The sequential and simplified home buying process

The publicized #1 mistake nearly all first time home buyers make is looking for a home before determining what home they can afford.  One would not want to "fall in love" with a home they could not afford, right?   However, I would say the 1st mistake comes long before that.  It's the lack of gaining information and planning up to 2 years prior to buying a home.  Also, the most important initial part is getting your credit score up to par.  Then focus on a down payment.  The best way to save for a down payment is to determine what a future mortgage payment will likely be and start living as if you have that mortgage payment now and saving the difference.  Ok, now that we've got that "all important" step out of the way let's move on to the home buying process.

All good Real Estate agents will advise their clients to first get a Pre-Approval before they take their clients home shopping.  But before even doing that, one needs to starting saving for a Down Payment and that will be at least 3% (minus any down payment assistance programs) of the purchase price.  Well how you would know what purchase price you could afford?  So how would you know how much of a down payment to save up for?  You wouldn't... Well you either contact us for a free consultation or you select the "Budget Planner" link to get you in the ball park.  There is another huge factor to consider when buying a home and that is your FICO score.  It's best to shoot for a 740 or higher score to get the best deals on loans, however we can obtain loans for anyone with a FICO over 580.  We also do VA and USDA loans that require as low as a 0% down payment if you qualify.

The #2 mistake is assuming you can't afford a home...  Explore the website below are review the renting vs. owning section.

Now start saving for that Down Payment and work on that FICO score.  For more information about how to improve your FICO score select this link.  https://www2.myfico.com/Downloads/files/myfico_uyfs_booklet.pdf?fbclid=IwAR2GMXH1sSiK5itzX5LPAHCz-2eCxDybQZo_bMAsWHSN9TdeKIZuv8vjGt0

Assuming step #1 was completed, you will now need to get a Pre-Approval.  In this process, you will essentially need to provide all of your financial information to support your "ability to repay" the home loan.  Remember, a lender will likely be lending you hundreds of thousands of dollars, so they're going to be very diligent about researching your financial background to ensure your ability to repay the loan... You can start this process by selecting the link below to take you to the application page.  You will also be provided a checklist for the required documents.  In this process, you will accurately and most basically determine the maximum home price you can afford and what the associated down payment and monthly mortgage payments will be.

This is the fun part!  Once that Pre-Approval comes in you know what maximum home prices you can afford.  However, there will be many other factors you're going to need to strongly consider to make an informed and solid purchase decision.  Your Realtor will ask you a myriad of questions to help you hone in and prioritize the many factors associated with a home.  Such as, school district, neighborhood, property's age, space, taxes, etc.  with the understanding that the perfect home does not exist but our job is to find the best fit home for you...  Since the sheer number of homes can become overwhelming, it's best to separate your must-haves from those features you'd like, but don't really need. Do you really want a new home or do you prefer a fixer-upper? Make a list of your wants and needs to get started, and whittle down your options.   The next step will be enter that criteria into the Multiple Listing Service and monitor your matches constantly and be prepared to go see the home as soon as possible.  All the while being postured to seize the moment when it arises and put in your offer.

When working with your Realtor to develop the appropriate offer their are more factors than just the price that are also vital in the process and your realtor will explain this to you.  And remember when you got that Pre-Approval, well your realtor will provide that with your offer to show that listing agent the strength of the offer.  No need to reinvent the wheel here, as Realtor.com has some great advice on the "Basics of Making an offer."  Upon acceptance of this offer, you will have a short period of time (3-10 days) to cough up a good chunk of money referred to as the "Earnest Money Deposit" that does vary from seller to seller but is generally 1-3% of the sale price.

Now that you have an accepted offer it's time to dial in that loan.  Your loan officer should already have your loan application complete and your file ready for submission.  However, it likely that a good amount of time has passed since your pre-approval so you will need to expeditiously obtain recent pay stubs, as hopefully you have provided all requested documents from your pre-approval checklist.

 A home inspection is where you hire a home inspector to check out the house from top to bottom to determine if there are any problems with it that might make you think twice about moving forward. Think: termites, faulty foundation, mold, asbestos, etc. Sure, a lot can go wrong, but rest assured that most problems are fixable. 

 Even if you got pre-approved for your home loan, your lender will want to conduct a home appraisal. This is where the lender checks out the house to make sure it's a good investment.  The primary purpose of the appraisal is to give the lender a valuation of the collateral for their loan to you.  Here's more about the home appraisal process and what to expect as a buyer.

 Closing, which in different parts of the country is also known as settlement or escrow, brings together a variety of parties who are part of the real estate transaction, including the buyer, seller, mortgage representative, and others.  Closing is the day you officially get the keys to your new home—and pay all the various parties involved. That will include your down payment for your loan, plus closing costs, the extra fees you pay to process your loan.  Closing costs can be sizable, averaging anywhere from 2% to 7% of the home price.  Here's more on closing costs for home buyers.

Done with closing? Got your loan? Congratulations, you've officially graduated from a home buyer to a homeowner! See, the long-term process of buying a first home wasn't so scary after all, right? Now it's time to kick back and enjoy the many benefits of becoming a homeowner.