First Time Home Buyer
Are you are tired of paying for other people's mortgages in the form of rent, or living with roommates, or not having a home to call yours? Have you been thinking about your own home and saving for it, but you have questions? Questions like: Are we ready to buy our first house? Is it a right market? Can we afford to buy it?
One of our greatest joys as real estate professionals is handing over the keys of ownership to a first-time home buyer. As experienced agents, we understand that preparation is important to avoid missteps with that first home purchase. We're here to help navigate the waters of those potential missteps and answer all your questions.
Less than 10 steps in buying your first home
1) Affordability
As a first time home buyer, keep track of how much money you earn and how much you are spending. Loan officers will ultimately determine how much you can afford but you will have a general idea of that amount as well based on your income and expenses. When considering your monthly mortgage and affordability, make sure to include costs such as: tax, insurance, possible closing costs, utilities, upgrades, home owner association fees and even unplanned repairs and maintenance of your home.
2) Finances
Your credit score is a substantial in determining the amount of your loan qualification. Many elements affect your credit score: timely payments on your credit cards and other types of debt, debt to credit ratio, average age of credits, total number of accounts, and total number of hard inquiries. Monitor your credit months leading to your home purchase for unpaid accounts and errors. If needed, talk to a credit repair specialist to help you with correcting your credit reports.
3) Get Pre-qualified
The next step is talking to a loan agent and getting prequalified. Explore all financing options available to you and pick the most competitive one with a dependable loan institution. In order to help with this process, get your documents ready. You will need pay-stubs, W2's, tax records, bank statements, and in some instances immigration documents. If you are on OPT or H1B visa, make sure to explain your immigration status to the loan officer and ask for requirements considering your visa. Getting qualified for a loan will put you in a strong position and advantage when writing an offer for your dream home.
4) Long term life plan
Are you planning to live in the area for a long time? Are you planning to have kids? Adopt pets? Do you live with others? Will your parents or elderly relatives stay with you? Will you have frequent house guests?
This is a good time to sit down with your family members and talk details about your life plans and lifestyle to figure out what type of home will satisfy your wants and needs. Talk about how long you see yourself living in your home, the location, resale value, neighborhoods, schools and all the little things that matter to your family.
5) Choose a real estate agent
Choosing the right real estate agent will make the process easy, enjoyable, and more importantly, establish a relationship for life. There are a few characteristics that you should look for in a good real estate agent. Communication is the key. Your real estate agent should focus on your wishes, follow up with you, search for ideal properties, and in a hot market such as the Bay Area, be ready to move fast and strategically with an offer. In order to avoid any surprises, your ideal realtor should explain all the steps, forms and disclosures to you. The agent should provide market analysis reports and suggest a price, but ultimately let you make the decision on whether you want to make an offer and what is a suitable price for you.
Furthermore, your real estate agent should also be in constant communication with your loan officer and the listing agents. She should take care of you after and during escrow, and make sure that the contract closes on a timely manner. Don't underestimate the agent negotiation skills in a competitive market such as the Bay Area's market conditions.
6) Meet you real estate agent for a buyer consultation
Buyer consultation is a great opportunity to get to know your agent and how they will work. Explain all the details of what you want and what you need. Don't be afraid to talk about what the importance of each room in your house, what your hobbies are, and future plans. Share your priorities: open kitchen, big closets, good school systems, yard, and/or spectacular view. This will help your agent find all the relevant properties that match your needs. Explore the resale value of your favorite locations. Bring your pre-qualification letter and your loan officer information. In this market, you have to be ahead of others.
7) House Hunting
This is the fun part. You may discover new things about yourself and like the things and features that you didn't think about. Bring a checklist but keep an open mind and look beyond aesthetics, such as old wallpapers, paints, carpet or even staging. Picture your own furniture in the house, picture yourself relaxing in your sofa, or having a dinner party with family and friends. Take notes and take pics with your phone because after viewing a few properties, they will all melt together and it will be difficult to remember each of them. Once you like that one property, your agent will obtain the property disclosures, such as home inspection, pest control, and natural hazard disclosures. Read it carefully and ask your agent to explain them to you if needed.
8) Writing an offer
Yay! You found your home. Your agent will offer a comparative analysis of similar properties sold in the past few months relative to the listing price. Look at them carefully and compare the features and upgrades to your desired home. Pick the right price based on the comparative properties but make sure you are comfortable with the price. Discuss possible contingencies with your agent. Read everything carefully and ask your agent to explain sections that may appear unclear to you. Your agent will present the offer and the seller either accepts, counters, or rejects the offer. After acceptance, you will make a good faith deposit (usually 3%) and the transaction will move to escrow. Escrow usually takes up to 30 days and you will need to remove loan, inspection, and appraisal contingencies (if there are any contingencies) during this period. A good agent will help with a fast and easy closing.
9) Move in and live happily ever after
You closed your contract, congrats! Time to sign the papers, pack, move in, and live happily ever after in you perfect home.
Have more questions regarding your first move, don't hesitate to contact us! We here, every step of the way to your dream home!
