Recently I had the opportunity to put together a quick intro class outlining the steps for home ownership and I wanted to share some of that here with you all. The journey to owning your first home is a long one and often the process isn't known to you until you find yourself in the thick of it and then it all feels overwhelming. So let's take a look at what this journey will actually look like.
1. Save for a Downpayment- this step is something you will be doing through this entire process, but the sooner you start saving up the more you will have in the end to put down. Honestly though you will want to more than just save up for the downpayment, another thing you will want to do is to speak to loan officer and look into loans that you qualify for that ask for a downpayment that seems attainable for you. There are always new programs coming out to help people reduce the down payment needed and a good loan officer will be able to find one that works for you. If you don't know where to look for a loan officer send me a shout and I will introduce you to all the best local loan officers. To learn about down payment assistance click here
2. Know your Credit Score- Do you have Credit Karma? get it, or whatever your favorite equivalent is. When you apply for a mortgage your credit score will get looked at. Now a loan officer is going to look at more than just your credit score, but you don't want to walk into that meeting and get blindsided by this when you could have easily found it yourself. Keep in mind that these apps are never going to be 100% accurate, but they will give you an idea of where you stand. If your score is struggling, you may want to look into a credit counselor, and if you are working with one of the loan officers I suggest, they are all licensed credit counselors. There is not a magic number you are looking for because every mortgage loan is different, but in general, you want it to be as high as you can get it. For some credit score basics read more here
3. Find a REALTOR®- If you can get steps 1 and 2 done before you find a REALTOR® then you are ahead of the game, but no worries if you can't. In fact most people I meet with have not done anything yet, and I am always happy to help you figure out not only what the steps are, but also how to get them accomplished. When you are looking for a REALTOR® keep in mind that you are going to be working very closely with this person for up to a year or more sometimes, so make you like the person and that you find them helpful. I have a blog of questions for your REALTOR® that you can use as a guide to interviewing REALTORS® to find the right one for you.
4. Get Pre-Approved- Once you have an idea of what downpayment you can afford and what your credit score is, your loan officer should start working on getting you preapproved. In a sellers market, having a preapproval letter shows the seller that you can get the mortgage needed for the sale and makes you a better contender, in a buyers market its good to have as well, but because now you have a realistic idea of what you can purchase and be within your means. This also gives your REALTOR® actual parameters for your home search and sending you homes to look at. All around this is an important step that is often overlooked by buyers, so don't sleep on it.
5. Find a Home- Now comes the fun part that everyone knows about, which is looking for a home. Your REALTOR® will send you homes, you will find homes, your friends and family will send you homes, and then you'll start touring homes. This process could take 2 days, or 2 years depending on the market, your needs, and the inventory available. Be patient and remember why you want to buy.
6. Make an Offer- Once you find a home you like then the roller coaster ride starts kicking into high gear as you submit your first offer and wait to hear back. Remember that you are in charge of the sale so let your REALTOR® know what you want to offer and how you want to offer. there are many things you can do to make your offer more appealing. From inspections, to closing dates, to the amount of money offered, every seller is going to be motivated by something different. Your REALTOR® can help you find out what is motivating the seller so that you can make your offer the best. If your offer is not accepted, the ride starts again, if
7. Home Inspections- Do not skip on these. When my buyers put in an offer I always suggest inspections. You wouldn't buy a car without looking at the history of it, or shoes without reading the reviews, so why would you buy a house without getting all the information you can? Now if you don't have septic or well you won't need those inspections, but each home is going to have list of things you want to get checked out before you put your life savings into it. Ultimately the inspections you get done are your choice, but you can ask your REALTOR® for guidance as to which inspections will be beneficial, or how the seller will react to them.
8. Get an Appraisal- If you are using a mortgage to purchase your home your mortgage company will require an appraisal to make sure that they are loaning you money for a home worth what you are paying. If your appraisal come in with a lower number than what you are offering, then you will have to decide whether you can and will pay the difference or if you will need to walk away. If you think that the home will not approve for what you are offering then you should think about this ahead of time a decide what your plan will be if this happens. Learn more on appraisals here
9. Close the Sale- Now comes the fun part. Closing can happen a few ways. You can sign a head of time with a deed package, or the day of in the office. By the time you get closing all of the negotiations will have happened so when you come in you are just here to sign. Before heading into the office to sign, you will have a final walk through of the home to make sure that everything is as you negotiated and agreed for it to be. If it all looks good, then you are good to sign, if not, then talk to your REALTOR® about what your options will be. When you sign you will get an email from the title company or your realtor with a checklist of items to bring; make sure to have all of the items on the list so that closing goes smoothly, otherwise a bump in the road may lead to settlement happening another day or not happening at all. When you walk out of that office you will be the proud new owner of the home!!!
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