Wednesday, January 8, 2014

Home Buying Walk Through for First Time Homebuyers

01/08/2014

Being a first time home buyer and going through the process, its highly stressful, there is SOO much to do, and money you pay out that you will NEVER get back if your loan falls through for ANY reason (seller, house, or loan approval).

1. Figure out your house buying budget. Just because your lender will give you x amount of money doesn't mean you should borrow x amount.

  • When thinking about your budget consider how much monthly outlay you and your husband are willing to pay on housing, for us I wanted a payment around or cheaper than our current rent (cause you have to make all repairs).
  •  Don't forget to factor homeowners insurance and estimated taxes into your monthly payment. Zillow often will let you know what the homeowner paid in taxes last year and this is different for every house, take that amount and divide by 12 for your monthly tax cost. Homeowners insurance is almost impossible to guess since the insurance is based on the replacement cost and not market value. 
  • If you know your credit score go on myfico to estimate your interest rate on your mortgage.
  • Use Bankrate.com to estimate base mortgage payments (minus taxes and insurance) based on home price. Just put random amounts in there and remember the higher the value of the home the higher the cost of tax and insurance!


2. Get Pre-qualified/ Pre-Approved before starting your home search. This will give you your credit score, and your lender will let you know if there are any potential problems.

3. Sit down and make a list of must haves and would be nices, do this with your spouse or co buyer if you have one.

  • You need to be realistic for your budget, most people over estimate how far their $ goes (my husband is one of them). Looking at houses online isn't always useful in getting a realistic expectation because many houses that look great in those photos are hiding major noticeable flaws that you see as soon as you get to the house!
  • Make sure your being realistic about what is a need and what is a want. You want this to be a house that you can be in for at least 6 years, therefore if you want to have a family then make sure the house is big enough for YOU. Needs are things you won't be happy without not live or die. For us 2 FULL bathrooms was a need! 
  • Be honest about your needs, because there is no point viewing houses that don't fit your needs!
4. Find a Realtor or Real Estate Agent, these are actually different although they serve the same purpose. You want one you can trust to look out for your interests and that will work with your budget.

5. Look at houses, you can team up with your agent and email mls listings back and forth that you would like to see (keep in mind the house NEVER looks quiet like the mls pictures). My agent added two houses to our viewing and we are in the process of buying 1 of her picks!  
  • when your viewing multiple houses in one day it helps to bring a notebook and write thoughts about each house while your viewing them, it is easy to forget what features were in what house! You should also put any repairs/upgrades you intend to make (figure out $$ you will be putting in the house).
ONCE YOU FIND YOUR HOUSE

1. Make an offer- NEGOTIATE! Unless your in a hot market (where houses go for more than list and fast) then I would always recommend asking for things. We got $3,200 in closing costs, $3,500 off of list price, and appliances on a house that was listed below market value for a quick sale!

2. If you have a good agent then she/he will talk you through the process. You will need a Broker/Lender, Title Search Company, Insurance company, and you will want to get a home inspection. 

3. In your contract their should have been an inspection clause, if something comes out in an inspection then you should be able to re negotiate. 

4. After this point it is largely out of your hands. Your lender and the Title Search Company will let you know what if anything they need (documents, bank statements). 

5. You will get the keys at close and you can move in!!!

TIP- As a 1st time homebuyer the process is stressful enough. I would say find people to work with you trust and stick with them! I know conventional wisdom is to "shop around" for brokers, title companies, etc but since everything is new you want to make sure you are working with someone you can trust! That discount broker who doesn't close on time isn't worth it!