We are finding more and more that first time home buyers are feeling very anxious about the buying process and they don’t know where to start. When we tell them they need to speak to a loan officer and get pre approved THEY FREAK! Credit card bills from late payments past instantly come flashing back in neon letters through their minds and a glaze comes over their eyes and they start to fidget and then the subject gets changed to anything that won’t remind them of those late payments. Well first timers, I am here to tell you that you may not need to worry as much as you think. SO RELAX! You should be more stressed out about the fact that the rent you are paying on that apartment with intermittent hot water and no guaranteed parking is probably equal or even MORE than what you could be paying for a mortgage on your very own home with your very own driveway. Whatdayathinkaboutdat? I’ll give you a minute to process…
Okay. Let’s buy a house. YAY! HOUSE SHOPPING! Here is my basic breakdown to the home buying process. It’s so much easier than you think.
1. Get Pre-Approved. Talk to your bank or ask the Realtor who you are going to work with for a good mortgage broker. DON’T BE AFRAID! It’s likely that your credit is WAY better than you believe it to be. Plus, it’s better to know. If you need to fix it, your mortgage broker will be able to tell you how.
2. Pre-approved – TWO THUMBS UP! You have successfully jumped hurdle number one. Let’s go house shopping. I KNOW! I KNOW! I KNOW! you think you know EXACTLY what you want. But before you get discouraged, open up to that house that you are lukewarm about. It will do one of two things – be horrible and solidfiy what you DON’T want in a house or possibly open up your mind to something that could be great.
3. OMG! You have found it! It’s not the perfect house but with all the pin boards you have on your Pinterest page you just KNOW you can make it HOME! Let’s make an offer…
4. When we write your offer, you will need some earnest money to show good faith that you are serious about buying a home. First timers, $500 – $1000 is just right. We will make your offer contingent on a building inspection and your financing. The offer process can go back and forth as many times as needed (hopefully not TOO many times) until both buyer and seller are satisfied with all terms.
UNDER CONTRACT! Congratulations, you have jumped hurdle number two.
5. Time for a building inspection. Depending on the utilities and features of your home, your inspection should range between $300 and $800. This money is non-refundable but TOTALLY NECESSARY! A good building inspector will thoroughly go through your new home with you, teach you about the systems, show you things to be aware of and sometimes give you tips on maintenance and up-keep. You should follow your inspector around the house during the inspection in case anything comes up of concern. This is also a good time to show your parents your new house or take measurements because it will be the last time you see the house prior to your final walkthrough a day or two before closing. If major issues are found in your inspection, you A. Ask the seller to remedy such items B. Ask for a credit at closing to have such items repaired C. Re-negotiate the purchase price. Whichever options you choose, makes sure it is done within the timeframe outlined in the building inspection contingency in your offer.
6. Made it through the inspection? YAY! YAY! Hurdle number three cleared. Now time to pay for and order your appraisal with your loan officer. These typically cost $525 but could vary. The appraisal will ensure that the value you have negotiated for the purchase price of your home is on point with what is happening in the market.
7. For the next couple of weeks, you can relax for a bit. The lender will be pushing all their lending paperwork around and us Realtors will be chatting back and forth to make sure everything is going well. If your lender asks for any sort of paperwork, please be very expedient about getting them the necessary documentation they are looking for. You don’t want to be the kink in the wheel that slows down or stops the process to the closing table.
7a. PLEASE! PLEASE! PLEASE! DO NOT USE YOUR CREDIT CARDS, TAKE ON NEW DEBT OR APPLY FOR ANY SORT OF CREDIT DURING THIS TIME PERIOD. Once you are pre approved, any new debt could hinder your approval to buy this new home that you are so excited about. Want a new Pottery Barn couch or that fab new comforter from LL Bean? WAIT! Wait until the ink is dry, the keys are in your hand and that house is YOURS!
8. We’ve received a clear to close on your loan from the lender and have arranged a date, time and place to make you a homeowner. EEEEKK! But first, let’s take one last visit to the house for a final walk through. This is when we make sure all is as it was when you were last there and all items that were agreed to in the offer are still at the home and in working order – this typically means appliances.
9. CLOSING DAY! Your last hurdle. Stretch your wrists out, do some finger exercises because you are about to sign what will seem like a never ending amount of paperwork. Now, you can read all the paperwork, ask any questions you want – BUT! I will tell you a little somethin’ somethin’ – ultimately all this paperwork says is “If you don’t pay, you don’t stay”. Pay your mortgage on time and you will always be able to live in this house without anyone telling you what to do.
10. CELEBRATE! Post on Facebook that you just bought a house, go shopping for new house stuff, break a bottle of champagne against the foundation – OH WAIT! it’s not a boat – whatever. Unpack, decorate, paint the walls an electric color, throw a house warming party. Basically – relax and enjoy your new pad.
And your forever parking spot