I want to buy a house, now what?

You have been listening to those around you discuss their real estate endeavors and you’ve decided you want to buy a house? Congratulations! Now what you ask? Keep reading and I will help you navigate through the process step by step. If you get tired of reading and want to skip ahead… Give me a call I would be happy to personally guide you on your journey in real time as your trusted REALTOR® (I’m not yelling, you see it is a registered brand and must be capitalized.). Let’s get started!

Things To Do:

Determine your budget:

Look at your current financial picture, including income, expenses, and existing debts. What is the monthly payment you would feel comfortable paying? (Realistically without being married to the mortgage as I’ve commonly heard recently.)

Down payment / closing costs:

Have you started to save for a down payment? Wait… What’s a down payment? The purpose of a down payment is to demonstrate your commitment to the purchase (gives you skin in the game) and to reduce the lender’s risk. There are many different types of loan products to choose from and they all have different requirements and down payment options can be as low as 0% and range up to 20% or more. It depends on what your goals are, and you will decide which loan is best for you with your expert Lender/Loan Officer (we will cover how to choose a lender/Loan Officer in a bit). It’s a great idea to start saving even if you end up with a zero down loan program as the savings can be used for closing costs or upgrades to your new home. Closing costs can vary and your Lender/Loan Officer will give you a cost estimate. We can get more in depth on closing costs when we discuss making an offer.

Check your credit:

I use Credit Karma to keep an eye on my own credit report, as it is a great tool to see debt balances, inquiries, collections, lates and to verify that the accounts reported are accurate. The credit score they give isn’t accurate in terms of a mortgage loan. Why not? Different types of algorithms are used in obtaining a Mortgage loan versus other types of credit. There are a lot of things that a Loan Officer will look at when they pull your credit report and there are some key things to remember in obtaining a higher credit score. How do I know? I used to be a Loan Officer and now I have more fun because REALTORS® usually do. Don’t tell my Loan Officer friends I said that… okay?! Keep your credit card balances below 30%, make timely payments as lates or missed payments negatively impact your score depending on how fresh they are. (Refer to your Loan Officer for more in depth credit information as they are experts in that area.)

Lender/Loan Officer:

Choosing a Lender:

You will work closely with your REALTOR® (me that’s me!) and your Loan Officer, so it is super important to choose a trusted local Loan Officer who is familiar with the market in the area you are purchasing. If they have worked in the market, they will be most familiar with how homes are built & what is common in the area. Trust is key as you will rely on your Loan Officer to guide you through determining the right loan product that is going to be best suited to you and your new home. There are many rules that have to be followed when getting a loan and YOU must follow your Loan Officer’s DO’s and Don’t’s so you have a smooth transaction. A few things to note… Not all Loan Officers are the same and that means fees can vary between Lenders, and some offer more competitive rates than others. It is your choice who you decide to work with, and it is a good idea to do some research, check local reviews, ask friends & family and rely on your REALTOR® for a referral as we work very closely with all in the area.

Pre-Qualified VS Pre-Approved:

Once you choose a Lender you are ready to start the loan process. Wait, I haven’t found a home yet why would I start the loan process? Before you start home shopping you need to know how much home you can qualify for or if you can obtain a loan right now. The Loan Officer will ask you for a list of documents and at this point they will run your credit. (Your credit is AWESOME because you checked it already and fixed anything that was out of place. Right? If not, they will guide you on what to do to fix it.) Once they have all the necessary documents, and all necessary criteria has been met they can issue a pre-qualification which means you are 90% good to go… subject to underwriting. Some Loan Officers will go a step further and send the application through underwriting and once they sign off we call that pre-Approved. Be sure you don’t make any credit or job changes or that could be BAD very BAD. Once you receive a pre-qual or pre-approval we all can high-five and you can start officially shopping for a home!

TO BE CONTINUED…

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