By Tracy Crawford Thompson
A lot of first-time home buyers have no idea where to start when they are thinking of purchasing their first home. I hope this article will give the reader some insight into the process of looking for their first home and going through the purchase process. Working as a Georgia licensed real estate agent, the excitement of working with first time home buyers has been one of the most rewarding and gratifying parts of my job.
Steps for First Time Home Buyers:
Go over your budget, save for down payment, set a budget/payment amount that you can afford for the purchase of your new home.
Check your credit score and make any needed changes to increase your score.
Call a lender to get pre-approval for a home mortgage.
Call a real estate agent to start shopping for your new home.
Your agent will schedule appointments for showings to shop for your new home.
Once you have found “The House” your agent will help you with making an offer on your home.
Once your offer has been accepted by the seller, you have a binding contract.
Get home inspection done.
The lender will order an appraisal of the home and will keep the buyer up to date with the process of the loan. The buyer will need to acquire home owner insurance for the new house and will discuss with lender the taxes and insurance for the new home.
(10) Closing day.
Regarding step one, the buyer will need to analyze their income and expenses to see how much of a mortgage payment they can afford. A general rule is that the mortgage payment be less than 28% of the current gross income. So, for someone making gross income of $50,000, they would be able to afford monthly payments of $1,167. Be prepared to provide documents showing income, debts, employment history and credit score.
Check your credit score and discuss with your lender any changes that need to be made to increase your score. There are different types of loans and these will require certain credit score and will determine the amount of down payment needed for home loan.
The next step would be to contact a lender that you know and trust to help you with getting pre-approval for your mortgage loan. You will need to fill out a loan application and provide employment history and income. Your credit score will be assessed. Your lender will be able to determine what type of loan you may qualify for, as well as how much down payment you will need and the approximate payment amount.
Contact a trusted real estate agent. Do your homework and check with close friends and family, as to agents they may have used for buying or selling a home. You can check agent reviews of local agents, as well as recent listings and sales by real estate agents. Choose an agent that you can relate with and feel comfortable with. The agent should be knowledgeable of current listings in your desired area and will make a search of available homes within the buyers budget and then set up showing appointments.
When you think you have found “The Home” for you, then your agent will go over the paperwork and process of making an offer to the seller. The agent can assist you with determining a good offer amount, and any special terms you may want to make with the offer. You will add the amount of earnest money to be paid at the time of your offer which will let your seller know that you are serious in making your offer. The agent can help with setting the due diligence period, which is the number of days you will have to get inspections done.
Once your offer has been accepted by the seller, you then have a binding contract. Your agent will schedule appointments for inspections (general and termite), and the agent will be present for the inspections, so they can inform the buyer of any findings on the inspections. Any significant repairs that are needed can then be negotiated between the buyer and seller.
The lender will order appraisal of the home being purchased, and the real estate agent will be present for the appraisal. The appraisal amount will need to be for at least the purchase price amount. The lender will inform the buyer if the appraisal does or does not meet the purchase price. The buyer and lender will need to discuss acquiring home owners insurance policy and if the insurance and taxes will be included in the mortgage payment.
The process from the time of making an offer on a home to the closing date usually takes 4-6 weeks depending on the type of loan and any unforeseen problems that may arise during this process. During this time the real estate agent, lender, buyer, seller and closing attorney will all work closely together to insure the progression of the home buying process. During this time period the buyer should not make any major purchases or changes in employment as these can alter the buyers credit score and the loan process.
The final step in buying a home is the closing date. On this date, the buyer, seller, agent and closing attorney meet for the signing of closing documents, getting the keys for the new home and buyer will bring payment for closing costs and down payment. All parties will receive a closing statement prior to the closing which will list the buyer and seller expenses. The buyer may need a copy of the closing statement to have certain home utilities turned on in the new home. After the closing and transfer of funds for the purchase of the new home, it then becomes the buyers’ home. My favorite part of being a real estate agent is the excitement and gratification of knowing that I have helped someone find their new home.