set aside for closing.

• Thou shalt not omit debts or liabilities from your loan application.

• Thou shalt not buy furniture.

• Thou shalt not originate any inquiries into your credit.

• Thou shalt not make large deposits without first checking with your loan officer.

• Thou shalt not change bank accounts.

• Thou shalt not co-sign a loan for anyone.

You’re welcome to use your own provider, your lender might have some good options, or I’ve had good experiences with these two insurance providers…

• Rhys Malen – Goosehead Insurance

• 512-596-0002

• rhys.malen@goosehead.com

• Website

• Rob King

• 512-825-2092

• rking@greenway-ins.com

• www.greenway-ins.com

Home warranties are a popular recommendation for buyers and there are several companies in Austin that can provide a home warranty for you.

We have mixed feelings about home warranties. I have had clients who, when their AC went out, were happy to have the home warranty. And others (including a personal experience, myself) who were unhappy with the amount of time it took to fix the problem, what was covered, or that the home warranty company was difficult to deal with overall.

Whether you want a home warranty or not is really a personal choice. Home warranties may cover unexpected issues after you buy a home, such as an AC or dishwasher going out.

For more on the basics of home warranties, see here:

https://www.bankrate.com/real-estate/do-home-warranty-programs-pay-off/

Many times, sellers cover up to a certain amount for the home warranty for the buyer (usually around $600).

If you’d like to purchase a home warranty, talk with your agent while drafting your offer about how competitive the offer situation may be, and whether requesting that the seller pay for your home warranty is an item that is important to you.

There are some websites that compare these companies, but here are a couple of the companies that my clients have been most happy with.

Acclaimed Home Warranty – https://acclaimedhw.com

Fixd Repair – https://www.fixdrepair.com

Please, leave some wiggle room in the schedule: The closing date can move around a bit for a number of reasons. There are lots of moving parts with surveyors, appraisals, insurance, lenders, HOA companies etc. that could potentially cause a delay. If possible, it’s best and if you can stay flexible enough so that a day or two won’t derail you. If you can be flexible, or at least have a ‘Plan B’, this will reduce stress all around.

If you’re using movers, please let us know before you finalize the date! It’s best to wait or allow a little wiggle room in the date that we close, and the time that the movers come. It takes several hours for the deal to be final, and we don’t want to be waiting at the title company with the moving truck loaded.

Will you be in town? Do you need a mobile notary? Do you have a vacation planned around the closing date? Please let us know early so we can talk about a power of attorney, mail out, mobile notary, and more.

The title commitment falls into the category of boring but important. Skim over it if you’d like, and either way, we will. It’s dull, but good to understand. It is important because you need it, and could potentially cost you money.

Your title commitment is an *insurance policy* that details what your title insurance will and will not cover you for. Title insurance insures your clear title (ownership) of your property and insures you if you have a claim against your property.

Imagine, for example, that an inheritance was handled improperly decades ago, and the aggrieved party, who we will name Billy Bob, comes knocking one day, telling you he owns 1/4 of your property. That’s the kind of situation that title is supposed to take care of for you.

Your title commitment, furnished during the contract, will detail what your title insurance does and does not cover.

Since we are neither attorneys nor title experts, we’ll let the experts take over:

• Read this for how to read your title commitment:

• Read this to understand additional, optional, title endorsements:

• Skim this for answers like “What is title insurance?”, FAQs, examples of when you might need it, and really everything you ever wanted to know about title. http://www.austintitle.com/downloads/RealEstateGuide.pdf

When putting an offer together, realtors have the option of checking a box in the contract that could end up being very important to a buyer down the line. Paragraph 6(A)(d) gives the following options: This paragraph in the contract controls whether or not a buyer will get Survey Deletion in their Owner’s Title Policy. Survey Deletion (also known as “Area and Boundary Coverage’) is important coverage for a buyer. It covers against “Any discrepancies, conflicts or shortages in area or boundary lines, and any encroachments, protrusions, or overlapping of improvements.”

So if there’s a loss from something like the items below, the buyer would not be protected without this additional coverage.

• An adjoining landowner with improvements encroaching on to your buyer’s property;

• An adjoining landowner claiming your buyer’s improvements protrude into their property;

• Surveyor errors in locating improvements or the boundary lines of a property;

• Fences lines not following the actual boundary lines of the property; or

• Improvements from your buyer’s property that sit into an easement or over a building restriction on the property.

How can this coverage be added to the policy?

When the title company is presented with a survey, adding some coverage back into the title policy becomes an option. Once we have reviewed a survey we are able to add back in (a/k/a “delete” portions of the exception) to put this coverage back into the title policy. That is why you can think of this as “survey deletion.” We delete exceptions to coverage. When we add survey deletion to the policy the exception above is amended to read as follows: “Shortages in area.” -The result for the buyer is that coverage for discrepancies, conflicts in boundary lines, and any encroachments, protrusions, or overlapping of improvements is now included in the policy.

How much is it to add?

On a residential policy the cost of Area and Boundary Coverage is 5% of the Owner’s Title Policy (15% for non-residential). Let’s look at the math for a $500,000 sales price as an example. The base premium for the Owner’s Title Policy, typically paid for by the seller, is $3091. In that transaction the buyer would pay $154.55 to add this coverage to their title policy. That’s pretty minimal cost for some pretty important coverage for a buyer! ***The material contained herein is for informational purposes only. It should not be used as a substitute for legal advice.

The appraisal is an estimate of value prepared by an appraiser to help the lender/bank avoid over-lending on properties. Your lender will choose an appraiser, send them over to the home you’re planning to buy, and then review the appraiser’s findings. If the appraiser says the home is worth contract price or more, great! There’s no problem, we just keep moving forward.

If the appraiser says the property is worth less than the contract price, we may have a hurdle to overcome.

If it doesn’t appraise, does that mean I over-paid?

Not necessarily. Appraisers are often less in-tune with market realities than real estate agents and buyers in the area. We’ve had appraisers seriously under-appraise a property after we had 10 offers in the first weekend. Think about that for a moment. Ten buyers in the first weekend thought the property was worth asking price and then some. And this guy’s scientific opinion is that it’s worth less than the asking price. My point being, the appraiser’s opinion is not *more* right just because he uses more paperwork and sounds really confident.

What happens if the appraisal comes in low?

But even if he’s wrong, it can still cause issues. In short, the money has to come from somewhere, and it’s not coming from the bank.

If you plan to put 20% down, the lender usually agrees to loan you 80% of THE LOWER OF the sales price or the appraised value.

For example, let’s say you’re taking out a 80% loan, and your contract price is $500,000.

Contract Price: $500,000

Loan Amount: $400,000

Down Payment: $100,000

If the property appraises for $490,000, then the lender is now only willing to lend 80% of $490,000, so you get…

Contract Price: $500,000

Loan Amount: $392,000

Down Payment: $108,000

Your out-of-pocket costs as a buyer just went up $8,000. So you have several options:

1. Pay the $8,000 out of pocket, and keep on truckin’.

2. Ask the seller to reduce the contract price to the appraised value. Bonus: You’d only need to pay another $8,000 to bridge the gap. So if the seller agrees to reduce the price to $490,000, you just saved $2,000 in cash at closing.

3. Meet the seller somewhere in the middle. You come up a bit, they come down a bit.

4. Fight the appraisal, and try to get the appraiser to increase the appraised value.

5. If all of these avenues fail to bring you and the seller to an agreeable solution, then you may be able to terminate your contract.

Can I terminate based on appraisal?

You may be able to terminate your contract based on a low appraisal. We say “may” because it depends on your lender, how much you’re putting down, and if there’s an appraisal addendum.

What are the appraisal takeaways that I should keep in mind?

Appraisals are an opinion of value for the benefit of the bank. Just an opinion. But that doesn’t mean they can’t cause problems in a transaction.

If you find yourself facing a low appraisal, there are several options we can pursue to try to reduce your cash out of pocket.

If you and the seller can’t come to terms, you may be able to terminate the contract.

Schedule a final walk through on the day of or the day before closing.

What to expect? We’ll walk through and note the property condition, and that all negotiated non-realty items are there. If we negotiated any repairs, we can take a look at those as well (and we should have already received the receipts)

The property should be clear of all personal property that wasn’t negotiated in the Non-Realty Items Addendum. If we asked for a professional cleaning in the contract, we should get a receipt. Otherwise, it’s nice if the property is wiped down and clean, but it’s not always the case. To be safe, allow time to get it cleaned to your liking (appliances, windows, baseboards, etc) so that everything is ready for move in.

When it’s time for the Closing Appt:

• Bring a copy of your photo ID

• Bring a checkbook in addition to your certified funds or wire, for any small discrepancies in the final amount.

• Think about the Closing Docs: do you prefer hard copy or emailed PDF copy? (Original recorded docs and your full title policy will follow a few weeks after closing.)

• Wiring Instructions-Wire your funds to title day of or day before closing. TO AVOID BEING A VICTIM OF WIRE FRAUD!!! Verify your wiring instructions with the closer during closing.

• Go to USPS.com/move to change your address online. Or swing by the post office and grab a Mover’s Guide packet. Sometimes, in order to re-key the mailbox and issue new keys, you’ll take your closing disclosure to the local post office as proof that you own the house.

• Make sure your utilities will be turned on as of your moving date or the day before. Reach out about using 360 Home Connect, or your utility providers can be found on the seller’s disclosure. Your HOA management should also be able to provide assistance if necessary.

• You’ll probably get some spam in the mail. Please do NOT pay anyone to file your homestead exemption for you. And you do NOT need any additional mortgage insurance. Some of the spam looks official or like it came from your lender. If in doubt, please text us a picture, and we’ll confirm!

• Make sure you’ve moved/cancelled/started any lawn, pest, pool, or security service to the new address.

• Update your Driver’s License with your new address.

https://txapps.texas.gov/tolapp/txdl/