Buying A Home: Where Should I Start?
For those purchasing their tenth, or one-hundredth property, the process of buying a home seems natural. It is something that comes off as second hand. However, despite all of the information that is out there on the web, first-time homebuyers can find it quite difficult to get started. So where do you start with buying your first home? What should your first moves be? What comes next? What steps will help you successfully get from renter to homeowner?
Start with Clarity
A successful home buying experience begins with clarity. You’ve got to have a guide that will carry you through the process, and ensure you are happy with your choices. The last thing you want to is to end up stretching too far and suffering from buyer’s remorse.
This really starts with a list of priorities. Unless they have a completely unlimited budget, most people will find that they will have to make some trade-offs in the home buying process. For example; it is true that the better the location, the more expensive property is, and that you will pay more for less space. You can’t force the square peg in the round whole if it doesn’t fit. We’d all like a 20,000 square foot mansion on the ocean, or a lavish penthouse in Manhattan for $500 a month, but that just isn’t realistic.
If it helps, make so a list of your priorities and ask:
- How much can I comfortably afford to pay out of pocket to buy a house?
- How much can I comfortably afford to pay for housing in total each month?
- How close do I have to be to work and kids’ schools?
- How many bedrooms must we have?
- How soon do we have to buy a house?
- How long will we keep this house?
Get organized. Know what documents you can provide for mortgage lenders, and what they show. Find out how much notice you’ll have to give your current landlord. Make sure you have some liquid cash available for deposits and inspections.
Get Qualified for a Mortgage Loan
Most sellers and real estate agents won’t even talk to you until you are pre-approved for a mortgage loan. You certainly don’t want to waste your time looking at houses you can’t afford to buy. Nor do you want to crush your dreams of getting your dream home. Before looking at any real estate in magazines or on the web, go get pre-approved for a home loan. It is relatively painless. Most mortgage professionals can give you an answer pretty fast. However, if you do have credit or income challenges, you may have to go to a few different funding sources or find a mortgage broker that can do the leg work for you.
Start Your Home Search
Once you are armed with that mortgage pre-qualification letter, you can begin looking at properties. You can contact a local real estate agent, look on the internet, contact local real estate investors, and drive neighborhoods looking for signs. The biggest obstacle in this process is, ironically, finding someone that will pick up the phone or email you back. It’s crazy, but true. So once you’ve got someone on the line that seems to know what they are doing, and who actually cares about helping, get them on the job fast.
Make Offers, Get Contracts Signed
Since you’ve already been pre-approved for a loan, and know what you really want, things should move pretty briskly once you begin looking at homes. There is no single match, or ‘destiny’ home. It’s about checking the most important boxes, and appreciating what you can improve on later. Missing out on an amazing deal that was in the right neighborhood is going to hurt a lot worse than having to repaint a living room or change the wild pink carpet in the third bedroom. Be ready to make a strong offer on the spot, and feel confident and great about the decision. Your real estate agent should handle all the paperwork for you. If not, a local real estate attorney or title company can help, or you can find real estate purchase contracts online. You might have to go back and forth a couple times to hammer out the fine print, but make sure you don’t drag your feet too long on wrapping up a contract signed by everyone.
Get to Work
The real work doesn’t start until the contract is signed. That’s when you really need to get busy making a formal mortgage loan application, getting insurance quotes, getting approved by any applicable associations, having title searches and other inspections done, and – of course – giving notice to your landlord. Be sure you keep on top of everyone while you are waiting to close. Make sure some progress is being made at least every week or two. Just don’t soak up so much of everyone’s time that they don’t actually have time to be on the phone or in the files actually getting your deal wrapped up.
Close & Get Your Keys
You should now receive your closing disclosure or settlement statement three days before funding happens. That gives you time to make sure all the numbers are right, or get them fixed. You’ll also want to do one last walk-through of the property to make sure it is still in the same condition and that the seller is moved out. Then it is just a matter of signing and getting your keys!