Some Questions to Consider When Your Are Touring Properties on Cape Cod
Some people start from the outside and work their way in but most people start on the inside and save the outside for last. Do whatever works best for you! Let us know if you prefer to start outside and we will be sure to lead the way with the showing agent.
This list seems long and might be a bit overwhelming…that is why we are here! It is important for you to notice as much as you can, but it is our job to pay close attention to everything on this list and more. We developed this list based on our extensive experience selling properties throughout Cape Cod. We know what to look for in and around a house. It is also important to keep in mind that you will have a home inspection. (You can find more information on the home inspection process under Resources on the main menu.)
After all is said and done: you'll recognize your new Cape Cod house when you see it. Finding the right house can be like picking a family member out of a crowd. When all else fails, trust your instincts.
INTERIOR. When you are in the house, walk through at your own pace…be sure to open closets and cabinets. Sellers know that buyers will check these areas so don’t be shy. Think about the following as you poke around inside:
Do you like the floor plan? Will it work for how you need to use the house? Will it work for you in the long term?
How do you get the groceries from the car into the house? Look at steps along the way and counters when you get to the kitchen. If the present set up isn't ideal, is there a simple solution? (Oftentimes, you will enter the house at the “formal” entrance. Make sure to check out the path from the entrance you would likely use if you lived at the house. Plus, nobody comes in the front door on Cape Cod!)
Are there enough closets and other kinds of storage space? If not, is there a simple solution?
Will your furniture fit the rooms? If you have a king bed, will it any of the bedrooms? Will each bedroom fit a bed on a wall so the windows aren’t behind the bed? (If you have any large or unusually shaped pieces, it may help if you know the measurements before touring a house.)
Where are the bedrooms and bathrooms? Are they located near each other? Is the bathroom on a different floor from the bedrooms? Do you need a tub in at least one bathroom?
In which direction does the house face? Where is the sun throughout the day?
MECHANICALS AND STRUCTURE. Inquiring minds want to know about the mechanical systems and structure -- but don’t bother asking a lot of questions now. The home inspection will reveal any issues with the mechanicals and structure and it is our job to ask questions and do research. Do, however, give them a visual inspection for anything obvious for follow up later. Most of the mechanicals and even structure can be found in the basement. It isn’t glamorous, but it is essential to spend time there. As you walk around, consider the following:
Does the house seem structurally sound? Do the floors creak when you walk on them? Are the railings loose on the stairs? Any stains on the ceiling (especially around a chimney)? How do the walls look? Are there any scary looking cracks? Do the floors seem tilted?
Look inside closets to check for signs of mold or water stains. Note: surface mold can develop in closets in houses that have been closed up for a long time or just over the winter. Don’t despair as the issue can usually be rectified with a good cleaning and living in the house! If you are concerned or the mold appears more significant, we will have an environmental expert inspect it for you.
How do the windows look? Are they new or original? Does it look like any seals have broken (evidenced by cloudy look)?
Do the mechanical systems and appliances appear to be in working order? Are they Energy Star?
Note on Electric Heat: consider it just another appliance. Most buyers are unnecessarily afraid of the cost of electric heating bills and will not even look at a home with electric heat. This becomes another advantage to you because it reduces the pool of competing buyers. However, if you convert to a new, state of the art, efficient HVAC system of your own choice, you then get the use of a new system for 100% of its functional life. When you look at electric heat this way, homes with older, less efficient gas or oil systems may make a house less desirable than an all-electric house!
Is there a fireplace? Notice any black soot on the bricks around the fireplace? Is there a damper in the chimney? Are there signs of leaking in the ceiling around the chimney? Lead flashing around chimneys is notorious for creating leaks if installed improperly or as the result of critter damage (squirrels like to chew on it…go figure).
How does the basement smell? Notice any dampness or musty odor? Do the current owners run a dehumidifier in the basement in the summer?
Does anything need obvious repair or replacement?
Where is the septic system located? Is it somewhere that would prevent me from expanding the house? (Whether the system has passed the requirements of Title V is something we will research. It is typically considered the sellers responsibility to obtain this certification and make any necessary repairs to the system.)
EXTERIOR. Pay attention to what a property offers from the outside. A house can be newly and beautifully renovated on the inside but a hot mess on the outside. Exterior repairs and routine maintenance to a house can be expensive. So it is important to note anything that looks like it needs immediate repair or would require ongoing maintenance. Moreover, a beautifully landscaped yard with mature shrubs and specimen trees takes years to establish andalot of time and money to maintain. If there are trees that haven't been maintained well or need to be removed, you can anticipate additional landscaping expenses. Many Cape Codders have a "Cape Cod" lawn, where grass or ground cover are left as much as possible in their natural state. But even a pine needle lawn needs regular grooming. As you are walking around the outside of the house, check for the following:
Imagine the house in good weather and bad, and in each season. Will you be happy with it year-round?
Is the yard big enough? Is it sunny/shady? Does it look hard to maintain? (Especially important if you plan on doing weekly summer rentals.)
How close are the neighbors? Do you hear any dogs barking? Traffic noise?
How does the roof look? Are there any visibly damaged shingles? Are any starting to curl up on the sides? Are there any branches overhanging the roof and shortening the life of the shingles, clogging gutters, and providing an easy pathway for squirrels and raccoons?
Does the house have proper gutters? Gutters are more than just a way to keep water from pouring on your head when you come in the door…they are an essential element in maintaining the structural integrity of the foundation. Improper or missing gutters can cause hydrostatic pressure to build up too close to the foundation walls. The excess water can also result in leaks in the basement. A related issue is the slope of the yard around the house…it should slope away from the house so rain and melting snow are absorbed a safe distance from the foundation.
How does the siding look? Are shingles curling? Any missing shingles? Does the house look like it has been painted recently? Check out the window sills…do they look ok? Does it look like somebody painted over rotten wood? (It may be easier to check the sills of upper story windows from the inside.)
Is there a patio, deck, or porch? Do they feel sturdy? Check any railings…loose railings are a safety hazard. Are there cracks in the patio? Is it bumpy due to tree roots or settling?
How does the foundation look? Any major cracks?
Front or side loading garage: when the snow plow comes down the driveway, is the garage at a right angle to the road so the snow is piled up at the head of the driveway and not at the garage door?
LOCATION. It is true: real estate is all about LOCATION! You can renovate a kitchen, add bathrooms, add windows, even expand the entire house, but you can’t change where it is located. You want to check out the location either before or after the showing. Drive around, look at the other houses in the neighborhood. Drive from the house to the beach. Come back to the area in the evening and sit in your car with the windows rolled down and listen. The neighborhood may have many more vehicles around than when you saw the house at midday while folks were away from home. This is also where our lifelong knowledge of Cape Cod will benefit you. You will want to research the following:
What is the area like in the off season? (Many Cape Cod neighborhoods really bustle in the summer time and are deserted in the winter.)
Does the neighborhood have adequate parking on the street and on each person's property?
What is the appearance/condition of nearby homes and businesses?
How far a drive is it to your favorite beach?
If you are purchasing a condo or in an area with an association, are there any covenants or restrictions (or benefits) that come with membership like access to a beach, a boat launch, limitations on the size/number/weight of pets, extra parking, trash pickup, limitations on summer rentals, etc.. (Note that the majority of Cape towns do not provide municipal trash pick up. There are quite a few private companies that will provide pick up services for a fee.)
If you are purchasing a year round home and have school age children, you need to check out the town's school system. If you are retiring or have elderly relatives living with you, you should also check out the town’s elder services.
Check with the town's police department on the crime report for the area.
As you begin your Cape Cod house hunt, you may have many questions about the process of buying a home. Our team has the real estate knowledge and local understanding to help you make informed decisions and successfully purchase a home in this ideal location. For more information, please feel free to contact us. We are happy to answer any of your questions.
Step 1: Determine Your Price Range
The first step is a bit of the old chicken and the egg conundrum: do you look at your finances or your housing needs first? The answer is that your finances should come first because it'll drive everything else in your search.
Make sure your financial house is in order by pulling your credit report. Lenders look at factors called the four Cs of credit: credit history (timely bill paying), capital (money available for a down payment), capacity (income versus debt), and collateral (the value and condition of the house). Your credit score = your credit history. Read through the report thoroughly and make sure the information is correct and updated. When you're ready, select a lender and get pre-approved or at least pre-qualified for financing. Pre-qualification refers to when a lender calculates how much mortgage you likely can afford based on unverified information and no identified property. Pre-approval is a guarantee based on verified information that the lender will loan you a fixed amount of money, as long as the property appraises over the amount for which you are qualified and you buy within a certain time period. Getting either a pre-qualification or a pre-approval from a lender will clear up any mystery about what you can afford. You may qualify for more – or less – than you think! You will feel more empowered to buy if you have the certainty and security of a lender behind you.
Once you have identified a property, go back to the lender and have them run the numbers on that house. Having a pre-approval submitted with the offer strengthens your negotiating position because the seller doesn’t have to worry that the deal will fall through if you can’t get financing.
Sep 2: Decide What Kind Of Home You Need and Want
Determine your housing needs and wants according to what you can afford. Needs are your requirements that a house must have for you to consider it. Start by making a list of your needs in terms of location, style, size, and other amenities or design features. Here are a few questions to consider:
- Where do you want to live? On Cape Cod, location often comes down to distance to the beach…and whether that beach is on Cape Cod Bay, Nantucket or Vineyard Sound, or the Atlantic Ocean. If you're going to do summer rentals, proximity to the beach is an important factor. If you're looking for a year round home, which towns appeal to you?
- Do you want a new home or an older home? A new home is often better insulated, needs fewer repairs, and easier to maintain than older homes. On the other hand, you may get more space for the money buying an older home
- What size house do you need? How many bedrooms? How many bathrooms? Do you need a family room, basement or work room? Do you want a house that has only one level, or would you like a two-story house? Will it be big enough for your family in five years?
- What design features are important to you? Do you need a garage, central air conditioning, a fireplace, large back yard, large kitchen, first floor bedroom, etc.?
Next, consider other features you want in a home. These are attributes that you'd like to have, but aren't essential. Finally, go over your list of needs and determine whether any items are more wants than needs. The key question to ask yourself in distinguishing between needs and wants is whether you would be willing to trade off something if you can't find a home within your price range with all the features you want.
Step 3: Find a Buyer’s Agent
Buying a home is a decision that carries one of the highest price tags and biggest emotional roller coaster rides of anything you'll probably ever buy. Fortunately, we are here to help you. Ask family and friends if they can recommend someone. Talk to several buyer's agents before choosing one. Look for an agent who listens, understands your needs and makes you feel comfortable. Once you find someone you have confidence in and rapport with, promise to work exclusively with that one agent. The agents are all working off the same inventory of listings, so any agent can show you virtually any listing. That's their job! But looking at houses is just the beginning of the home-buying process. The services we brings to the job are considerable. At Cape House Real Estate, Marietta or Margaret will:
- Talk to you about what you want in a house.
- Give you information about the areas in which you want to buy a house and suggest other parts of Cape Cod that might also suit your needs
- Help you find a good lender to finance your home by recommending lenders we trust and have worked with
- Monitor MLS daily and send you properties in your price range with the features you need and want
- Take you to see the properties that interest you
Help you write the offer and negotiate with the seller to get the best value
- Refer you to other professionals to get you to closing, including home inspectors, attorneys, tradesmen, etc.
At your first meeting with an agent to discuss a specific house, you'll be presented with the Massachusetts Agency Disclosure form to review. This is not a contract; and you may elect to sign or not. The agent must tell you what type of agency relationship can be offered to you: seller’s agent, buyer's agent, or facilitator. A buyer's agent is your best bet because you will get the most value from the transaction by having someone 100% loyal to you. You're paying the same amount of money anyway; why not benefit from the experience and knowledge of your own special agent?
Step 4. Start Looking
Now that you have an idea of what kind of home you might like and have a buyer’s agent, how do you go about finding it? First, we will send you listings from the Cape Cod MLS that meet your needs and wants within your price range. We strongly encourage our clients do some exploring on their own. You can search available properties online by signing up for the MLS on our site. In addition to searching online, you can:
- Talk to friends and family to see if they know of anybody who is planning on listing their Cape Cod property.
- Drive through neighborhoods you are interested in and look for “For Sale” signs. You may find sale signs that say “For Sale By Owner.” We call these listings “FISBOS.” Many FISBOS are overpriced for the market because the owners have a very high opinion of what they are worth. We can help you determine the fair market value and evaluate the condition of the house so that you don’t end up paying too much.
- Read the newspaper real estate section and watch the real estate channel on your local cable network.
- Check real estate shopping guides. These free booklets are often found in supermarkets and malls and in sidewalk boxes. They usually have pictures of the houses and are a good way to compare prices and features.
- Visit open houses. When a house has an open house sign in front, it is an invitation to go in without an appointment and look around. The listing agent or the owner will be there to hand out information about the house and answer questions.
Step 5: Narrowing the Search and Selecting the One
It’s a good idea to take notes as you go -- write down the important things about each house as you go through, or you can use our Cape House Hunting Checklist. We will give you a hard copy of the MLS listings for each house we see. This listing sheet can be a handy place to write your notes.
NOTE: While you will have an official home inspection once you have an accepted offer, you can do the first level of inspection yourself. Pay attention to ceilings, walls, and floors. Cracks may indicate that there are structural problems. Make a list of questions to ask us about the structural soundness of the house. For example: When was the roof last replaced? What material was used? Does the plumbing system include any old lead pipes? (They may be unsafe.) By law, both the seller and their agent must tell you about any problems they know about in the house.Once you have narrowed your choices to a few homes, take a closer look. Don’t be shy about asking us to take you back to certain properties a number of times. If possible, let the whole family see the final choices; children especially have an easier time moving if they have been part of the decision.
Step 6. Make an Offer and Negotiate
Making an offer is easier than you think. The hard part is figuring out how much to offer. There are a number of factors to consider in determining the amount to offer:
- Is the list price in line with recent sales of similar homes in the area?
- Does the house appear to be in good condition? If not, does the list price appear to take the costs of major repairs into consideration?
- Are there any special factors to consider?
- Do the owners need to sell the house quickly (perhaps because they have a contract on another house)?
- Has the house been on the market for a long time?
- How much did the seller pay for the house and when?
- How much can you afford?
Don’t be tempted to offer more than you are sure you can afford!
As your buyer’s agent, we will gather all this information and recommend a reasonable market value for the property. Ultimately, it is your decision – based on our comprehensive market analysis – to determine what you are willing to pay for a property and where to start in terms of an offer.An offer is a legally binding written statement of your interest in buying a property. It includes a complete legal description of the property, the price you are offering, the amount of earnest money you are giving with the offer (often called the binder, the amount is usually $1,000 and it is credited towards the sales price at closing), the amount you will put down with the purchase and sales agreement, and how much of the purchase price you are financing. It will also note any items of personal property (such as a washer and dryer) the owner has said will stay with the house, the date you would like to close the sale and move into the house, and the length of time the offer stands (usually three to five days).
You will also make your offer contingent upon specified events such as satisfactory inspections of the structural and mechanical systems (which should occur within two weeks of making the offer). The offer may also have a financing contingency covering the need for the lender to okay several things about the house.Contingent means that if the inspection shows major problems or the appraisal of the property is not in line with the purchase price, you can get your earnest money back and cancel the sale. In terms of the inspection, if you don’t want to cancel, you can ask the seller to make the needed repairs or give you a credit at settlement for the amount it would cost you to make them. The seller, however, is under no obligation to do so. In terms of the financing, it is sometimes possible to work with the lender to increase the amount of your down payment.It may be a matter of hours or days for the negotiations to come to a conclusion. This is one of the most emotional phases of the process; and negotiations can continue into the next phase if, for example, there are issues found with the house during the home inspection.
Step 7. Inspections and Other Contingencies
Once your offer has been accepted, you have a legal interest in the property – and a strict schedule for satisfying any contingencies. As so much is dependent on the financing, you should immediately notify your lender that you have an accepted offer. The lender will assign, usually with your consultation, an attorney to handle the title search and mortgage paperwork. It is a conflict for the buyer and seller to have the same legal representative, so everyone will first want to know the identity of the seller's legal representative. Your lender will order the appraisal. (The appraiser typically schedules an appointment with the listing agent to inspect the property.)
If the septic report, soil percolation test, and water quality tests (which are all the seller’s responsibility) weren't completed prior to listing the property, the seller’s agent must get them done according to the schedule specified in the offer.
We will work with you to schedule the home and other inspections. Since May, 2001, the Commonwealth of Massachusetts has required home inspectors to be licensed and Realtors to give out information about how to find one. The law also states that only buyer's agents may recommend a home inspector to a buyer. In contrast, seller's agents, by law, may only give out a general list of inspectors. This is another example of how you are better off using a buyer's agent!
Note on Inspections: a home inspector checks the structural and the mechanical parts of a property. The inspector then writes a report noting the condition and describing any problems. The inspection report is not meant to tell whether you should buy the house or how much you should pay for it. If problems are found, the inspector will recommend calling in a professional in the particular area (like a plumber or electrician) who can give you an estimate of the repair costs. If serious problems are found, you have the right to cancel the purchase agreement and get a refund on your deposit. You can also ask the seller to reduce the purchase price to cover the cost of repairs. Or you may be able to negotiate with the seller to make the needed repairs.
Generally, the home inspector will do a basic inspection for the presence of termites and other wood boring inspects (like carpenter ants). If there is evidence of past or present issues, the inspector will recommend a professional pest company perform an inspection. (This way, you can save the fee for the pest inspection if there are no apparent issues.)In addition to a professional home inspection and (if necessary) a termite inspection, there may be other environmental hazards you should also investigate. Although chances are that none of these environmental hazards will apply to your home, it is better to be on the safe side and make sure you have investigated any potential problems. This is especially true if you are pregnant or have infants and small children in the home, if you are purchasing an older home, or if you plan to make renovations to an older home.Here are important hazards you should know about.
Radon - Radon is a natural, odorless gas that can seep into houses and cause major health problems. For this reason, many home buyers insist that the house be tested for radon. For more information about radon in your area, call your state or county public health department.
Lead-based paint - If the house you want to buy was built before 1950, you can be almost sure that lead-based paint was used. There's a good chance it was used in any house built before 1978. Exposure to lead paint can have serious consequences, especially for infants, young children, and pregnant women. Even lead-contaminated dust from children’s hands and toys can pass to their mouths. Renovation projects in older homes that disturb the lead-based paint can be especially dangerous.Before you finalize a sale on a house built before 1978, the seller or real estate agent must, by law, give you written information about lead hazards and tell you about any lead paint hazards in the house that he or she knows about. The seller must also give you 10 days to have an inspection completed. You should make sure any inspector you hire has taken an EPA course, or is certified in your state. You should never attempt lead-based paint removal yourself. For more information in English and Spanish, call the federal information hot line at 1-800-LEADFYI.AsbestosAsbestos is a material that, until about 20 years ago, was often used in housing insulation. Today, it is considered a health hazard and is no longer in use. If you are purchasing a home over 20 years old, you should ask about asbestos and get a professional inspection if you suspect it might be present.
Formaldehyde - Formaldehyde is a colorless, gaseous chemical compound that was an ingredient in foam used for home insulating until the 1980s. It can cause irritation of the eyes, nose, and throat, and is suspected of causing cancer. A qualified building inspector can examine your home for formaldehyde-emitting materials.
Hazardous waste sites - The EPA has identified more than 30,000 potentially contaminated waste sites in the United States. If you think you may be living near one of these, you should contact your regional EPA office for more information. Your neighbors may also be able to tell you about community organizations that have information about the problem.
Note on Appraisals: The appraiser’s job is to determine the fair market value of your house. You do not work directly with the appraiser, although you will pay for the appraiser’s services at the time you apply for the loan. Appraisals for single-family houses cost about $275 to $350.
To determine the fair market value, the appraiser compares the house you want with houses like it that have sold recently in the same area. The physical condition of the house affects its market value, as do special features that other houses may not have, such as a corner lot or an extra bedroom.
Note on Insurance: Your insurance agent will usually be happy to visit your new home and recommend how much insurance you should have. Insurance agents can often give you a safety inspection and recommend the proper types of door locks, fire alarms and other safety features. Some insurance companies even offer discounts for installing safety and security features. Choose a reputable company and an agent you are comfortable with and who can explain insurance products and services in a way you understand. In addition to hazard or homeowners insurance, there are many neighborhoods where special hazard insurance is required by your lender, such as flood insurance when you buy a home in a designated flood plain.
Step 9. Purchase and Sale Agreement
A few states require that a lawyer write the real estate contract, search the title and conduct closings.Generally at this point the inspections have been completed, and it is only the bank's full commitment that is outstanding. This is the step where you put down your ten per cent deposit, which goes into an escrow account at the real estate agency that listed the property. A personal check is okay. You sign the agreement first and then the Seller signs. It isn't the custom on the Cape for this to happen at a formal meeting, but rather it happens in two stages and sometimes by mail since one or both parties to the agreement may live off-Cape.
Step 10. Closing
Contact the Utility Companies.
Contact the utility companies to arrange for their services to be put into your name the day of the closing. The seller will contact them to request final readings and to okay the transfer to you on that date. These arrangements can be made 10 days or so prior to the closing. If the house has oil heat, the oil tank needs to be topped off just prior to the closing. The buyer pays the seller for a full tank of oil, and the oil company will certify the exact amount and price of oil in the tank.
Walk-Through - On the day of the closing, you and your Realtor will check out the house to make sure there are no surprises. Generally, the house is to be empty and "broom clean." Any work that was to be done must be completed.
Closing - This is a meeting at the Barnstable County Registry of Deeds or at the office of the buyer's lawyer. The buyer puts down the rest of the purchase money and signs the mortgage documents. The closing attorney provides you with a detailed list of instructions. Sometimes the seller doesn't come, but sends a representative. The listing agent will have a certificate from the fire department confirming that the house has working smoke detectors in the appropriate places and that the house numbers on the house are correct and visible from the street for emergency vehicles. In some towns there is also a special letter from the Board of Health certifying that the septic system is in compliance with the town's regulations for real estate transfer purposes. In other towns, the engineer's report is sufficient. The lender will want to have proof of homeowner's insurance from your agent. The Seller presents a new deed conveying the house to you. Your attorney or the lender attorney will put this new deed on record with the Registrar, confirming that you are now the new owner! You'll get all the keys (you may want to change or re-key the locks). You may now bring in your furniture — the place is yours!
Financing the Purchase of Your Cape Cod House
As it is with all great journeys, the first step you take will be the most important. The first step on your way to buying a Cape Cod house is the money. Figuring out how much you can spend first involves reviewing your monthly budget to estimate what you can afford to pay for a home. Make sure you have enough money budgeted each month to make the PITI (principal, interest, taxes and insurance) payments on your mortgage loan and set money aside for home maintenance. Plan ahead to be sure you can cover your monthly payments for several years. Also, you need to figure out how much you can swing in terms of a down payment. In addition to a down payment, you need cash for the home inspection and closing costs. If you are thinking of purchasing a fixer upper, you should figure out how much cash you have to invest in repairs or whether you can find a loan program that will allow you to include repair / renovation costs.
Next, make sure your financial house is in order by pulling your credit report. Lenders look at factors called the four Cs of credit: credit history, capital, capacity, and collateral.
- Credit History = your credit score. Your credit score is based on your track record of paying your bills in a timely manner. A higher credit score may help you get a lower interest rate on your mortgage. Read through the report thoroughly and make sure all the information is correct and updated. Ideally, for at least one year prior to purchasing a home, you should make sure that you pay all your bills on time You can order your credit report and credit score from each of the three major credit reporting agencies: Experian; Equifax; and TransUnion. For more information on credit scoring, visit www.myfico.com.
- Capital = your down payment. There are loan programs that not only require no money down, but also underwrite closing costs. It is important to note, however, that you will still need cash to put down with your initial offer (commonly called a binder) and a deposit with the signing of a purchase and sales agreement. (These funds get rolled into your down payment if you are using a traditional mortgage or refunded if you are using a no down payment program.)
- Capacity = your debt-to-income ratio. This is a comparison of your gross (pre-tax) income to housing and non-housing expenses. Non-housing expenses include such long-term debts as car or student loan payments, alimony, or child support. In general, monthly mortgage payments should be no more than 29% of gross income, while the mortgage payment, combined with non-housing expenses, should total no more than 41% of income.
- Collateral = value and condition of the house. Your lender orders an appraisal AFTER your have an accepted offer at a specified price. If the lender's appraisal comes back at a lower value than the negotiated sales price, your financing may be in trouble. This is why you need a buyer's agent who knows how to do a good market analysis before you put in an offer. (This is where Margaret's experience in the world of banks comes in really handy!)
In home buying, one of the most important math skills you will need is using percentages. In home buying, the interest rate you pay on a loan is given as a percentage. The amount of money you put down when you buy a house is described by a percentage. Lenders will decide how much you can afford to spend on a house by looking at what percentage of your total income will go to housing costs.
Your next step is to select a lender. Lenders can be banks, savings and loans, credit unions, mortgage companies, government agencies, or private individuals. Ask about the company itself and the experience of the actual loan officer you are interviewing. Ask about the types of loan products they offer and their rates and terms. In addition, ask people you trust if they know of any experienced, reliable lenders, and interview several. Cape House Real Estate can recommended some lenders (we like to go local). Mortgages have many features: some have fixed interest rates and some have adjustable rates; some have payment adjustments; on some you pay only the interest on the loan for a while and then you pay down the principal (the loan amount); some charge you a penalty for paying the loan off early; and some have a large payment due at the end of the loan (a balloon payment). Consider all mortgage features, the APR (annual percentage rate), and the settlement costs. Ask your lender to calculate how much your monthly payments could be a year from now, and 5 or 10 years from now. Mortgage calculators like the one below can help you compare payments and the equity you could build with different loan products. On any given day, lenders may offer different interest rates and fees to different consumers for the same loan, even when those consumers have the same loan qualifications. Lenders also consider the profit they receive if you agree to the terms of a loan with higher fees, higher points, or a higher interest rate. Shopping around is your best way to avoid more expensive loans. Shopping takes time and energy, but not shopping around can cost you thousands of dollars. To find the best loan, you have to do the shopping. For more information on mortgage shopping, see Looking for the Best Mortgage -- Shop, Compare, Negotiate.
Have the lender issue a pre-qualifcation or pre-approval letter for your financing. Pre-qualification refers to when a lender calculates how much mortgage you likely can afford based on unverified information and no specific property. Pre-approval is a guarantee based on verified information that the lender will loan you a fixed amount of money, as long as an identified property appraises at or above the amount for which you are qualified and you buy within a certain time period. Getting either a pre-qualification or a pre-approval from a lender will clear up any mystery about what you can afford. You may qualify for more – or less – than you think! You will feel more empowered to buy if you have the certainty and security of a lender behind you. Typically, a buyer will first get pre-qualified prior to starting their search. Once the buyer has identified a specific property, they will go back to the lender and have them run the numbers with the specific property. Having this pre-approval letter submitted with the offer strengthens your negotiating position because the seller doesn’t have to worry that the deal will fall through because the buyer can’t get financing.
The final step is to apply formally for the mortgage loan. The formal application process usually occurs AFTER you have an accepted offer on a specific property. (A pre-approval letter (discussed above) can be issued after your submit this application but typically only upon your request. The real document is the loan commitment letter described further on.) After the loan officer takes your application, your request for credit is processed and underwritten. Underwriting refers to the work the lender does to decide if you are a good credit risk based on verified information you submit as well as an appraisal of the property. The person doing the underwriting is usually not the loan officer, which is why it is important that the loan officer is knowledgeable and experienced with different loan products. (We can recommend good loan officers!) Once the lender has reviewed your application, they will issue a commitment letter outlining the terms of the financing and any items that are outstanding (e.g., up to date income statements or title 5 certification for the property). This commitment letter is usually issued no later than a week prior to the closing and ideally about two weeks before. Once all the outstanding items have been submitted, the lender will issue a clear to close. It usually takes about 5 business days from the clear to close to the actual closing. And then you are the proud owners of your Cape Cod house!
Sign up for internet access to the Cape Cod Multiple Listing Service by clicking on Property Search at the top of the page. Let us know how to best contact you. When you register, you will select some basic search criteria and the search engine will give you a list of matching properties. If you want, we can also send you automatic daily updates of all properties matching your criteria. We can also send you personalized recommendations once we get to know you. When you are ready, let us know and we will arrange a tour of properties. Don’t worry if the process takes a while! It is typical to look at alot of properties...so be patient with yourself!