First-Time Homebuyer’s Guide: Steps for Buying
This Article Is On The Steps To Buying A House For First Time Home Buyers
Planting your roots with buying a new home is a big step for most anybody. The real estate transaction and obtaining a mortgage home loan can be a major bumpy roller coaster. This is a HUGE purchase. Most likely the biggest purchase you will ever make in your life and it will be the place where you will make the rest of your memories! A home purchase is most American’s single largest investment in their life. The American Dream is owning your own home.
The home buying process is one of the best memories you will have. Most first time home buyers are intimidated at first. This is because most first time home buyers do not know what to expect. It is not often people purchase homes. Understanding the home buying and mortgage process is the first steps to buying a house. Set proper expectations. Know what to expect. Understand and get familiar with the steps of the mortgage process.
Ask a lot of questions to your loan officer. There is absolutely no reason to stress during the home buying and mortgage process. The home buying process should be an exciting and fun process. Not a stressful process. We are publishing this article to ease the jitters for first time home buyers. We will emphasize and highlight the main steps to buying a house to prepare you for this memorable and exciting phase in your life.
Understanding The Steps To Buying A House
- Some people cried in the process
- Half the people had anxiety and were nervous throughout the entire home buying and mortgage process
- More than 40% felt nervous and often had panic attacks
- For some families it caused arguments at home
- Almost half of the people stated it was the most stressful event in life
I have been in the Mortgage and Real Estate industry since 1986. I will agree with the above. However, there are many things you can do to limit the stress if not avoid it. Educating the home buyer and having them proactive during the home buying and mortgage process makes this an adventure and avoids stress. In the following paragraphs, we will discuss and cover on things you can do to streamline and avoid the stress during the home buying and mortgage process.
Getting Prepared To Shop And Purchase A Home
Understanding the process and getting prepared:
- A lot of the problem is people feel they don’t understand how things are done
- However by understanding the process you can feel much more educated about the process which lowers your stress
- You can speak to a loan officer and a realtor to get the understanding of the entire process
- If they can’t break it down for you then they are not the people you want representing you
- Interview several real estate agents and loan officers
- Do not just count on the referrals of a realtor and/or loan officer you get from family, friends, co-workers, and neighbors
- Do your own research
- Check on their online reviews of while vetting loan officers and real estate agents
- Talk to them multiple times
- See how punctual they are on returning emails, texts, phone calls
- See if they work late evenings, weekends, and holidays
- Communication and accessibility is the most important factor in this process
- You need to feel comfortable with the loan officer and real estate agent
Once you have selected the person to represent you as your realtor and loan officer, the process has begun.
Steps To Buying A House: The Importance Of Getting Qualified And Pre-Approved
Get pre-approved before looking at ANY homes:
- Get all your paperwork together and review it before you hand it in
- You will need the last two years’ tax returns and every W2 that is included in those tax returns
- You will need bank statements
- Look at your bank statements and make sure you have all pages and you know what all the deposits are
- Gather your pay stubs for the last 30 days
- Then locate a loan officer that can give you a preapproval
- One that you trust and have built a relationship with
- Once you get a loan pre-approval then you can go shopping with a realtor to find a new home that you qualify for
- This pre-approval lets you know exactly what you qualify for
- This will also help reduce the stress
- Make sure you don’t switch jobs in the process of looking for and obtaining a new home
- Ask your loan officer if they can refer a real estate agent to you
- Interview a few of them
- See how punctual they are returning calls, getting you a list of properties, and how familiar they are with the area
- Do not hire a part-time agent
- Make sure they are experienced
- Do your own online search of the real estate agent
- Check out their online reviews
- You need to feel comfortable with both your real estate agent and loan officer
- Do not hire the first real estate agent you meet
Once you decided on a real estate agent to represent you, the home shopping process has now started.
Shopping For A Home In The Right Location
Take time to figure out what you really want.
- Let the realtor know exactly what you want and where you want it
- Take your time finding the right home for you and your family
- Don’t wait until you are under an un realistic timeframe to get this process started
- Make sure you know what type of home you want, how many bedrooms and baths you want
- What size lot and where in or out of town you want it
- How about the neighborhood?
- How is the school district?
- Does you subdivision children?
- How far are parks and other entertainment areas
- How is the crime rate
Once you have a house in mind that you want to make an offer, drive by the area. Check out the nearest shopping centers. How close is it to the expressways. How far away is the commute to work. Check out the neighborhood during the evening and weekends.
How Much House Can I Afford Versus Qualify
Be realistic about what you can afford:
- Your home shouldn’t be more than three times your yearly family income
- Look at your pre approval
- Check your budget
- Include the mortgage payment in with your debts that you have
- Make sure you feel comfortable with this mortgage payment
- If you don’t then let the loan officer know you will need a pre approval letter with a lesser sales price
- Lenders will pre-approve you on how much you qualify
- Lenders do not qualify you for how much you can afford
- Everybody has a different household budget
- Mortgage underwriters do not include debts that do not report on credit bureaus
- For example, utilities, childcare, education expenses, elderly care, entertainment, maintenance, fuel, and other personal expenses are not included when lenders issue a pre-approval letter
You are the only person who knows how much you can afford. You do not want to overextend yourself and buy too much house.
Steps To Buying A House: Executed Home Purchase Real Estate Purchase Contract
Once you find a home and the offer is accepted make sure you give the purchase contract to your Loan officer:
The loan officer will get your file ready and submit it to the processor.
- The processor then gets it ready for the underwriter
- The mortgage underwriter is the person who is the one that measures the risk of your file against repaying the mortgage
- They are the ones that give you your approval
- Once the underwriter underwrites your file they will give you a conditional approval
- The file then goes back to the mortgage processor
- The mortgage processor gets together with the loan officer and go over the list of conditions from the conditional loan approval
The conditions are gathered so the mortgage processor can submit the file to the same mortgage underwriter for a clear to close.
Working On Conditions Of The Conditional Loan Approval For A Clear To Close
Working on the conditions from your approval:
- This is basically a todo list for you, your loan officer, your processor, your realtor, the appraiser and the Title Company to complete before you get the house
- You must do this quickly and efficiently so you don’t miss your close of escrow date on the home
- Once everything is received on the todo list the mortgage processor will submit the file back to the mortgage underwriter
- The mortgage processor will not submit the conditions piecemeal
- The processor will make sure that all conditions are complete, legible, has no missing pages, and labeled
- Gathering final conditions for a clear to close is one of the most important steps of the mortgage process
- The clear to close is the final step of the mortgage process
- A clear to close is when the mortgage underwriter signs off on the loan
- A clear to close means the lender can start preparing the closing docs and the lender is ready to fund the loan
- If the conditions are turned in half-assed, the underwriter will kick it right back which will be in the back of all files
- This can cause delays in getting a clear to close and can possibly delay the closing
Once the mortgage underwriter reviews the conditions and items of the conditional loan approval, the underwriter will issue a clear to close.
The Final Steps To Buying A House: The Home Closing
The Home Closing:
- The home closing is the final step of the home buying process
- The home closing takes place at the title company chosen by the sellers
- You will sign all kinds of legal documents
- The note is a legal document that tells you repayment terms and the Deed transfers the title to you
- The lender will wire the funds to the title company after all parties have signed the proper documentation
- The money will be distributed to everyone involved in the transaction
- Once you sign these documents you will then fund
- The title company will record the deed and all other important paperwork immediately which takes approximately 48 hours to finalize on public records
- At this time you will get the keys to your new home
It is at the home closing where ownership changes hands. The home is no longer the sellers. You are the official owner of the home.