Buying a house will most likely be the biggest purchase you will ever make in a lifetime. While purchasing your first home is exciting, the process can be extremely overwhelming, especially if you are unsure where to begin. Don’t worry, you do not have to do this alone, we are here to help you every step of the way! To start, here is a six-step guide to buying your first home.
Step One: Getting Pre-Approved
Before you begin to shop for a house, you will need to determine how much you can afford. To determine your budget, you must get pre-approved first and you will need a lender to pre-approve you. Pre-approval means that based on your income and credit, you should be able to get a loan (for a specific amount) as long as nothing changes with your credit score or financial situation. Once pre-approved, you will get a better idea of how much you can borrow.
“Get approved before you fall in love with a house. After you get pre-approved, don’t get any new loans, don’t make any large purchases, and don’t quit your job.”- President of Augusta Mortgage Company, Kevin McDougal said.
Step Two: Hire A Real Estate Agent
There’s a lot that goes into buying a home and you will want to hire a knowledgeable real estate professional. Once you find the agent you’d like to work with, you will sign a Buyer’s Agent contract. Now, your agent will work on your behalf to find a home that meets your search criteria. In addition to helping you find the perfect home, your realtor will also negotiate pricing and all of the deal terms, handle legal contracts, and other paperwork.
Did You Know: Unless another arrangement has been made, typically you (the buyer) will not be responsible for paying your agent. Your agent will make a commission from the purchase price of the property you buy. In most cases, commissions are paid like this: the seller pays the listing brokerage; the listing brokerage pays the listing agent; the listing brokerage pays the buyer's brokerage; the buyer’s brokerage pays the buyer’s agent.
Step Three: Shopping For Your Home
The fun part, house shopping! It’s time to view properties that meet your criteria and tour neighborhoods. Your real estate agent will help find a good match for you. Once you find a home you’d like to purchase, your agent will negotiate on your behalf and help you structure an offer. If your offer is accepted you will be ready to apply for a loan.
Step Four: Applying For Your Loan
Now, you have to actually apply for the mortgage. Be prepared to submit bank statements, W2s, and any documents needed concerning your employment, income, assets, and debt. During the approval process, your lender will then discuss different mortgage options that fit your situation like FHA, conventional or government loans, down payments, and closing costs.
Most first time home buyers take advantage of FHA Loans. A Federal Housing Administration (FHA) loan credit requirements are more lenient than the other loans and require a lower down payment as low as 3.5%. Again, your lender will help you in selecting a loan that will best fit your situation best.
Once the loan application and all the necessary paperwork has been turned in, your information is sent to the loan underwriting department. Underwriters will access all of your information and make the decision if your application will be approved or not. The process can take up to several weeks, especially if they have to clear any conditions to get final approval.
Step Five: The Pre-Close
Your lender will notify you once you are approved and will send over the loan file to the title company or attorney for closing. You will then do a final walk-thru on the property and make sure that any contractual repairs were completed and that the home is vacant and move-in ready.
Step Six: Closing Day
Be sure to bring two forms of ID and your funds for closing. Most attorneys will accept a certified check made payable to the closing attorney, or a wire transfer set up ahead of time. Contact your closing attorney to verify. Once all of the paperwork is signed and the closing is officially completed, you’ll receive the keys to your property.
Are you ready to buy your first home? Let’s tackle the first two steps together.
Step One: Fill out a mortgage application to get pre-approved
Step Two: Find a Real Estate Professional
Your agent will take you through the next steps; however, please reach out to us if you have any questions or if there is anything else we can do to help you get started.
Blanchard and Calhoun Real Estate
Augusta Mortgage Company