Easy to Follow First Time Home-Buying Guide
Buying a home can be a complicated and confusing process, especially if you have never bought one before. As an agent, it is our job to make the process as easy to understand and go through as possible. Here we've broken down the entire process into an easy to understand guide you can use as a checklist! Understand the process to see if buying a home is something you really want
Step 1: Pre-Stages
Your first step is to make sure your finances are in order and get prepared to buy a home. This includes:
Credit score is at least 550
Nothing in collections (past due medical bills, utility bills, car loans expired, overdue student loans)
Note: Current payments/payment plans for those are OK! As long as they are not late and in collections
Credit card mostly paid off/ total usage under 25% at a maximum, under 10% is even better
Steady job for at least 2 years
Note: If you have switched jobs, that is fine. As long as you have had some sort of proven steady sources of income for 2 years.
Employed at your current job for at least 2 months
Debt to Income under 45%
Note: Debt to Income is your monthly expenses compared to your monthly income. This includes what your new monthly payment would be if you bought a new home. This only includes "bills" such as credit card bills, car payments, car insurance, phone bill, student loan payments, etc (this does not include gas, food, entertainment, etc). If you make $3,000/month, then you can afford a home whose monthly payments and your other bills don't exceed $1,350
A minimum of $500 in your bank account
Note: $500 is the bare minimum for some loans, to keep your options open and have the best chances, 5% of whatever you're wanting to buy is highly recommended. For a $150,000 starter home, we highly recommend having at least $7,500 in your bank account. We can make less work depending on your situation.
These items are generally the minimum recommended. The good thing about real estate is there is a lot of gray area. Contact an agent/ lender to see if you qualify for an exception. If not, then a professional can help you get to where you need to be! Usually for no cost at all.
Checked Off Those Items? Great! Now You Can Get
Pre-Qualified/ Pre-Approved!
The next step in the pre-stage is to find a lender and get pre-qualified/pre-approved. What's the difference?
Pre Qualification is where you tell a lender what you make, credit score, etc and they give you an estimate of what price house you can afford based on what you tell them.
Pre Approval is when you provide them documents to back up what you say and they pre approve you for that amount.
A good lender will explain to you different loan options and will tailor the loan requirements and type of loan to your specific situation.
Do You Need An Agent?
During this entire process, over 72 people will have their hands on this transaction. An agent's job is to make sure that each one of those people do their job 100%. An agent also negotiates and acts on your behalf to get you the best deal possible. They will show you homes through their system which is the most accurate home buying software that every agent legally has to use. This is several times more accurate than Zillow and the leading home search tools. By entering an agreement, an agent legally has to have your best interest at heart. Everything they do in that transaction is to make things better for you, secure the best deal for you, you are their boss. A good agent will also explain/handle all of the contracts and simplify the entire process for you.
As far as paying the agent, the agent usually does not get paid until you have the keys to your new home in your hand. This means if you don't end up finding a home or change your mind and don't want to buy a home, you don't owe the agent anything at all.
You also usually never pay the agent directly. Most of the time, the sellers actually pay both their agent and the buyer's agent. Meaning you never owe your agent anything.
It is your choice, but if you want to have the best chances of having a successful transactions, or even as a consultant, a real estate agent is a must!
So you've met the requirements, you know what you can afford, and you have an agent. All of that can be done in 1 day and there are only 3 more steps. The next step is the most fun, shopping for homes. Fill out the info to have the next steps immediately emailed to you!
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