Buying a Home

Buying a home, no matter whether it’s your very first or you’ve gone through the process multiple times, is an exciting journey and among the most fulfilling milestones to be reached in life. While the process is complicated, that doesn’t necessarily mean it will be stressful and certainly shouldn’t be feared. Rather, working with the amazing professionals we have right here in Lincoln will allow you to have the best possible experience while also avoiding any pitfalls that may present themselves along the way.

First Step: Financing

Indeed, as many of our local real estate agents will agree, securing financing is a major part of the buying process. As another area that’s complicated to anyone not actively involved in the industry, you’ll want to be sure you’re working with a knowledgeable lending professional that has plenty of experience with the mortgage process.

Andrew Essay of Cornhusker Bank offers helpful insight to those who are considering becoming a home buyer in the near future:

“In the current housing market homes are moving extremely fast.  The housing inventory is at an all-time low and buyers need to act fast in order to get the home they want.  My best advice to help navigate the current market would be to talk to your loan officer before going out house shopping.   It is more important than ever before to have your pre-qualification letter in hand when you are shopping for a home.   You need to be able to act fast when you find the house of your dreams.

The pre-qualified process will benefit the potential home buyer in multiple ways.  The home buyer will be educated on the different mortgage products the bank offers.  Cornhusker Bank’s lenders will assist in matching up the right type mortgage with each customer’s situation.  Home buyers will also find out the amount of house payment they can afford and the price range in which they should be looking. We will also inform the home buyer of any potential setbacks which could take place during the process.  This helps ensure that no surprises will come up at the last minute.  The entire home buying process can move seamlessly when the buyer has all the necessary information upfront.

Cornhusker Bank has an experienced team of loan officers.  We pride ourselves in customer service and helping the customers through every step of the process.  The loan officers are involved with the customer from the prequalification process through closing, educating and guiding the customers through the entire process.  Even after a loan closes, lenders are still there to assist every customer.  Cornhusker Bank offers local servicing, an aspect that really sets us apart from the competition and gives each customer great piece of mind.”

“I encourage anyone considering a mortgage loan to first visit with a mortgage lender,” agrees Travis Gunderson of Midwest Bank. “It is important to explore your options and determine what size home you can afford to buy before you start looking.

Midwest Bank offers a full range of mortgage products including conventional, VA, NIFA (first-time home buyers) and USDA guaranteed loans (terms include 10, 15, 20 and 30 year fixed-rate mortgages with no pre-payment penalties). Additional related products we offer include construction loans, bridge loans, home equity loans and home equity lines of credit.  Our team of experienced bankers work closely with our customers to tailor a mortgage loan that meets their individual needs.

We also offer free pre-qualification for mortgage loans. By becoming pre-qualified, you know what you can afford before you begin your search and it may give you an advantage over a buyer who is not pre-qualified.  Your banker will explain all of our loan products and give you guidance as to the best loan option for your individual needs.

Buying a home can indeed be a very exciting and stressful experience. We work hard to ensure that our customers understand what is taking place during the entire home buying process.   At Midwest Bank, we value our tradition of exceptional personal service–a tradition respected in the markets we serve and reflected in the relationships we build. Midwest Bank has nine locations in eight communities in Nebraska. In Lincoln we are located at 2655 Jamie Lane (one block north of 27th and Yankee Hill Rd.)—feel free to stop by our give us a call to discuss your options and get the ball rolling.”

As previously emphasized, understanding your budget is critical to the rest of the home buying process and in terms of timeline, should be the first step. “Anyone who wants to enter the home buying market they should be aware of what their limitations are as far as budget is concerned,” further advises Matt Swanson of the Nebraska Bank of Commerce (NBC). “It often comes as a surprise when the amount that an individual or couple qualifies for doesn’t always align with their personal desires, both good and bad.  Furthermore, understanding a monthly budget going into the home buying process is a must. With that in mind we can better assist customers on finding a loan product and structure to fit their needs.

It is also important to understand that getting approved for a loan and closing on a house isn’t something that happens in just a couple of weeks.  There have been some very large industry changes that have lengthened the process from start to finish, so once you’ve established when you’d like or need to be moved in and settled, it’s best to start the process sooner rather than later.  Home buyers should also keep in mind that underwriting guidelines are continually changing; just because they were qualified for a loan 6 months ago doesn’t mean they are automatically qualified today.”

He adds, “At NBC Bank, we can offer an individualized and tailored look at your entire financial position, not just a mortgage.  Even though as a loan officer my focus is on helping with a mortgage loan, we can’t simply ignore everything else that is going on in peoples’ lives financially.  This perspective, along with a high level of analysis helps the customer feel more confident in their decision to go with a particular type of mortgage or term.

It never hurts to do research ahead of time, however take into account that what you may find online these days may have been posted yesterday or 6 months ago and may not be accurate information.  Talk to friends, co-workers and family members as it never hurts to start the process with someone who has helped people you know.”

Second Step: Shopping

After you’ve met with your lender, worked out the numbers, and have your pre-qualification letter in-hand, next comes the fun part—house shopping! During this phase, you’ll want to work with a real estate agent who is familiar with the local market and can offer plenty of expertise and guidance, ensuring you ultimately make an educated decision that’s in your best interest.

Sandra Larsen, a real estate agent with BancWise Realty, also emphasizes that the most important factor to consider when getting ready to buy a home is the financing.

She explains, “Buyers will put themselves in the most favorable position if they can be connected with a great local lender who can get them pre-approved.  To mitigate risk, this is one thing buyers can proactively do ahead of time that will make a big difference.  There are many good local lenders but it’s best to know the person who’s helping you with the most important purchase in your life.  Choose to work with someone you’ve met with in person and who can explain all of the different loan products and find one that’s best for you.

Your lender will probably share with you Rule # 1 once you’re in serious house-buying mode, and especially once you’re under contract to buy a house:  Don’t use your credit or do anything out of the ordinary financially without talking to your lender to make sure it won’t affect the loan process. Don’t go buy a new car, new furniture or run up a $7,500 vacation on your Visa. Instead, wait until the house closes.

It is also better when the loan underwriting process is local, accessible, reasonable, and can adapt quickly because the federal regulations lenders have to abide by now are very cumbersome and time-consuming. Furthermore, funny little unexpected requirements just pop up at the last minute, so be prepared to respond to your lender quickly when they request information.  Unfortunately, most of us are not carrying around $100,000 – $1,000,000 in cash so taking out a mortgage is the other option – be prepared to breath deep and be patient with the process. If you don’t already have a go-to financial professional or institution, seek a reliable, trustworthy lender referral from your Realtor®.

Most experienced Realtors® will ask the buyer to complete the first step of pre-qualification before looking at homes. Here’s why: Let’s say you go shopping for a home and you fall in love…now what?  Now you’ve put yourself on an emotional roller coaster of loving the home but not being able to offer on it because you’re not pre-approved and you have a house to sell.  Home after home comes on the market and then sells and in the meantime, you tour more homes, fall in love, then it sells and this keeps happening over and over.  We as Realtors® care about our clients and this is not good for you to experience.  We want the process to be as smooth and as simple as possible for you so that you are able enjoy what is supposed to be a good thing!  It is so much fun when it’s done in the right order.  In the current market conditions, most sellers won’t sign off on your offer without a pre-approval letter.  It’s a reasonable expectation to demonstrate to a seller how you’re going to pay for the home, right?  Currently most sellers in this market don’t need to accept an offer that is contingent upon your house selling because there’s likely another buyer for that home that doesn’t have a house to sell.

As it’s a seller’s market for the most part in all areas of Lincoln these days, there are a few other things to consider aside from promptly obtaining pre-qualification. Making low-ball offers and asking for closing costs is, most of the time, not the best strategy to get the result you want, which is to buy the home you love.  If you love it, other people probably do too.  It is competitive out there but now is still a great time to buy a home.  Rates continue to stay low and relatively speaking, Lincoln’s home prices are reasonable compared to national averages.  Please discuss your particular scenario with a caring and competent Realtor® who can guide you through the entire process.  We are here to help you make smart, educated decisions and navigate through inevitable setbacks and problems that will probably arise.  We’ll do it with a calm demeanor and sound advice for solving problems along the way.

A key advantage of trusting a Realtor® when buying a home is simply experience.  As an experienced Realtor®, I am involved in buying and selling homes everyday while most folks will do it two or three times in a lifetime.  Every endeavor has a standard process or professional protocol that takes place whether it’s planning a vacation, lighting a stage for a performance, catching a fish or painting a house.  Experienced practitioners in any profession complete the needed tasks to get from Point A to Point B better than someone who does not practice that profession daily.  Realtors® have had hours and hours of training, practice and sheer repetition.  Your Realtor® has toured hundreds and hundreds of homes in different price ranges and with different condition issues.  We’ve processed many, many transactions.  We’ve seen what happens when it’s not done right and what the sad consequences are as a result.  When you place your trust and loyalty with a good Realtor®, they will in turn bend over backwards to help you find the right home and oversee all of the contractual details, not because they’ll make a commission, but because we are people people.  I love people, and I love helping people–People First, Real Estate Second is my motto.  In most situations, the buyer will not incur a cost to have a professional advocate looking out for them except for a small broker fee.  You’ll be glad you took the step to trust a professional who will be with you from start to finish.”

In agreement, Nic Fett of Real Estate Avenues: The Brokerage adds, “Understanding the different types of financing options available is of great importance. Having a good understanding of the loan options available will help you to make an informed decision on which lending institution and loan type to select. Once the best financing option is selected, then you’ll have a better idea of what price point to look at. It is always best to get pre-approved by your lender prior to starting your home search. Lincoln has an incredibly competitive housing market, and in order to land that perfect house, you first have to know how you plan to pay for it!

Next, it’s equally important to work with a qualified, experienced real estate professional. As a Licensed Realtor I provide you with accurate information as well as extensive knowledge of the local housing market and its recent trends and activity. I will be there to educate you in order to make an informed decision to achieve the best possible outcome in each situation. As a home buyer, there are a few key advantages I will provide as your Buyer’s Agent. I am able to show you any house listed for sale in Lincoln and its surrounding communities regardless of being listed with a different company, or by the owner. I am your independent advocate and represent your best interest through the course of the transaction. I also provide you exclusive access to the Multiple Listing Service (MLS) by setting up a home search tailored to your request. This provides the competitive advantage needed to find ‘The One’ before the competition does!

He also notes, “The most common misconception when it comes to real estate is that buyers have to pay a commission in order to be represented. This is completely false; Buyer’s Agents are compensated through the proceeds of the sale. In other words, the seller typically contracts with a Listing Agent for a specific percentage, and upon closing the sale, the Listing Agent pays the Buyer’s Agent a portion of the percentage contracted with the seller. As a home buyer you have a right to representation, so you might as well take advantage! If you have any further questions regarding buying (or selling) a home, you may reach me by phone at (402) 326-5632 or by email at Nic.Fett@REAtheBrokerage.com.”

Dennis Slama, a real estate agent with HOME Real Estate, also points to the importance of financing as well as understanding the inspection process.

“When it comes to mortgages, how much you will ultimately be paying for the house when all is said and done is a practical piece of knowledge that you’ll want to know before you commit because it’s what you’ll be dealing with for years down the line. Just because the loan officer tells you that you can be approved for X amount does not always mean you should go that high.  You should go with a payment that you are comfortable with and look for a house in that price range.

Along the same lines of knowing what to expect in the future, towards the end of the home buying process, you’ll want to ensure that a whole house inspection is performed so that you’re alerted of any potential issues.

As far as the current market and things on the horizon that may affect home buyers,  I believe that the housing prices are going up at too fast a rate for this part of the country and we may see a mini 2008 in the next 5 to 7 years. In light of this, my advice is not to get caught up in a bidding war on a property.  Stick to what you and your Realtor® believe is a reasonable price regardless of your emotional attachment to a potential home.

Ultimately, the job of a good Buyer’s Agent is to be there for their clients, from the time they are pre-approved to moving day and all of the steps in between.”

As a recurring theme, certain details about the market like inventory and interest rates will be critical to the decisions you’ll make down the line, from what you can afford to putting in an offer.

“With the ongoing low housing inventory in Lincoln right now it makes the market hot for sellers,” advises Matt Kirkland of Realty Works.  “Right now with the market a little crazy due to low inventory, research and knowledge of the market is key to not overpaying.  Your Realtor, who is representing you as a buyer, should be doing their homework to ensure you don’t find yourself in an unfavorable position.  This includes research on the neighborhood and the history of sale prices in the area, not just asking price.

In fact, I recently had a client who stopped bidding on a house that was a For Sale by Owner (FSBO) at $16,000 over asking price. Someone overpaid for the house by thousands and will have a very tough time ever getting their money back out of it.  Without that knowledge of the market that Realtors have, an unrepresented buyer could make a poor decision and overpay or get into a house with problems.

Interest rates remain very low and it is a great time to purchase a home if you can find one at the right price.  Make sure you consult with a reputable local lender, shop around and talk to your Realtor to make sure you get the service you deserve. Also, you wouldn’t buy a car without test driving a couple, so keep that in mind when you are looking for a Realtor, interview more than one Realtor and see which one might be the best fit for you.”

Third Step: Closing

After shopping around and finding the home that’s perfect for you, the buying process isn’t just a simple transaction of money and then both parties call it a day. There are certain steps such as putting in an offer, the home inspection, getting all details confirmed and paperwork in line, and then closing to make it official.

There are many things that could potentially affect your decision to buy a home, and a home inspection is a critical part of full disclosure so that you can evaluate the positives along with any negatives.

Randy King of King’s Home Inspections, an InterNACHI Certified Master Inspector with over 18 years in business who has inspected over 7,000 homes of all shapes and sizes in southeast Nebraska, lends his expertise on the topic:

“One important part of buying a home is having a professional home inspection done prior to purchase. This is usually done as part of the negotiation phase during the purchase process.

Schedule your home inspection as soon as possible after getting your offer accepted; usually home inspectors are in high demand and booked out several weeks.

Most home inspection companies offer something called a ‘Whole House Inspection’, which is a comprehensive review of all aspects of your home. This includes electrical, plumbing, heating and air conditioning systems, structural components, interior and exterior finishes, roofing, grounds and landscaping. These range from $350 to $550 depending on size of house, price, number of home systems and type of equipment, etc. and it varies company to company.

A home inspector is a generalist by nature, and a home inspection is a thorough review of all these areas. An inspection can uncover defects or issues with a home that the buyer (and many times the seller) is not aware of so that these issues can be dealt with prior to purchase. Additionally, other inspections such as termite, radon testing, mold, lead paint, and asbestos may be asked for as the need arises.

When choosing a home inspector, look for one who has years of experience and credentialing with a national association, such as International Association of Certified Home Inspectors (InterNACHI), American Society of Home Inspectors (ASHI), or National Association of Home Inspectors (NAHI). Also, look at the education and experience of the inspector; if possible, select one who is certified or a Master Inspector (meaning years of education and experience).

Remember, while a home inspection is comprehensive, it is not invasive. This means your inspector will review readily accessible areas of a home, but will not dismantle water pipes to look at the insides, video scope a sewer line, water test a furnace heat exchanger, or any other invasive, exhaustive analysis of parts of the home. Those types of inspections are specialized and far beyond what a home inspector does. The home inspector often will refer you to a specialist for further evaluation if a component is suspect.

Also, a home inspection is not a guarantee that nothing will go wrong with your house; you can purchase a home warranty to help cover things that may break or go bad. These are usually for one year and can be renewed. Ask your Realtor or representative at your title company for more information on home warranties. On older homes or ones with equipment over 20 years old, they are often a very wise investment.

Components in a house have a lifespan, and your home inspector can identify the age of components and help you formulate a game plan on when to plan to remodel, replace, or upgrade components such as shingles, a water heater, or an HVAC system. This is important, especially if major systems have to be upgraded in the first few years of ownership as it helps the buyers to know what major expenses they may be facing on a particular house.”

While many homes share the same characteristics as far as critical systems, there are a few outliers found in certain circumstances. A major one would be septic and lagoon systems for properties outside of the city.

“If someone is looking to move into the country for the first time, I would recommend these new homeowners educate themselves about septic and lagoon systems,” advises Jaime Kubik of Southwick Liquid Waste. “I understand the last thing someone wants to think about when moving is learning where their waste water goes, as it’s much more exciting to consider new window treatments or floor plan designs. However, living on a property with a septic or lagoon system requires homeowners to understand that disposal of wastewater is different than when living in town.  It isn’t rocket science, but it is different. Not understanding how they function can really ruin aspects of your new home if not maintained appropriately.

After learning a bit about maintaining a septic or lagoon system, you’ll want to make sure your system is sized appropriately for the home.  When buying an existing home, a septic or lagoon inspection can be quite helpful prior to purchase.  This will tell the new owner if the system meets the required code, the approximate age of the system, and if there are any signs of possible problems in the past.  Keep in mind that a septic or lagoon system doesn’t last forever. They have a life expectancy of about 25-30 years.  So if you’re purchasing an older home, the system will also have replacement date associated with it as well.  I would also recommend that any inspections for the lagoon or septic system be done by an inspector who works in the septic industry. These professionals will have a better knowledge base of what to look for since this is what they deal with every day.

More than likely your inspection will bring to light issues that might need to be addressed. One thing I would definitely make sure your septic system has, no matter what your inspection report says, is a riser to the surface from the tank.  It is now required that all septic tanks have a riser; however, for many years it was not and there were many contractors who didn’t opt to add this when the septic system was installed.  Knowing where your septic tank is located is HUGE, especially when an issue arises.  If you know where your septic tank is located and have a surface access point (riser), when you have a problem, your contractor can locate the tank and potentially fix it within a matter of minutes.  If you do not have a riser to the surface or do not know where the tank is located, this problem will take much longer to resolve and fix; all the while you have septic water filling in your basement. Not only that, but the longer you have people searching and digging the more costly this will become.

Homeowners also need to understand that both lagoon and septic systems are always at the mercy of Mother Nature and may not always behave the way they want them to.  Because all of the water that is dispersed from the house has to be absorbed or contained by the soil outside, rainy seasons can be problematic if the homeowner is not aware of their water usage.  Even during non-rainy seasons, the amount of water used in the house should be monitored.  No one wants wastewater coming back up into their house and that is exactly what can happen if too much water is being used in the house in a short amount of time.

A common myth in the septic industry is that you never need to have your septic tank pumped.  Not maintaining your system can decrease its life expectancy drastically. You know, for example, that changing the oil on your car keeps it well maintained…the same is true for your septic tank.

Another myth is that you can treat your septic or lagoon system just like you did when you lived in town.  Water usage needs to be monitored as using too much all at once can cause waste water to back up in the basement.  Again, this isn’t something you have to be crazy about, but if you have family visiting for Christmas, just make sure two people aren’t showering at the same time the washing machine and the dishwasher are running.  All that water will have to drain at the same time and it will be like trying to put 20 gallons of water in a 5 gallon bucket.

Probably the biggest myth out there is that all toilet paper is septic-safe.  Most toilet papers claim they can be used on septic systems but the thicker, more quilted papers can cause blockage in the line much easier than the cheaper, lesser ply papers.  Those that are thick can maintain their integrity in the line, get stuck and cause a clog where the cheaper stuff breaks into tiny pieces immediately and doesn’t run the same risk of clogging.

Again, as stated above, many people assume (especially when building a new home in the country) that everything is the same as living in town.  It is not.  Water usage needs to be monitored, the correct toilet paper needs to be used, and the tank needs to be pumped regularly.

There could also be certain times of the year when a ‘septic smell’ could present itself.  If the septic system is a bit older this could be more common or if your area is going through a bit of a rainy time.  Remember that all your wastewater is being distributed into the ground so smells outside aren’t unusual.”

To review, here are Kubik’s top tips regarding septic and lagoon systems:

#1. Keep your septic tank pumped every 3-5 years, which is largely based on activity level. The more people you have living in your home, the more frequently you need to have your septic tank pumped.  When we come pump your tank, we are after the solid matter that collects at the bottom of the tank.  The more people living in the house, the faster the solid matter collects.  When too much of this builds up, it slowly makes its way out to the lateral field, clogs it up and decreases the life of your septic system.

#2. Be aware of your water usage.  Too much water sent to your system at one time can cause wastewater to back up in your house.

#3.  Use cheap, lesser ply toilet paper.  Basically, the better it feels the worse it is on your septic system.  Quilted, several ply toilet paper maintains its integrity in the line longer and can create clogs causing waste water to back up in to the house.  Cheaper toilet paper breaks down into small pieces quickly and drastically reduces your chances of backups.

#4. Protect your lateral field.  Make sure you always know exactly where your laterals are located.  Nothing heavier than a lawn mower should ever be driven over this area and nothing with any substantial root system should be planted into this area either.  Roots can ruin a lateral field.  You also need to make sure that drain water or sprinkler water stays away from this area.

Each major step one will take in the home buying process can be a little intimidating, and that continues on into closing with title, escrow, etc. A new partner will come into the picture here that will work closely with your Realtor and financial institution—your title company.

“Typically after the purchase agreement has been signed, you then select your title company,” explains Tanya Angell of Union Title Company. “Many homebuyers don’t realize that they are able to choose their own title company just as they have the other professionals they’ve trusted with such a major purchase and life event. Your Realtor and lender will have a great working relationship with a title company so they’ll certainly be able to make a recommendation, but it also never hurts to check out a few prospective title companies to see if there’s one more than the others that you’re more comfortable with or like best for any number of reasons. Even if there’s a prominent affiliation, ultimately it’s up to the buyer to choose.

We find that our clients have chosen us because we are a smaller, locally owned and operated company, which allows the same representative to remain with the client throughout the entire process, including closing with you at the end. A client is also able to call us directly, which many find favorable over the service center/call center for obvious reasons. Basically, you’ll know my name and how to get a hold of me at any time, and I’ll know your file intimately. That’s important because of the variance from transaction to transaction; each situation is unique and has its own specific requirements that must be met within a relatively short time frame. Along the same lines, there are absolutely no stupid questions; no matter how many questions you have or if you have the perception that it’s something you should already know and feel a little embarrassed about asking—ask anyway!

Right after the purchase of a new home, many will opt to buy new furniture, appliances, and may even get started on improvements, whether indicated by the home inspection or areas that the homeowner wants to update based on their taste and preferences.

There are also the less obvious things that you’ll notice once you actually live in your home; water quality is a prime example.

“Buying a new home is a huge investment alone, and then oftentimes the new owner will also be investing in new appliances on top of that,” says Eric Schnakenberg of Aqua Systems. “An easy way to protect your investment is to have a water softener installed. Hard water causes mineral build-up inside the appliances, so with a water softener that issue will be eliminated, extending the life of major appliances such as the washing machine, dishwasher, refrigerator if it has a water dispenser and ice machine, and even your water heater.

A water softener system will actually provide a monetary return on investment because you’ll use less cleaning products. This will not only save you money but will also decrease your family’s exposure to chemicals and save you time on cleaning because you’ll be doing less scrubbing!

He adds, “If there is an existing water softener system in the house, it’s important to have it checked over to make sure the settings are correct. A lot of times they are set up for the number of people in the house, so we’ll come in and reprogram them based on your family size and usage. Older systems are designed as “timer systems”, meaning they clean every so often regardless of usage, while newer systems are “on-demand systems”, which go by usage and only clean as needed. Furthermore, most homes built from 2005 on are set up for soft water by default. So if you have an older system, you may benefit from a more updated, efficient system and if you’re buying an older home, it’s likely something that’s not been incorporated and well worth addressing.”

Finally, as a result of newer legislation that’s just now begun to impact the process, the preparation timetable has changed a bit which is leading to the need for earlier preparation. The earlier you prepare, the easier the transaction will be overall, from bringing in your chosen title company to getting everything in order accordingly.”

As evidenced by all of the helpful information our local professionals have provided, there are a lot of things that should be taken into consideration when buying a home. With the right guidance and team put together to help you make your dream of home ownership a reality, or to help you find a better fit as your needs change, you can be sure that everything will go as smoothly as possible. Buying a home is one of, if not the biggest, purchase a person will make in his or her lifetime when it comes to the price tag. As such, it only makes sense to do everything possible to ensure that the decision you make on a home is a result of the proper knowledge being applied and the necessary steps being completed. There are plenty of great homes on the market in Lincoln and we not only hope you find the perfect one for you and your family, but that the process of buying a home is something that you’ll thoroughly enjoy and a memory of an important experience in life that you’ll look back on fondly. Lincoln is indeed a wonderful place to call home, so best of luck to all of you home buyers out there—but of course, you won’t need much luck if you have skill and experience on your side!