Buying A Home And Don't Know Where To Start?

Follow This CheckList For Success

1. Getting your credit score

Banks look at your credit score to determine if loaning you money is a high risk.  They also use it to see — what kind of loan product to offer you. Scores over 700 get you the better interest rates and terms. A 620 score is usually the minimum required score for most mortgages. Under that and interest rates are higher and there are fewer loan options. 

To boost your score, check your credit report for inaccuracies. You can request yours from each of the three reporting agencies — Equifax, Experian, or TransUnion — once a year for free.

2. Round up your docs

You won’t be handing over any financial documentation just yet, but it’s a good idea to gather stuff early on, so you’re not scrambling later. Start pulling together this shortlist:

• The last two years’ worth of tax returns
• The last two months bank statements
• Pay stubs for the previous two months
• Proof of down payment and closing costs or a “gift letter” if a family member is giving you the $$ 
• Recommendation from your landlord, if you’ve been renting
• A government-issued ID (like a driver’s license or passport

3. Pre-approval over pre-qualification

A pre-qualification is a best guess of what you can afford based on what you tell a lender about your income and debt. It’s only as reliable as you are truthful, and even so, it doesn’t show the full picture. 

** A pre-approval is the real deal. Based on your financial docs, it’s an actual underwritten estimate of how much home you can afford and how much debt you can take on. ** It’s way stronger than a pre-qual. Real estate agents and sellers both prefer working with pre-approved buyers. 

4. Count your pennies

You’ll need enough to cover a down payment, appraisal fees and closing costs. To estimate how much you’ll need for the down payment, refer to your loan officer, they can explain what's needed for the pre-approval amount.

Not all mortgages expect you to put down as much as 20%, If you qualify for a VA loan it does not require a down payment, while others only require a 3-5% down payment. Lower down payments may require yet another expense: private mortgage insurance (PMI). All in all, there are out-of-pocket expenses when it comes to buying a house.

5. Know your DTI

Working with the right loan officer you will be educated on your debt-to-income ratio, aka DTI.  Your loan officer can help you calculate this and understand how this impacts the loan approval process.

6. The Realtor's Job

Any real estate agent can find a home that fits your budget. A great Realtor will listen to your needs and get you into the neighborhood and property that suits you best. My job as your Realtor is to help you make an offer, manage seller negotiations, and navigate the home inspection.

Think twice before skipping this step to avoid paying Realtor commissions. Typically 6% of the purchase price comes out of the seller’s pocket, not the buyers. So as a buyer you want a Realtor that has prove negotiation skills.

A great Realtor will also:

• conduct a property search and review comparable home sales to see if asking prices are justified
• be familiar with the neighborhood and know the dirt that a buyer alone wouldn’t easily dig up
• negotiate an offer, including clauses and contingencies in the purchase agreement
• help manage the inspection and arrange for repairs or seller credits 

7. Hunt for houses

Searching for your dream home, spend some time considering wants vs. needs. Doing the mental legwork before actually hitting the streets. Nowadays consumers view online listings with their Realtor to save a lot of time. 

Once you know your budget, viewed properties online that interest you, your agent to set up some showings, If you pop into any open house you come across, be sure to tell the open house agent you are working with a Realtor and provide your Realtors card. Sometimes the perfect home falls right into your lap and that open house agent can follow up woth your Realtor and start the negotiation. 

Understand with a mortgage, it can take 30-45 days to close on a new house. You can close in 15 days if you're buying CASH. 

8. Make An Offer

Once you’ve found the house you want to buy, figure out how much to offer. Your Realtor will research comparable sales, how much buzz the property is getting, and what competing offers may look like to avoid a bidding war.  

To prove you’re a serious buyer you may have to submit a higher “earnest money deposit” held in escrow and used towards the purchase at closing. If your deal fails through no fault of your own, you get that money back.  

9. Closing & get the keys

The last step in buying a new home can take a few hours. Closings can be stressful (you’ll sign mountains of paperwork and write a fat check) and also exhilarating (you get the keys to the front door.)  

You will need to bring a certified check for your down payment and closing costs, rather than a personal check. If you’ve taken out homeowner’s insurance, bring proof. And don’t forget a government-issued picture ID.