e house property

hey this is jeremy from shine insurance.i'm excited to share with you our first time home buyers step-by-step guide.whether you're a first-time homebuyer, you haven't purchased a house in awhile, or the last time you bought a house it just wasn't a very smooth process, youare in the right place. i'm gonna break down from beginning to end exactly how the home buying processworks. so let's dig right in. what we'll learn here is theinside scoop on new home buying. we'll break it down into thesefive parts. we'll talk about 1. applying for a mortgage - you've gotta have apartner in the process if you're going

to buy a house. 2. making an 0ffer - engaging with the seller the escrow period - a whole bunch of thingshappen in the escrow period. the closing - the period of time where you actuallypurchase the house. finally, we're going to break the mortgage payment down into it's parts. your mortgage payments obviously is going to be with you for a while and i'm gonna show you the three different parts of that payment. so let"s get into it!!fun fact - when i bought my first house i had absolutely no clueabout the stuff. i look back at that time and i bought a really cool house, it allworked out fine, but i really did not have any idea about anything i'm gonnatalk about in this video. i knew it was a

good idea to purchase a house. i went inand did everything and i really didn't understand things like i should have. this video whould have helped me a ton and i know you're going to be much better atthis process then i was. let's start from the very beginning. youmight think the very beginning is going out and looking for houses. maybe you'redriving around town looking for houses now. you know that's fine but the realbeginning of the process is knowing whether you can buy a house at all! i meanmaybe you've got the money to purchase the house and if you do this part isn'tas important for you but for the

majority of folks, you don't have thefinances right there to pay for the house. so you're gonna need afinancial partner, someone to invest in this house with you and banks that provide home loans are the folks that are generally going to dothat for you. so step one in the process of buying a new home is applying for amortgage. you're going to apply for a mortgage so that you know what you haveavailable and what kind of house you can purchase. generally you'll getpre-approved to borrow a certain amount of money. so you'll call the bank, either a local bank or the folks online the 800 number andthey're going to

ask you a bunch ofinformation and then they're going to tell you what they feel you can borrow. the point i want to make here is that preapproval is not a for sure, "yes you can borrow thisamount of money from us". this is a pre-approval so they're saying it looksto us at this point like you could borrow this amount of money.later on in the process they're going to solidify that agreement and if there arethings that have changed in your job scenario or something like that it ispossible for this pre-approval not to go through. i don't say that to make youworry about it, i say that so you understand the process and how it works.pre-approval is, "we think we can loan you

this amount of money if all the thingsthat seem to be here right now lineup." so this is a good step in theprocess but not the final step in knowing exactly how much you can borrow.if you go to a local bank, generally you're going to get a better sense ofexactly what you can borrow because they can ask you a few more details up frontand spend a little bit more time with you. so i always advise folks to go to alocal bank a place that is closer to you where you can sit down face-to-face withsomeone. but either way works just know that it's not a hundred percent surethat you can absolutely borrow that. i also want to point out the interest ratehas a ton to do with your credit score.

if you want more info on that you can go out there online. we've got some great blog poststhat tell you all about credit score and how it affects things. it affects yourmortgage for sure. it affects your insurance as well. you wantto have the best possible credit score you can when you go to buy a housebecause your interest rate is going to reflect your credit score. ok, once you're pre-approved it is timeto truly go house shopping!! now you have a sense of how much money you can borrow,how much money banks are willing to invest in your new home. so you have a real sense of what you

can purchase and you can go houseshopping. so you've gone house shopping your realtor help you find the home ofyour dreams and you made an offer. well what does that mean? itmeans simply that you put in writing the amount of money you want to buy thehouse for is step one and most of us know that that's part of it. and included anycontingencies or additional expectations connected with your offer. socontingencies could be things you want the seller to do, "the roof is in badshape, we're offering you x amount of money to buythe house. but in order for this to go through you'l have to have fix the roofbefore the closing." or it can be things

you want like, " i'm making this offer for xamount of money but i want all the furniture, i want to hot tub, etc." youknow whatever things don't generally come with a house. but you've made it acontingency in your offer that for this deal to go through it will come with thehouse. so sometimes contingencies are what you want the seller to do beforeyou purchase the house (like fixing things). sometimes contingencies are thingsyou want from the seller that maybe they wouldn't generally include in the sale.so those two things, the price you're gonna pay and the contingencies are part of makingan offer. so the offer is made and the seller decides ifthey want to do one of two things in response.

do they want to counter or do they want toaccept? we'll start with the thing that happens most often in the firststep which is a counter. the seller will reply to your offer witha different set of price and contingencies. they may say they wantto sell it for a lower price, they may say they want to sell it for the sameprice but they don't want to do whatever contingency you ask. all sorts of thingscan change in the counter, but basically, they're taking those two things, theprice and the contingencies and coming back to you with a different version ofwhat they're willing to do in the sale. so that's a counter. if they counter you, you then have the choice to counter or

accept as well. so let's talk aboutaccepting which is the next step. so at some point one side or the other accepts and that means they agree to sell orbuy the house based on the last offer presented. at this point one side says to the other, "i accept youroffer or i accept your counter and we have a deal." at that point we're donewith the make an offer part. we've figured out exactly what the sale willlook like, what the price will be and what the contingencies will be. we're ready to move on to the escrow period. the escrow period is a period oftime between an accepted offer and the

closing. as we'll get to, the closing is the actualmoment when you purchase the home from from seller. we'll get to that but wehave the escrow period to walk through and tons of things happen in theescrow period. so let's talk about what happens during the escrow period. you've got a secure that mortgage that you got preapproved for. most the timethere's a home inspection which means someone will come in and really like dig intothe house, take a deep look at the structure of the home. during that time we're going to address the contingencies which means if you ask the sellerto do something we need to make sure that's actually done before closing. andwe need to get insurance. so those are

the things that need to happen beforethe closing. then obviously the closing happens at the end when allthose things have happened during the escrow period. so let'sbreak into each of those quickly. securing a mortgage - you're gonna goback to the mortgage company now that there's an accepted offer and say lookyou pre-approved us for x amount of money, let's finalize these details andthey'll want your finances, your w-2, your work information, all thefinancial pieces of your world. the mortgage company's going to wanna seethem because they want to make sure that you're going to be able to pay yourmortgage payment. that's what they're

trying to figure out. and so all thatstuff gets figured out back and forth between you and the mortgage companyuntil the mortgage is secured. this means it's really set and ready for closing. so thatfinancial side has to happen, securing the mortgage. homeinspection is when a certifiedinspectors examined your home and describes all the structural concernsthat he or she notices. now, you made the offer on the house assuming you had asolid house in place. maybe the seller said there was a problem with the roofor there was something like that. a lot of times times when you'regoing through with your realtor your realtor will know that there are someissues and they'll tell you about that from the beginning.

but often times in this inspection you'llfind other kinds of issues. maybe there's termites in the house or all kinds of different things can come up during the home inspection. most importantly, this is a pointwhere often times even though you've made an offer, it's been accepted, and you're in escrow a home inspection can change the agreementbetween the seller and the buyer. usually in the offer it says, "contingent on homeinspection." so once the home inspection goes through, if there's majorproblems, you can say, "look you need to fix this or we're backing out of thedeal." oftentimes, deals fall

through at the home inspection point. this is a good time to address the contingencies in general. so the purchase offer iscontingent on the inspection. so there may be additional negotiation ifthe inspection finds issues. i just talked to you about that. but we also, if there's any othercontingencies that were part of the offer ("hey we need to fix the roof"), that'sgoing to be a part of the escrow process as well. it has to get done before theclosing so you know that the seller absolutely has takencare of it before ownership changes hands. getting insurance - insuranceprotects the home and it protects not

only your financial interest in the homebut it protects the mortgage companies financial interest in the home. themost basic part of insurance is this. if it wereto burn down or get taken out by a tornado or whatever, the investment that you'vemade and your mortgage company has made is no longer there. insuranceprotects from that situation. so insurance is going to pay to rebuildthat house and bring the investment that you have and the mortgage company hasback into the picture. so the mortgage company will insist on youhaving insurance before the closing. so

you need to go out toyour local independent insurance agent and engage with them. say, "hey i'm buyingthis house. here's the address, here's the closing date, please let me know whatinformation you need." they will get a quote to you which you can then handover to the lender and say, "hey here's the amount of money that i'mgoing to be paying or really is going to be paid out of my escrowaccount (we'll get to that later) and they will figure it into the process. and then,before closing, you have to actually secure that insurance policy and get a certificateof insurance to your lender so that the closing can happen. so that's all a partof the process and getting insurance is

an incredibly important part of theescrow period. like i said insurance is animportant part of your escrow account which i will address later but that'swhy they need the numbers specifically. the mortgage company needs twoinsurance things to close. one is that you have insurance to know that their financialinterest is protected. two is that they need to know how much that insurance isgonna cost so they can figure what your monthly mortgage payment will be. i know i'musing a bunch of big words there but i'll get to it in just a second.

ok, we talked about you getting thepolicy into place & get your mortgage company proof of insurance prior toclosing, we got all that taken care of. so we've secured the mortgage, we've gone toour inspection, we've taken care of all those things. we've got our insurance inplace and we are ready to close on the house. general this happens on a given day. oftentimes the buyer and the seller will come to the same place, a title companywhich is in charge of making sure all this stuff happens, and sit down at thetable and one party will buy the house the other party will sell the house. there'slots of signing of papers, putting things in place, and that is the closing. thedate that you actually purchased

the house and the seller no longer hasany interest in it. so all documents will be signed ownership of the house willofficially change hands to you and congratulations you purchased a newhouse!! but there is a lot of cost. involved. specifically, there's a group of people that get paid at closing. so at closing you're gonna see a lot of course connected there. these costs vary widely with a lot of different expenses but here's some of the mainones. at closing you're gonna pay the realtors and thetitle company. so you're going to pay everybody that helped you with thebuying process. you're gonna pay one year of your homeowners insurance sothat will be a part of your closing

costs (unless you paid thatahead of time), and a lot of other fees that come with it. so there'sa lot of different closing costs and understanding those closing costs reallyhas to do with you talking to your mortgage broker about how this is gonnawork. asking questions like, "what are the closing costs? what are they gonna looklike? why do i have them?" ask those questions make sure that youunderstand because when you're at closing there's so many things going on. yoursigning papers everywhere and all this stuff is going on that everybody elseknows how to do. they do this all

the time. so they're kind of zooming through itand if this is the first time that you'retrying to understand everything you can end up leaving that room a littlefrustrated and feeling like you don't understand. so take a little bit ofyour mortgage brokers time ahead of time. sit down with them and see exactlywhat closing costs are going to be in there. have them break it down foryou and they should gladly do that for you. so that's the closing costs part of your closing. soyou purchased your house, congratulations! you get to move in, you get to be happy, you're a new homeowner! you've invested in

something that will provide you tons ofjoy, maybe grow your family, whatever your future interests are in lifethat house you just purchased has a lot to do with those. that willbe the foundation of where those things happen so buying a new house being a newhomeowner is super exciting and a smart investment for the most part and soenjoy it! you've done everything you had to do. itwas nearly three months of paperwork and all this kind of stuff andnow you're actually moving into your house. so be happy. but i wanted to breakdown, at some point, your mortgage payment is going to need to be made. a lot of times youget a grace period. so the first

maybe month you're living in your houseyou don't have to pay anything. but in that second month or maybe thethird month you're gonna start having to pay your mortgage payment. that payment isgenerally the same amount of money that your mortgage broker told you from thebeginning. but what i didn't know when ipurchase a new house and what i want to share with you right now is that thereare absolutely parts of that mortgage payment that are important to understand.there's three parts actually and they are principle, interest, and escrow account contribution. so you've got these three different parts of your mortgage paymentand let's break those down and look at

what each one is. the first one isprincipal. this is what you think of in your payment. it's the part ofyour monthly payment that goes toward paying down your debt. you borrowed $200,000 and every monthyou're paying a little bit to pay that down. in 30 years or fifteen years orwhatever you agreed to, you'll have paid down all the money you borrowed. that portion is principle, however, especially the beginning, principle is not the main part of yourpayment. it depends on how your loan is set up but often times at the beginning ofthe loan the main part is actually interest. interest is the part of your monthlypayment that goes toward paying the

mortgage company for the privilege ofborrowing their money. as you know, banks don't do this for free. they make money everymonth and oftentimes they front-load mortgage payments so thatthere's more interest being paid at the beginning than at the end. that'sobviously set to their advantage so that they make more money whether you sellyour house later or not. so you've got the principal (what you're paying down on themoney you actually borrowed), interest (what you're paying the mortgage companyfor the privilege of borrowing their money), and then the third piece which isescrow account contribution. so there's a little tiny bank account thatis a part of your mortgage.

it's called the escrow account.every month you pay a small bit into this bank account that your mortgagecompany keeps track of. it usually covers two things. it will cover yourproperty taxes and it will cover your homeowners insurance. your mortgagecompany likes it to be set up this way because they want to know that you're paying your taxes and that your homeowners insurance is protected in case something bad happens. they wanna knowthat's happening and they want to have a little bit of control over that. theway they've set it up is having an escrow account contribution as a part of the mortgagepayment. so you're paying to the mortgage

company a little bit of money each month. when the property taxes need to be paid the bill goes to your mortgagecompany and your mortgage company pays those property taxes or pays thathomeowners insurance out of the escrow account. so they are responsiblefor paying the property taxes and homeowner's insurance. it's not like they're paying out oftheir pocket of course, they're paying out of your pocket. you're just paying it as a partof your monthly mortgage payment each month. so you're paying into the escrowaccount, the mortgage company is paying property taxes and homeowner's insurance,and that way they have some control over

knowing those things are actually beingpaid and actually being taken care of. it's important to know that even ifyou set up a mortgage that cannot change. the price cannot change. oftentimes afixed rate mortgage means nothing is going to change about the principal(amount of money you borrowed). nothing is going to change about the interest (orthe amount of money you're gonna pay the mortgage company for the right to borrowthat money). something can change though about the escrow account contribution.sometimes the mortgage company will send people something like, "hey your mortgage payment is going up from $1,000 a month to $1,200 a month"and they get all up in arms. again

this was one of the places i didn'tunderstand when i bought my first home. i had that happen about a year in.my mortgage payment changed and it went up by a couple hundred dollars. i wasthinkin, "well wait a minute. i don't understand this. why am i paying moremoney when i made this agreement?" i got really frustrated with my mortgage company and the person who sold me the mortgage in the first place. i was like,"what? you set me up for something that now suddenly is going up." what ididn't realize was simply that my homeowner's insurance and my propertytaxes had gone up. that made the escrow account contribution change andtherefore, my monthly mortgage payment

goes up. so, if your monthly mortgagepayment changes it's almost 90% sure it is your escrow account that is causingthe problem. if you know that and understand that then you can dig into what'sactually going on and see if you can do something to fix it.escrow account contribution for the most part, 90% of the time, is theonly thing that can change in your mortgage payments. so know that. if yourmortgage payment changes on you. i got ahead myself there. again, if you have a fixed ratemortgage then insurance and taxes are the only real reasons that your monthlymortgage payment amount should ever change. i think i jumped on that onealready. i guess i'll say it here again. now

you know and if your mortgage paymentdoes change, don't freak out. you gotta know that it has something to do, mostlikely, with your taxes or insurance. ok, here's a rookie mistake, something that ithink people do sometimes. hopefully your mortgage broker will be telling younot to do this but i'm gonna tell you not to do this right here as well. applying for any other loan during theescrow period. your your mortgage is still changeable ifsomething happens to your credit. something can happen to your ability toborrow money from the bank that you've made the agreement with all the way upto the closing date. a lot of times

mortgage companies don't actuallytotally solidify your loan till two days before closing or even the day of closing.so you do not want to apply for any other loan during the escrow period without speaking with your mortgagebroker. if your mortgage broker tells you, "hey, here's the situation. it's fine. youcan go ahead and buy that new car." well that's differentbut do not go and apply for any other loan unless you spoke with yourmortgage broker and they've specifically said that it's not going to have anegative effect because oftentimes it will. so rookie mistake>> applying for any otherloan during the escrow period.

alright, what we learned: well, we appliedfor a mortgage, we navigated all the different parts of the escrow period, andonce we had closed and bought the house, we broke down your monthly payment. now you're there. you understand exactly how these things work, exactly how buyinga house works from beginning to end. i hope that you're like, "ok i get it! there's a lot of pieces but i understand it now. i can navigate them noproblem. i feel like a boss. i feel like someone who's going to nailthis thing!" and i know you are you going to be able to go right throughit smoothly, take care of any bumps that do happen, and purchase that home of yourdreams. the last step in this video

is pretty simple. three-parts. i would likeyou to go and subscribe to our youtube channel. we share a whole bunch of greatinformation just like this video you just watched. so please subscribe to ourchannel so we can get it out to you and go from there. step 2, please share thisvideo with someone who needs it. so i'd like you think about if you know someoneelse who is purchasing a new home or who's purchasing a home at all. do you know a mortgage broker that might be ableto share this video with the folks that work with them. please share this videowith one person who needs it. then finally, i hope your post on yourfavorite social site about this video so that

other people can experience it as well. goodinformation is only great if people share it. and it's really not even goodif people don't care because you can't enjoy something if you don'tknow it's there. so please post this video on your favorite social sites. so we will see you next time. feel free to head over to our youtube channel ifyou wanna see some more videos. i really appreciate the time you spentwatching this video and i hope you got a ton out of it. if you did please let meknow. i will see you in the next video orthe next place have a wonderful wonderful day