Helping First Time Home Buyers
For many years you have been renting a place to live and now you have finally made the big decision to buy your first home or condominium. Since you are new to the world of home buying, like many people, you naturally turn to the internet to start browsing for homes, contact a family member/friend that is a Realtor for advice. These are all good starting points for those who know how to utilize these resources. First time home buyers like to be educated so that they can make informed decisions. For those information seekers like you, we have prepared this quick guide on the home buying process.
Welcome to Home Buying Process 101!
Here are 6 key steps that can help you navigate through the home buying process:
- Determine Source of Funding – More often than not, the first thing most home buyers want to do is shop for the home before determining how they are going to pay for it. We recommend you identify your source of funding before you start looking. Some people are blessed with cash funding and know exactly what they can afford, but most individuals have to rely on traditional lenders to obtain a mortgage loan. Let’s assume you will be seeking a mortgage as your source of funding. It is best to contact a mortgage banker first to determine “How Much Home Can You Afford”. A mortgage banker will walk you through the mortgage pre-approval process which includes assessment of your credit score and source of income. Ideally, you want to be pre-approved for an FHA or Conventional Mortgage Loan. The banker will provide you with a pre-approval letter that will state the maximum loan amount for which you are pre-approved. This gives you an idea of your buying power so that you can now negotiate your first real estate deal.
- Select a Realtor – The next step is to interview and hire a licensed Realtor. Real estate is a local business. To make an informed decision we suggest you check the Realtor’s resume and evaluate his/her years of experience in the business, formal educational level, service areas and reviews from other customers. Most of this can be accomplished by checking his/her Realtor.com, LinkedIn and Zillow.com profiles. It is best to select a Realtor that is local to the area in which you are looking to buy, one that is tech savvy and most importantly, possess excellent business acumen.
- Selecting Home Type, Price Point and Location – Now you have a mortgage pre-approval letter and have hired a Realtor. You are ready to shop for your first home. Your loan pre-approval amount will dictate the type of home you can buy and ultimately narrow down possible locations. This is where your Realtor can best offer expertise on your real estate local market and can recommend neighborhoods that would best fit your budget and your lifestyle. Be patient during this step and do not rush to buy unless you are completely sure of the property and its location. If you have some reservations we suggest you take your time and learn the market and neighborhood before making such a big decision.
- Make an Offer to Purchase – During the process a lot of attention is given to the seller’s asking price. While you want to offer a reasonable purchase price, you must also take into consideration all the expenses associated with closing the sale. Your Realtor can advise you on the best price to offer based on property condition, sales terms, and market value.
- Conducting your due diligence – Great news! Your offer to purchase has been accepted and you are now under a contractual obligation to buy your first home. On average, financing transactions may take 30 – 45 days to finalize. We suggest to use this time wisely and do the following:
- Study the purchase contract and all the terms such as your inspection period and escrow deposit deadlines.
- Get a home inspection – This can often identify concealed problems with the property.
- If the property is located in a community association we recommend you review the rules and regulations and the financial statements. Getting to know the association can better protect your financial future.
- Get insurance – Obtain a few homeowner insurance quotes so that you will be knowledgeable of this expense.
- Closing the Sale – Your lender has issued the “Clear to Close” and the day of closing has been scheduled. The lender will provide you with a figure for the exact amount of money you will need to bring to closing to supplement the loan being used to fund the purchase. Before heading to the closing table, you and your Realtor should conduct a final walk-through inspection of the property on the day of, or day before closing to make sure there have not been any significant changes to the condition of the property. Once all of this is clear, you are now ready to close the sale of your first home.
Welcome to home-ownership! You have earned your 3 credit hours in Home Buying Process 101.
To learn more about the Home Buying Process Contact Us Here or call 305-814-9310
Written By: D. “Alex” Vaughn
Alex Vaughn, is a Broker Associate Realtor on The Vaughn Real Estate Team with Vylla Home (US) LLC and specializes in helping first home buyers find condominiums and homes in the Greater Miami & Detroit areas. Alex is a highly experienced agent, offering end-to-end professional real estate service. http://thevaughnrealestategroup.com/member/realtor-d-alex-vaughn/.