First time home buyer things to do
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Think you are ready to buy your first home? Well then, before you jump in be sure you are ready.
After nearly 20 years in the mortgage and real estate industry we have come across a multitude of 'more than ready' home shoppers that are not prepared for what is about to come. So if are a first time home buyer and about to start the process it is a great moment to STOP, get prepared and learn from what we have seen.

1. Don't look at homes until you know what you should be looking at!

I can't tell you how often a customer calls in for a loan after they already have found the home they want. Not a good move.

It is exciting, you are ready to jump in and become a home owner. So you search sites for homes in the location you want, you may even take the weekend to drive around the neighborhoods looking 'For Sale' yard signs. It is certainly fun to do but it can force you into making a decision about a home that may look like what you want but it truly is not the right fit for you financially.  After all, what good is the perfect house if you can't afford to live in it? So before you even shop, you must find out from a lender what you can really afford. 

  • Have your credit checked by a lender. You may have used a free credit reporting company or remember your scores from that time you bought a car. But these scores may NOT be the same that lenders use for home loans. So you should understand your credit, its history and how it helps and hurts you for a loan.
  • Know your income. Don't estimate it! To often customers say "I make about....a year" or "I have been at this company for a couple of years". Take your time and gather the last Two years of your tax returns, W2's, and most recent pay stubs. If you have had multiple jobs in those years then find the exact start date and end date.
  • Do you have savings? Are you getting a gift? Do you need first time home buyer downpayment programs? You need to know if the lender needs to find programs to help you with down payment and closing costs. So make sure you know all the assets you have.
  • Finally, understanding these tips, you are ready to begin the first time buying experience at a mortgage lender or bank that does home loans.

2. You are now a prequalified first time home buyer, whats next?

Great, you did it! You held off shopping for a new home until after getting all your paperwork to a lender and finding out how much you can afford. What is next?


Time to start shopping. Do you use an agent? Have you watched enough shows and think you are ready to negotiate on your own? Will your family lead the way because "they have bought several homes before and they will help".


So this is where the websites that offer new homes are the right tool. You know how much you can afford to spend on your house. Now you can search online for what your taste is for the price range you are in. As you are searching homes and looking at pictures build a list of what you like and what does not meet your needs. Then narrow that list down to most important items. Things that can't be changed without great expense. Like the number of bedrooms and bathrooms. 


Now is the time to find an agent. Of course you can get recommendations from family and friends but lets say you want to avoid mixing your home search with family and friends. Then you can contact your local NAR  to find an agent in the area you want to buy.  The lender may also be able to recommend a competent agent they have worked with in the past. 

 

  • Don't be shy when working with an agent. It is your home, your money, your life and you must be clear and tell the agent exactly what you want. Let them work to find you the bet match. Likely no home will perfect but there will be the one that is close!
  • Don't use the listing agent of a home your are trying to buy. They work for the seller. If you walk into the home without a agent of your own you, in many places, you run the chance that the listing agent will not have to pay the agent you later bring in to help look out for you. So, view the home online and have your agent make the appointment to see the home.

 

3. You found the home, now what should you expect.

It happened, you found the right house! Now make sure you know what you are getting into when the offer is accepted.

Inspection and Appraisal: Your lender will get the contract and order the appraisal. the agent will likely recommend an home inspection. So, what does that mean to you?
  •  The lender appraisal will established the value of the home. It will likely point out functional defects and items that do not meet the lender's guidelines. But it will not be able to tell you all possible issues with the home.
  • The Agent may likely recommend a home inspection which will have a inspector come into the home and check for defects. AS the BUYER I always recommend you and your agent walk through with the inspector. Ask questions, point out items of concern and make sure to take your time. The inspection is not a guarantee or warranty on the home. Read the inspection contract, it usually limits and liability for items missed so you will be your best advocate for finding problems before you settle on the home.
  • Don't hesitate to get a pest inspections, roof inspector or electrical and/or plumbing inspection if you think there may be an issue. This is the time to do it. Make sure you feel comfortable in knowing your new home is safe and well built.

4. Under Contract! Now you wait and get paperwork for the home loan.

In most locations it can take 30 - 45 days to close on your first home and during that time the agent and the lender may need you to get more documents and sign more paperwork.

Once the contract is signed the lender will get the loan started. During this time you will likely be contacted by the loan officer and loan processor for documents. It is important you kept all new bank statements and pay stubs because they may be needed. 
  • Don't be surprised if something comes up. The lenders can be very thorough when looking at the information provided to them by the home buyer. they may find something in the past on the credit. Don't panic, be honest and work with the lender if any of these issues arise. A skilled loan officer who knows the lending guidelines may be able to walk you through an hiccups. 
  • Don't be surprised if you need more time to close your loan if you are using first time home buyer assistance programs or grants.  These programs sometimes require the first loan be fully approved prior to them reviewing the loan for the assistance programs. So you can expect to add 7 - 30 days more if you are using an additional program.
  • the faster you get the documents needed the faster you will be in your new home!

5. Now you get the keys and you have become a first time home buyer!

It is an amazing feeling to sign all the paperwork at the closing table! Every time I closed a loan I felt so happy for the new home buyer but there are things they need to remember.

You are now your own landlord! No matter who you are, when you own a home things come up. Problems will happen and you need to make sure that even after you close you stay prepared to handle being your own landlord.
  • Since you qualified properly and borrowed the right amount that you can afford then you should be able to set aside some funds each month for possible repairs that arise.
  • Home warranties can be a great help but make sure you read then fine print to see what they actually cover and what your portion of any repair will need to be. You may also be able to get equipment breakdown coverage from your homeowners insurance, so be sure to ask your agent if it is offered.
  • Now you ready to build a life in your new home! Enjoy it!
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