2. Get pre-approved before looking. What does this mean? Go to your desired lender and ask for a home pre-approval. They will then pull your credit and ask some income information; based on that (your credit/debt & income) they will give you a pre-approval letter stating how much you qualify for. For example Jake & I qualified for 130k in our letter.
If you do not qualify check out my earlier post "15 things I learned about Credit" for some tips to improve your score.
Most Realtors will want you pre-approved before you look at houses and pretty much 100% of sellers what to know you are pre-approved before you can even put in an offer on a property.
3. Don't look at houses you can't afford & go evaluate your costs.
Talk with your mortgage officer about possible payments for different loan amounts. Keep in mind they will probably only be able to quote you a principle and interest total.
You may also have mortgage insurance & escrow* (see below for more) included in your monthly payment.
AND you need to keep in mind you will have monthly utilities separate from your mortgage payment; water, sewage, electrical, gas etc.
Go over closing costs with your lender as well; how much are you going to have to bring to closing?
Continuing with my example;
Jake and I qualified for 130k but I was more comfortable with the $120,000.00 monthly payments; our principal and interest payment is $533.40, mortgage insurance $28.00 and escrow $158.00=$719.40 as our mortgage payment. Including our utilities we pay around $1,000.00 a month for our home.
We lucked out and qualified for a Rural Housing program that did not have closing costs. We had to make an earnest money payment of $1,200.00 but we were able to get it back after closing.
4. Get a good realtor. When we first started looking we used our current landlord who was a realtor. BIG MISTAKE. Don't do business with friends.
He was awful.
I would be up til 11:00 at night writing up our proposal to the sellers. Just so you know, this is not your job.
Our next realtor did all the paperwork, explained the back and forth between the seller and, did the running around; which is their job.
5. Don't let your Realtor pressure you you. Find a Realtor you like but also remember that their job is to sell you something. Don't be pushed into a home too quickly because your Realtor thinks its "awesome!" or because you feel bad you are wasting their time looking at so many houses.
Again, thats their job.
They will deal.
6. Make a list of what is most important to you. What has to be in your home?
7. Be patient; your dream house is out there!
I remember feeling so discouraged while we where looking for a home. Everything we saw had a laundry list of things that I didn't like. I started to try talk myself into some or compromise when I was feeling desperate.
Then we found our home.
There are still things that we need to fix, its older, and small but I love it!
Let yourself fall in love with your house!
8. Test the key things; plumbing, electrical & temperature.
Test the water pressure, turn on the faucets and flush the toilets. Do the switches work? Heating & cooling?
If these things are on the fritz life is going to be uncomfortable.
If your still really interested bring in your home inspector once you've made the offer.
9. If you find a house that you want put in the offer as soon as possible.
I'm not sure the housing market will be same in a year from now or 10 years but right now with the low prices for homes there is a lot of competition between buyers.
There are also a lot of investors buying up properties for rentals.
We almost lost our house to another buyer.
10. Get a good home inspector. Seriously.
I love our home but I wish we would have had a better home inspector.
We had a great inspector for the first house we put an offer on, I need to find his number...
He had an 80 page report! He got in all the crawl spaces, on the roof, everything! He found a lot of mold which prevented us from purchasing.
The guy we went with for our home was recommended to us. He was a joke; he had a 3 page punch report, didn't even get on the roof and he missed so many things (check out my "Water, Water Everywhere" earlier post).
Both inspectors charged around $300.00
11. Be kind and courteous to your sellers; You want their house so don't drive them nuts.
I understand that there are some things you can ask be included or fixed by the seller but don't be unreasonable or they will sell to someone else.
You will most likely go back and forth negotiating a your purchase contract before you both sign it and send it to your lender.
12. If you want something included get it in writing. You must make sure your realtor specifies in the negotiations if you want something included; this includes appliances!
Sellers can legally take their stove, dishwasher, fridge, washer/dryer etc. with them because they are not attached to the home. If you want something or have talked about including something with the seller get. it. in. writing.
13. Find out who your Home Owners Insurance will be through. Shop around; call a couple insurance companies and compare quotes based on amount, coverage AND customer rating.
They will need information on the home so know the details; square footage, flooring, bedrooms, bathrooms, foundation type, heating/cooling, garage/carport etc.
14. Get your documents to your lender asap. I'm not going to lie, no matter who you go through the lending portion is not going to be fun. There are so many early disclosures to sign & documents to fax in even before you are closing.
Roll with it.
The process will usually take 30-45 days from the time you have a complete sales contract and documentation submitted to your lender.
The quicker you get those things to your mortgage officer/broker the smoother things will be.
15. Don't fight with your lender. Working at a bank I've noticed that the clients that want me to fight underwriting on getting a document (they don't have it, or don't want to look for it) takes so much longer. AND its usually denied.
Your lender can be your advocate and fight for you but there are some things that underwriters just need. I wouldn't recommend waiting and hoping your lender can convince underwriting otherwise.
Make the process easier on yourself by just getting your stuff together.
*Note on escrow from #3; Most people also choose to have escrow (your taxes and insurance) included in their monthly payment, instead of paying it on their own. This amount will be on top of that principle and interest payment.
Escrow is calculated by taking your annual premium for homeowners insurance and your annual premium for your taxes and dividing it by 12.