Your Guide to Home Buying
Buying a house is often one of the most financially impactful decisions a person can make. If you know you are ready to buy a home, here are the steps you need to take.
Planning - The planning stage is critical to finding the right property. Some questions you should get the answer to are -
Where do I want to live? If you don’t know quite yet, an agent can help you figure it out.
What size do I need?
How much can I put down"?
What are my goals for the property? Do you want to stay here and raise your family or are you looking for an investment property to rent out?
2./3. Get Pre-approved/Find an agent - These two really are interchangeable steps because the first question most agents will ask you is if you are pre- approved, at the same time they can also connect you to a lender. Many of my clients have come to me without prior pre-approval and as an agent, my job is to connect them to an excellent lender to help them get started. For the purposes of this article, let’s start with describing the pre-approval process first.
2. Pre-Approval
When qualifying for a mortgage, the factors most important to a lender are income and employment status, debt to income ratio, liquid assets, and credit health. Stay tuned - I’ll be following up on this more thoroughly in a later blog post.
Many people think you need to put at least 20% down to qualify for a mortgage, I can tell you that that is untrue. While it is the most common for a conventional loan, it is unrealistic for many first time home buyers. Some popular loan types include conventional loans (which you can get for as little as 3% down), FHA loans (3.5% down with less strict credit requirements), VA loans, and even USDA loans (if you live in a rural area). Your lender can help you determine which loan type is right for you.
3. Find the Right Agent - The right agent is with you for every step along the home buying journey. They not only need to know what they are doing but you need to like them too! Here are some factors to consider when choosing the right agent for you.
Local Knowledge - Has your agent lived in the area for long? How well do they know the market? Don’t be afraid to ask them questions and gauge their understanding. You want to find someone that knows which streets are best and which to avoid, which schools are better than others, where you can get the best deal.
General Vibe - Is this someone you like and feel good being around? Is this someone you can trust?
Work Ethic - Do they respond to you in a timely manner? Do they follow up with you and actively send you listings?
4. Begin the Hunt! - Once you have found an agent you are happy with, it’s time to start the hunt. Some factors you’ll need to consider to narrow down your search include - price, square footage, home condition, repairs needed, walkability, nearby schools, bedrooms, bathrooms, amenities, and property value trends.
From there the next step is to make an offer. In today’s highly competitive market it is unlikely that your first offer will be accepted. Often buyers need to submit multiple offers before they enter into escrow. Keep this in mind as you begin your journey. Negotiations may go on for some time after you submit your offer, top agents are expert negotiators and will help you at each point in the process.
5. Inspections - After an offer is accepted its inspection time. Does the property you are buying do what it’s supposed to? Are there any problems or repairs needed? Common inspections include - home, geological, roof, structural, termites, septic/sewer, soil, land survey, foundation, and mold, among others. It is common for buyers to include a home inspection contingency to give buyers the option to back out, or negotiate repairs, without losing their deposit on the home if there is a problem.
6. Get an Appraisal - An appraisal is essentially a property review that tells you the value of your home. If you are buying a home with a mortgage, an appraisal will be required. A lender will not lend money for more than the home is worth. Buyers should include an appraisal contingency in their offer. Don’t worry about remembering all of the contingencies, your agent will help you with this process.
7. Do a Final Walkthrough - Check to make sure everything is as you expect it to be. Were the repairs made? Has the property been cleared out? Is it still in good condition?
8. Close on your new home!
While this may seem like a long process, it’s important to remember that a good agent will be there with you every step of the way. They can help you narrow down your search, find a lender, and ultimately find your dream home. If you have any questions about the process or want to work with us, contact Megan Majd at (310) 845-6209 or megan@meganmajd.com.