In today’s housing market, it is completely normal to be anxious about taking a leap of faith and wanting to have home ownership. For a lot of you, it has always been frightening as it is your first time buying.
I want to share with you some tips to keep in mind and ease your nerves as you get started. It is so easy to fill your mind with situations that could go wrong. For instance, not having the sufficient funds, not being able to get pre-approved with a qualified lender, not feeling ready & being filled with nerves, etc.! Those are all normal feelings.
That is why we are the professionals and help you guide your journey to make it as smooth as possible. It’s important to have an idea of what could come along the way and mistakes you’d want to avoid as well.
The most important step to get started is knowing your deadlines. Essentially, you want to clearly know WHEN you need to move out by, whether that is a lease ending soon or you need to sell your home as well. Or maybe you need to be moved in before school starts in the fall. Or, you came across a job opportunity and you need to move ASAP! These are all important factors that are rooted in your reasoning to buy a home. Once you establish that and put it on your calendar, you’ll feel much better along the way when you have those important dates already decided.
Next, is of course financing. It is so easy to say, “Well, just go get pre-approved!” In most cases, it can take more than just that. If you’re a cash buyer, you’re ahead of the game! You have to allow some time in anticipation for anything that could come up. Let’s say you this is your first time buying and you know you have been saving up, which is great! But, then you go to a qualified lender and they find that you actually need to work on your credit. This would be a huge set back if you were actually planning on moving in the next two months or so. This is why it is important to take a look at your timeline. Make sure to know what your credit looks like. Talk with a trusted lender on how to achieve those goals on a more personal level. A helpful suggestion would be to make to sure pay your credit cards in full by the due date. The reporting date on your credit cards may differ but this is usually middle of the month and/or end of the month. This means that creditors will take a look at your balance and credit usage and report that to credit bureaus. This is where a lender will pull your credit from. You want to be smart about this.
It’s great to have your accounts loaded but please keep in mind that you’d need to have everything sourced. For instance, if you had a large deposit in your account that the lender is going to look at. The first question will be, “Where is this coming from?” You’ll have to be prepared to back up that deposit. No need to worry if it is your salary and/or a bonus from work. If you earn income with crypto or coin base make sure to talk to a loan officer to double check if that can be sourced. If you’re receiving funds from a parent to help you secure a home purchase, this would be a “gift” and you’d want to mention it to your lender.
It’s a good idea to have an emergency fund and actively setting money aside to go towards that periodically. When you’re looking to buy a home, please keep a savings account that is indented to go towards the house. This would cover your down payment which can vary (3%, 5%, 10% or 20% of purchase price, depending on your loan), earnest money (usually 1% of purchase price, you’ll need this when you make an offer), inspection costs ($500-$600, after offer has been accepted and there is an inspection contingency), closing costs (2% or 3% of purchase price). If you’re making an offer stand out on a competitive home with multiple offers and you are saying you’d cover appraisal gaps if appraisal were to come down lower, have that money handy! Of course, you don’t need all of this money at once. You can have the earnest money, inspection costs, and some of the closings costs STARTED but you wouldn’t have to pay the closing costs until you close.
GREAT NEWS, YOU GOT PRE-APPROVED!
Your trusted lender will take a look at your income, credit score, how much you can put down and reviewed your assets as well as your tax returns. They will approve you up to a certain amount. It might be your lucky day and you got pre-approved for a lot more than you thought! Congrats. Stop for a minute and take into consideration what payments would be comfortable for you. Just because you got pre-approved for a certain amount, doesn’t mean you have to use all of that! 🙂 Please take into consideration the utility bills, if there are HOA dues, etc. All of that adds up! You do not want go house broke!
If you are switching jobs or you quit your job AFTER you received your pre-approval, let your lender know! They pre-approved you with the job income & position and all of that has to match when they finish underwriting and open the mortgage loan for you.
TIME TO GO HOME SHOPPING!
Right now, we are in a seller’s market so your top 5 picks are probably already being bid on from left to right. It’s nice to have your standards in place. For instance, you need a nice flat backyard for your children to play in, or you for sure need an office because you work from home, or you need to be close to commute to and from work. This is what helps narrow down your home search. However, it’s a good habit to keep an open-mind when taking a look at home options. I always believe in the concept that when you walk into a home, you just know if it is the one! In some cases, you have to take about three laps and look at the potential. Outweigh the pros and cons. Especially in this market. Now, this doesn’t mean that you should settle for just any home available. That is not what I am saying, of course we want to get you in the best home possible! I know everyone is different and that is totally okay! Just go after that home you fell in love with and can comfortably pay. After all, you want to choose wisely as this will be a long-term investment, hopefully!
These are just some tips to help you get an idea of what it would take to get started. I would love to chat with you to see what your situation looks like. Feel free to contact me, whether that is a phone call, text, email, or FB message, I’ll respond!
Best of luck!