Complete Home Buying Guide From Inception to Closing Part 1
You think you want to own a house one day and you have no idea what it takes. Well, you’ve come to the right place! I’ll guide you through every step from the moment you’ve thought about it to when we put a key in your hands. And if you’re a little further along, feel free to skip to Part 2 or follow along and use it as a checklist.
In general home buying consists of these steps:
The Thinking Stage
- Looking at your financial situation. How much money do you have for a down payment, closing cost, and emergency repairs?
- Save as much money as you can
- Review and improve your credit score
- Talk to a loan officer to get an idea of what you can pre-qualify for
- Think about where you want to move to
- Think about what kind of house you want to live in
- Research the housing market and get an idea of how much the home you want will cost (this step is way easier if you talk to me about it)
- Check out this guide to get an idea of what your mortgage and monthly payments will be
- Determine if you are financially ready to buy a home
The Action Stage
- Talk to a loan officer to get pre-approved for a loan
- Talk to me to start shopping for a home
- Go through a cycle of seeing a house à making an offer à getting outbid in this market
- Your offer gets accepted!
- You deposit the earnest money
- Loan company asks you to send documents
- We do a home inspection
- We get the inspection report back and determine if we need to request the seller to make repairs
- The loan company orders an appraisal
- Loan company asks you to send more documents
- We do a final walkthrough to check the condition of the house, if repairs are done, etc.
- Send over the down payment and closing costs.
- Sign A LOT of paperwork
- We meet at your new home and I hand you the keys to your new house!
The Thinking Stage
Maybe you’re a soon-to-be ex-Californian looking to escape from crushing jumbo mortgage loans like I am and you set your sight on the beautiful city of Vancouver. Or maybe you’ve been here all your life and you decided that it’s time to stop paying rent and start building equity. Either way, we need to talk about credit scores and money. The easiest way to do this is to start a conversation with a loan officer. YOU are in charge here. You should interview several loan officers and go with the one that gives you the best knowledge, the best underwriting team, and that you can get along with. It takes about 30 days and a mountain of paperwork to close a loan, so you’ll want someone who is organized and on track. I have a list of loan officers that I work with and trust on my vendor page.
There are 3 big credit bureaus (Equifax, Experian, and TransUnion) that most consumers are familiar with but, there are a lot more bureaus with their own reporting methods. This means that when loan companies run your credit check, they’re going to end up with different numbers. Don’t worry about your exact score but make sure you clean up your credit to make you the best candidate possible.
MYTH! You do not need a 20% down payment to buy a house. Being able to put 20% down does have its advantages. It makes your offer more attractive to sellers. You avoid paying private mortgage insurance (PMI). You’ll likely get a lower interest rate. But let’s face it, for many people, it is really hard to come up with that kind of cash unless you were gifted funds. In fact, according to NAR, down payment was between 6 to 7% for first time home buyers.
That being said, you should try to save as much money as you can because you’ll need to pay for a home inspection (about $400) and closing costs (3-5% of purchase price). Plus, you’ll need to have money left over in case you need to do repairs.
What’s your dream house?
I wish I could tell you that I can get you everything on your dream list and stay under budget like some kind of HGTV show, but the reality is that it’s very hard to do that in a competitive market. It’s easy to lose your focus and fall in love with a beautiful shiny house because part of our job is to sprinkle that magic dust, generate a lot of interest and sell that house at top dollar for our sellers. So, buyers must be able to look at houses logically and decide if the house fits their needs.
Here’s an easy checklist to go through but house features are divided into 2 categories: needs and wants.
Well?? Are you ready to take the next step and buy your dream home? Let’s go!