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Home Buyer Information Guide

Buying a home is all about decision making. Working on your behalf, our Real Estate Advisors will provide you with the important details regarding real estate market prices and data in the areas you are considering, as well as information regarding the necessary steps involved in the Real Estate buying process, so that you feel comfortable when you ultimately make that home or Investment buying decision. Our services are 100% satisfaction guaranteed. Past client referrals available upon request.Our team collectively with our associate brokers within the Coldwell Banker Apex brokerage assisted 12,000+ clients to achieve a record breaking $4+Bil in sales in 2021 by assisting real estate property buyers & sellers work through this important decision making process: decisions based on location, the current market conditions, financing options, the condition of a property as it relates to sale price, and recommendations of service providers directly or in-directly related to the real estate transaction to assist you with most likely your largest purchase/investment in your lifetime to build multi-generational net wealth.Also, as a member of several Multiple Listing Services throughout the state of Texas & California (La Jolla/San Diego) We have instant access to the information for any listing that is available in these areas – so you have the luxury of one-stop shopping should you be curious about a particular property, perhaps something you have seen on the internet or a for sale sign on a property. Please feel free to contact us,so we can provide you with the property information.We look forward to working with you and appreciate the opportunity to assist you through the Real Estate buying/selling process.Sincerely,Thomas RicciSr. Advisor/PartnerThomas.ricci@cbrealty.comC:980.333.3175O:972.861.0888CalDre#01115794Shelby JohnstonAdvisor/PartnerShelbyjohnston.dfw@gmail.comC:972.332.8562O:972.86.0888

About Our Team Our Guarantee The Johnston Ricci Realty Group is completely committed to providing you with first class service before during after the purchase sale or lease of your home office or real estate investments in Texas around the world We understand that you have a choice when seeking out real estate services and we sincerely appreciate the opportunity to assist you with all your real estate transactions for many years to come Our core values are summed up in four words Expertise Creativity Integrity Honesty These are not just words but are our commitment to our clients and to ourselves on how we will conduct our business and client relationships We know that talk is cheap and only performance counts We are confident and focused on ensuring that you will see the true essence of these words fulfilled throughout the transaction We strive to manage The Johnston Ricci Realty Group in a way that is ethical honest most competitive in our industry Our Strength is in team work Our Recognition is for our Results If at anytime you do not feel that we have exceeded your expectations please contact me personally we are here to build a lifetime relationship not just a one time transaction Sincerely Thomas Ricci Shelby Johnston Accomplishments Specialties Top 7 of nationwide network 2013 2022 Multi million dollar producer Luxury Single Family condos Townhomes Relocation Corporate Housing Multi family Office Restaurants Short term rental investments Land Ranch Commercial Multi state licensed TX CA CalDRE 01115794 Home Selling Service Commitment We commit that we will Communicate with you in a timely and efficient manner Identify your needs Develop and implement an effective Marketing plan for your property Assist you to determine an effective pricing strategy Recommend steps to prepare your property for market Represent you in negotiations with prospective buyers Work to protect your interests through the completion of the transaction Coldwell Banker Realty Apex Realtors 21 Offices Serving DFW Waco Austin La Jolla CA all 50 states 40 countries Thomas Ricci 972 861 0888 thomas ricci cbrealty com Shelby Johnston 972 322 8562 Shelbyjohnston dfw gmail com

The Highest in Professional Service“Strength in Teamwork…Recognition for Results” At Johnston & Ricci Realty Group@ Coldwell Banker Apex it’s more than just a slogan, it’s the philosophy that makes us the premier real estate group in North America.At Johnston & Ricci Realty Group@Coldwell Banker Apex we take pride in our organization reputation for quality customer service that dates back to 1906. Our Real Estate Advisors and employees form an elite international network backed by comprehensive training, powerful advertising, extensive relocation programs, and exclusive marketing systems.To help guide our real estate clients through the complex process of buying and selling properties, our real estate advisors are equipped with the most powerful tools available anywhere in the real estate industry – tools designed to communicate and to get results through our face-to-face networks & social media.We are committed to serving you with honesty and integrity. We stand committed to these ideals because we want you to be our client FOR LIFE!

WORKING WITH A BUYER’S AGENTSo, what is a Buyer’s Agent and why should you work with one? A Buyer’s Agent represents you, the property buyer, during every step of the real estate transaction. That means your interests and preferences are always the first consideration, from the moment you start looking to the moment you arrive to the closing table. This type of focus and dedication allows you to shop for a property with the ease and confidence of knowing you have someone looking out for your best interest.As you can imagine, there is a lot involved in the purchase of any property. As a buyer of real estate, there are numerous items to be addressed before you finally move into the right home for you. Working with a knowledgeable agent, that you are comfortable with, who will take on the responsibility of handling the details of your home purchase, is a very important first step.To assist you regarding FINDING a property we will:•Discuss your property requirements, including size, location and price.•Explain financing alternatives and assist you in the selection of a mortgage lender, if necessary. •Provide information on properties available meeting your search criteria, and arrange viewing appointments.To assist you regarding CHOOSING a property we will:•Discuss the benefits and drawbacks of each property in relation to your specific needs.•Gather data regarding comparable sales information to assist in determining market value.•Give you a complete estimated Buyer’s Cost Analysis Statement for any property on which you make an offer to purchase.To assist you BUYING a property we will:•Prepare and negotiate a Real Estate Purchase Agreement for the price and terms which are right for you.•Handle all the details and negotiations, and carefully explain all written documents.•Accompany you to the closing, making sure you understand the entire settlement process.

FINANCING YOUR PROPERTY PUCHASE The LenderMost people use financing of one type or another to buy a property. The amount you can afford will depend upon how much cash you have for the initial investment, or down payment, plus the amount of mortgage you can afford according to your income and debt levels.There are many advantages in working with a reliable, professional mortgage company. Some of the more important services that good lenders provide:Pre-approval of your loan: A lender can provide a loan pre-approval through an examination or your credit status and current financial situation. It will save you valuable time.Ability to find the right loan at competitive prices: Today there are hundreds of different loan programs, all with different terms, rates, and fees. A professional mortgage lender can help you choose the best program at the most competitive rate.Efficient and timely follow-up: Once the transaction has been negotiated, a skilled lending broker works to insure that the loan is processed and funded within the specifications of the purchase agreement.

FINANCING YOUR NEW HOMEPre-approval vs. Pre-qualificationWhat could be more comforting than the peace of mind that goes with knowing your mortgage is fully approved?You will have a greatly improved negotiating position when you are pre-approved for a mortgage. Sellers are more apt to negotiate with someone who already has a mortgage approval in hand. The pre-approval letter lets the seller know they are working with a serious buyer, and that your offer is solid. A pre-approved buyer can also close on a property more quickly- -another major consideration for a motivated seller. In today’s market, it is not unusual for multiple offers to be made on a property, and a pre-approved mortgage is almost essential in that situation.Pre-qualification is not a commitment by a lender to loan you money, it’s merely an indication of what you can probably afford to pay. A pre-qualification includes an analysis of your income, monthly debt, employment and available cash for down payment to determine the best loan for you and the amount you might qualify for.Pre-approval takes this process another step further and uses basic information as well as electronic credit reporting. When you are pre-approved, you actually have a lender’s written mortgage commitment. It is a true mortgage commitment to financing your home and an indication of the total mortgage amount available to you.

FINANCING YOUR NEW HOMEInformation to have available when you contact the mortgage lenderAbout You•Name and Social Security number of each applicant•Address of landlord or address or mortgage company and mortgage account Assets•Source(s) of down payment and closing costs•Bank aggress, account number and approximate balance•Value of assets (Stocks, bonds, mutual funds, etc)Debts•Confirmation of credit cards and installment loans•Information on any other properties owned (rental, investment, second homes)•Alimony/child support payments (if applicable)Income•Monthly salary and sources of income•Information on employment

FINANCING YOUR NEW HOMEThings you should not do whenapplying for a home loanDon’t buy or lease an auto. The lender looks carefully at the debt-to-income ratio and a large payment such as a car lease or purchase can greatly impact those ratios and prevent you from qualifying for a home loan.Don’t move assets from one bank account to another. These transfers show up as new accounts and complicate the application process, as you must then disclose and document the source of funds for each new account. The lender can verify each account as it stands. You can consolidate your accounts later.Don’t change jobs. A new job may involve a probation period which must be satisfied before income form the new job can be considered for qualifying purposes.Don’t buy new furniture or major appliances for your “new” home.If the new purchase increases your debt load, it can disqualify you from the loan or deplete your funds to close.Don’t run a credit report on yourself. This will show as an inquiry on your lender’s credit report. Inquiries must be explained.Don’t attempt to consolidate bills before talking to your lender. The lender can advise you if this needs to be done.Don’t pack or ship information needed for the loan application. Important paperwork such as W-2 forms, divorce decrees, Form DD214, and tax returns should not be sent with your household goods. Duplicate copies can take weeks to obtain.

HOW MUCH CAN YOU AFFORD?

INTEREST RATE FACTOR CHART

UNDERSTANDING ESCROWYou may have heard phrase such as “we are in escrow” or “we are waiting for escrow to close”. So just what is escrow anyway? Simply stated, escrow is the involvement of an impartial third party in a real estate transaction. This neutral third party acts as an intermediary between the buyer and seller, and also collects and remits funds as instructed. Generally, this means that when you buy a home, you do not pay the seller directly, instead you deposit funds with the escrow company which then remits to the seller on your behalf. The basic concept of escrow is to ensure that both the buyer and seller are protected during any real property transaction.Not only does escrow act as the neutral third party receiving and disbursing funds, but it also performs other transaction services: 1) Prepares escrow instructions according to the terms of the purchase agreement. 2) Determines the legal ownership and status of the property through a title search. 3) Requests payoff statements for existing deeds of trust, liens, judgments, special assessments and homeowner association dues. 4) Prorates all of these related financial matters, in addition to taxes, insurance and interest. 5) Records all legal documents as necessary. 6) Closes escrow when all instructions have been fulfilled. 7) Disburses funds as instructed and prepares final closing statements for all parties.In addition, the escrow officer makes sure that the transaction closes in compliance with its instructions, with no changes made except by mutual written agreement of the buyer and seller. Escrows have clearly defined time limits. If for some reason, the transaction is not closed by the time limit, buyer and seller must agree in writing whether the escrow is to be extended or canceled.

WHAT ARE THE CLOSING COSTS?Closing costs are an accumulation of separate charges paid to different entities for the professional services associated with the buying and selling of real estate.If you are purchasing with a loan, the lender will disclose a good faith estimate of what the closing costs will be, although not all items will be included in that estimate, such as inspection fees or Home Owner Association fess.An estimate of fees will also be provided for you at the time a purchase agreement is prepared for a property, so that you will have an estimate for a specific property. Other than the earnest money which is provided when a purchase agreement is prepared, and initial loan application and inspection fees, the balance of funds is required at the time of closing. Some of the items associated with the closing costs are:Down Payment: The cash portion paid by a buyer from his own funds, which in addition to that portion which is borrowed, equal the purchase price.Loan Fees: Fees charged by a lender in connection with the processing of a new loan. These may include: initial application fee, loan origination fee, discount points, credit report, processing fee, appraisal fee. Escrow Fee: Charged by the escrow company for services in preparing documents necessary to the real estate transaction, handling funds, and facilitating the closing.Title Insurance: Required by the lender to protect its lien position. This is in addition to the title insurance policy provided by the seller for the buyer’s coverage.Hazard Insurance: You will need to pay for an entire year’s hazard insurance premium up front. Also the lender may require you to place an amount into a reserve (impound) account to be held by the lender for future payments on your behalf.Prepaid Interest: Interest on the loan from the date of funding to the end of the month you close.Inspection Fee: Fees charged for various inspections as requested per the purchase agreement, such as the home inspection or termite inspection.Document Preparation and Recording: To cover the preparation of the final legal papers, including the note and deed of trust, and charges paid to the county to record the document.Miscellaneous Fees: Document Processing Fee, HOA dues and transfer fees, express mail or wire fees.

PROPERTY INSPECTIONYou feel you have found the property you’ve been looking for! You love the floor plan and it is in the area you want. You know this is the property. But before you complete the purchase, you will want to have a professional property inspector give you an unbiased point of view about the condition of your potential new property investment. To do this, the inspection must be included as a contingency in the purchase agreement, to occur within a period of time, agreed to by both buyer and seller.Texas is one of the states that requires home inspectors to be licensed by the State of Texas.Once you have selected a property inspector, and the appointment has been set, you are encouraged to also attend the last 15 minutes of inspection. While not required.You will be given a written report with the results of the inspection, which will detail the overall condition of the property. Do all the major systems work properly? Is it structurally and mechanically sound?The report will also let you know of anything that the inspector found that may need to be fixed. There may be items that you would prefer to have the seller repair prior to closing and depending on how your contract is structured during the option period, we will discuss what your options are. A request would be presented to the seller to negotiate these items in order to complete the sale.

HOME WARRANTY PLANWhen you buy a home, the last thing you want to worry about is what might break down within the first year. A home warranty plan can offer you peace of mind by protecting against costly repair expense for one full year after the closing.A home warranty policy can be purchased by either the home seller or the buyer. It is designed to cover certain components in your home when they break down due to normal wear and tear. If a service call is needed, you will only pay a set fee, which may be a fraction of what you would have paid had the component not been under warranty, and covered items will be repaired or replaced for a full years.Basic coverage may include pluming, electrical and heating/cooling systems, stoves, disposals, and other built-in items such as microwaves or dishwasher. Other items, such as an in ground pool or spa, may be covered for an additional cost.Many sellers of re-sale homes in our market have already agreed to place home warranties on their properties at closing, at their expense.

YOU’VE FOUND THE RIGHT PROPERTYWHAT NEXT?PREPARING THE REAL ESTATE PURCHASE AGREEMENTOnce you have found the right property, the offer to purchase will be completed, stating exactly what you are willing to offer relative to price, earnest money deposit, down payment, financing, inclusions, and all other details. Today’s purchase agreements have become quite lengthy, therefore it is a good idea to review the documents in advance. In our fast paced market, the move to prepare an offer to purchase may come quickly after viewing a home, and having already reviewed the documents will better prepare you for that process.In addition to the purchase agreement, your lender can provide an estimated closing cost l You will know approximately what your expenses and monthly payments will be before you sign the contract.After the contract is complete, including receipt of your earnest money deposit, the contract will be submitted to the listing agent to be presented to the seller for consideration. The seller can respond one of three ways- accept the offer as written, reject the offer or make a counter offer indicating a change of some detail of your original offer. When both buyers and seller agree to all terms and sign all documents, the property is removed from the market and an escrow is opened to facilitate the closing of the transaction.Between the time the contract is accepted and the actual closing is reached, the buyers and sellers go through various steps. They include: any inspections the buyer requested, an appraisal of the home for the lender to make sure that the value of the home is in accordance with the amount of the loan, the final processing of the buyer’s loan, and a preliminary title search of the property.

1) It is best to start by getting a pre-approval from a loan officer (We will provide our preferred lenders for you to have additional options); there are 3 benefits to doing so:-To be able to look at homes with confidence of what you can buy!-So that you will have a firm understanding of what your monthly payment and interest rate will be for the varying amounts of the loan (I.E. what your monthly payments would be whether you borrow $300K, $700K, $1m, etc). This will help you best select the target price of homes to consider-So that you have a good understanding of how much money you will need for a down payment and for closing costs.2) Once we know how much you would be comfortable borrowing (based on the info from Step 1), We will send you information on several homes for you to choose from.3) We will go look at several homes and communities of your choice & our recommendations.4) When you find your home, we will then check the sales of comparable homes that have sold, current market conditions so that we can know if it is priced fairly, and then we can discuss what it will take to get an accepted offer.5) At this point, we would draft a contract to purchase and your advisor would begin the negotiations with the seller’s agent. At this time, We would need an earnest money check for 1% of the sales price plus a separate check for $250-$10k (negotiable) to buy the 3 to 10-day option period.6) Once we reach agreement on price and terms for the sale, and everyone signs off on the changes, then the contract is 'executed'. From this point, you have the option period to back out of the deal. Your only out of pocket loss would be the money for the option period, plus the inspections (if you have had it inspected already).7) Within the option period, we would immediately have a licensed home inspector come to the home and perform a thorough inspection. Based on the results of the home inspection - while still within the option period – Your advisor will negotiate for any repairs you deem necessary as determined by the inspection. If the seller does not meet your demands in these negotiations, you have until the end of the option period to cancel the contract and walk away. In this case you would get the earnest money back.8) Assuming we reach agreement on any necessary repairs, we sign any addendums to the contract get signatures then move forward to close the purchase of the home.9) After closing, you take ownership of your beautiful new home!HOME BUYING PROCESS MADE SIMPLE9 Steps to Home Ownership

NEW CONSTRUCTION HOME BUYING PROCESS10 Steps to Buying a New Built Home from a Builder1) It is best to start by getting a pre-approval from a loan officer (We will provide our preferred lenders for you to have additional options); there are 3 benefits to doing so:-To be able to look at homes with confidence of what you can buy!-So that you will have a firm understanding of what your monthly payment and interest rate will be for the varying amounts of the loan (I.E. what your monthly payments would be whether you borrow $200K, $300K, $400K, etc). This will help you best select the target price of homes to consider-So that you have a good understanding of how much money you will need for a down payment and for closing costs.2) Once we know how much you would be comfortable borrowing (based on the info from Step 1), We will send you information on several homes for you to choose from.3) We will go look at several homes and communities of your choice & our recommendations.4) Once you find a community and floor plan that you prefer, your advisor will negotiate with the Builder. Once an agreement is reached, we will review, sign & execute a contract to purchase on the builder’s contract form. Earnest Money/Down Payment is due upon execution of the contract.. The amount of money is dependent on specific builder-It may be 1%-5% of sales price or flat dollar amount, all credited at closing toward down payment.5) Most builders will require that you are also pre-approved for a mortgage, often through their in-house lender as assurance to them, that you are able to buy the home6) If you did not choose an inventory home ,we will make an appointment to visit the builder’s “Design Center” to select your interior finishing’s, your brick color exterior color etc. Usually 20%-50% of total spent above builder allowance will be due based on total price of your selections,7) We will attend 1 or 2 “pre-construction” or “Red Tape” meetings with the construction superintendent to review, blueprint, wiring options, Design center options & everything builder needs to know about your home. After this meeting, construction will start. 8) Many builders also hold a “Pre-Sheetrock” meeting where we walk through-out the home in its “framed” stage before the sheetrock is installed, to verify location of electrical outlets, plumbing, wiring etc.9) Approximately 1 week prior to closing, you may choose to hire a 3rdparty home inspector to inspect the home. We will attend a “First Walk-Through” to inspect the home in its near-completion state. We will spend a couple hours thoroughly inspecting the home ourselves for any imperfections. The construction superintendent will accumulate a list of corrections to make prior to closing, based on the 3rdparty inspectors report as well as notes we make during our “First Walk-Through” meeting.10) Just before closing, we will re-inspect the home to ensure all the imperfections identified the previous week are corrected, and we will confirm the home is Perfect, then we will go to close!

CASH FLOWS IN THE HOME BUYING PROCESS Upon Execution of Contract 1 of Purchase Price Earnest money at Time of Contract Credited to you at closing 250 to 10K 500 Option Money at Time of Contract Credited to you at closing if closed otherwise option money non refundable in exchange for Option period Inspection Fee during the Option Period 150 Termite Inspection Gas Leak check during Option Period Within First 2 Weeks of Contract 450 700 Appraisal Fee typically after Option Period Use our approved lender Lender covers the cost At Closing Balance of Down Payment Closing Costs due at designated Title Company

UNDERSTANDING THE LANGUAGEGlossaryAdjustable Rate Mortgage (ARM): A mortgage with an interest rate that changes over time in line with movements in the index.Adjustment Period: The length of time between interest rate changes on an ARM. A loan with an adjustment period of one year means that the interest rate can change once a year.Amortization: Repayment of a loan in installments of principal and interest, rather than interest only payments.Annual Percentage Rate (APR): The total finance charge (interest, loan fees, points) expressed as a percentage of the loan amount.Appraisal: An estimate of the property’s value, made by an independent appraiser. This is generally required by the lender to determine if the value of the property is sufficient to secure the loan.Balloon Payment: A lump sum principal payment due at the end of some period.Buydown: Permanent--prepaid interest that brings the note rate on the loan down to a lower, permanent rate. Temporary--prepaid interest that lowers the note rate temporarily on the loan allowing the borrower to more readily qualify and to increase payment as income grows. Cap: The limit on how much an interest rate or monthly payment can change, either at each adjustment or over the life of the mortgage.Cash Reserves: The amount of the borrower’s liquid cash remaining after making the down payment and paying all closing costs.

UNDERSTANDING THE LANGUAGEGlossaryCC&R’s: Covenants, conditions and restrictions, which controls the use, requirements and restrictions of a property. Closing Costs: Fees paid at closing, including escrow, title and recording fees, mortgage related fees, pre-paid interest, insurance and pro-rations for taxes, assessments or HOA fees. Contingency: A condition that must be satisfied before a contract is binding. For instance, an agreement may be contingent upon the buyer.Debt Ratios: The comparison of a buyer’s housing costs to his gross or net effective income, and the comparison of a buyer’s total long-term debt to his gross or net effective income. The first ratio is the housing ratio and the second ratio is the total debt ratio.Due-On-Sale Clause: A clause that requires a full payment of a mortgage or deed of trust when the secured property changes ownership.Earnest Money: The portion of the down payment given by the buyer at the time of an accepted offer to purchase, and deposited with the escrow agent, as evidence of good faith.Fixed Rate mortgage: A loan with a single interest rate for the life on the loan.Gift Letter: A letter from a relative stating that an amount will be gifted to the buy and that said amount is not to be loan.Index: A measure of interest rate changes used to determine changes in an ARM’s interest rate over the term in the loan.

UNDERSTANDING THE LANGUAGEGlossaryInitial Interest Rate: The introductory interest rate on a loan, signals that there may be rate adjustments later in the loan.Lien: A legal hold or claim in a property as security for a debt or charge.Loan Commitment: A written promise to make a loan for a specified terms.Loan-To-Value-Ratio: The relationship between the amount of the mortgage and the appraised value of the property, expressed as a percentage of the appraised value.Lock-in: The fixing of an interest rate or points at a certain level, usually during the loan application process. It is done for a specific period of time, such as 60 days, and may require a fee or premium in the form of a higher interest rate.Margin: The number of percent points the lender adds to the index rate to calculate the ARM interest rate at each adjustment.Mortgage Insurance Premium (MIP): The mortgage insurance required on FHA loans for the life of the loan.Origination Fee: A fee for work involving in evaluating, preparing, and submitting a proposed mortgage loan.Point: An amount equal to one percent of the principal amount of the investment or note. Lender assesses loan discount points at closing to increase the yield on the mortgage to a position competitive with other types of investments.

UNDERSTANDING THE LANGUAGEGlossaryPrepayment Penalty: A fee charged to a borrower who pays a loan before it is due.Private Mortgage Insurance (PMI): Insurance written by a private company protecting the lender against loss if the borrower defaults on the mortgage.Purchase Agreement: A written document in which the purchaser agrees to buy certain real estate and the seller agrees to sell under stated terms and conditions, also called a sales contract, earnest money contract, or agreement for sale.Rate Gap: The difference between where the rate is now and where it could adjust to on an ARM. Also, used to compare the difference between a current conventional rate and that of an ARM.Title Insurance Policy: A policy that protects the purchaser, mortgagee or other party against losses.

REALTORFAIR HOUSING DECLARATIONwe agree to:Provide equal professional service without regard to the race, color, religion, sex, handicap, familial status, or national origin of any prospective client, customer, or of the residents of any community.Keep informed about fair housing law and practices, improving my client’s and customer’s opportunities and my business.Develop advertising that indicates that everyone is welcome and no one is excluded, expanding my client’s and customer’s opportunities to see, buy, or lease property.Inform my clients and customers about their rights and responsibilities under the fair housing laws by providing brochures and other information.Document my efforts to provide professional service, which will assist me in becoming a more responsive and successful REALTOR.Refuse to tolerate con-compliance.Learn about those who are different from me and celebrate those differences.Take a positive approach to fair housing practices and aspire to follow the spirit as well as the letter of the law.Develop and implement fair housing practices for my firm to carry out the spirit of this declaration.