First Time Home Buying 101
By Bob Walsmith Jr.
Santa Barbara Association of Realtors
So you’re thinking about buying your first home. A place to call — and make — your own.
It’s a big move, literally and figuratively. Buying a house requires a serious amount of money and time. The journey isn’t always easy. It isn’t always intuitive. But when you get the keys to your new home — that can be one of the most rewarding feelings ever.
The key to getting there? Knowing the home-buying journey. Knowing what tools are at your disposal. And most importantly? Creating relationships with experts who can help you get the job done.
That’s where this guide comes in. I will point out not only the major steps (and the recommended order) you’ll take during the home-buying process, but also explain the relationships and experts you’ll need along the way.
Do Your Homework
Oh sure, everybody wants to jump right into open houses. But before you even set foot in a home, you should identify your list of “musts” and “wants.” There’s so much to decide: Housing type, neighborhood, school district, just to name a few. I recommend writing down the ten most important items you want in your new home in order of preference.
If you’re planning to buy a home with a partner, make sure that you sit down with them and write down your top ten together. You want to be on the same page while buying a house. If you’re not, you’ll be less able to give agents or lenders the information they need to help you.
Find a Great Realtor®
Your relationship with your real estate agent is the foundation of the home-buying process. He or she is the first expert you’ll meet on your journey, and the one you’ll rely on most. That’s why it’s important to interview agents and find the agent who’s right for your specific needs.
Choose a Lender
Once you’ve found your agent (AKA, your new best friend), ask him or her to recommend two to three mortgage lenders that meet your financial needs. This is another big step, as you’ll be working with your lender closely throughout the home-buying process.
The Loan Process
Once you’ve decided on a lender (or mortgage broker), you’ll work with your loan agent to determine which mortgage is right for you. You’ll consider the percentage of your income you want to spend on your new house, and you’ll provide the lender with paperwork showing proof of income, employment status, and other important financials. This step is crucial, especially in today’s market. The quicker you can get your lender everything they need, the faster you can get to the next step in the process. If all goes well (fingers crossed) you’ll be pre-approved for a loan at a certain amount.
Open Houses, Showings and Looking Around
Now that you have both an agent who knows your housing preferences and a budget — and a lender to finance a house within that budget — it’s time to get serious about viewing homes. Your agent will provide listings you may like based on your parameters (price range, ZIP codes, features), and will also help you determine the quality of listings you find online. Then comes the fun part: showings, which give you the unique opportunity to evaluate properties. Your agent will help you navigate showings, whether virtual or in-person.
Quite often, first time home buyers will put this step ahead of all others. This can be very deflating. If you don’t know what you can qualify for, you will often misjudge what your buying power is and look at homes far above your actual budget. Resist the temptation and follow this blueprint.
Make an Offer
Once you find the home you want to buy, you’ll work with your agent to craft an offer that not only specifies the price you’re willing to pay but also the proposed closing date and other important items.
Negotiate, Negotiate, Negotiate
Making an offer can feel like an emotional precipice, almost like asking someone out on a date. It can be very stressful! Some home sellers simply accept the best offer they receive, but many sellers make a counteroffer. If that happens, it’s up to you to decide whether you want your agent to negotiate with the seller or walk away. This is an area where your agent can provide real value by using their expert negotiating skills to haggle on your behalf.
If your offer is accepted, then you’ll sign a contract. Most sales contracts include a home inspection contingency, which means you’ll hire a licensed or certified home inspector to inspect the home for needed repairs, and then ask the seller to have those repairs made. This mitigates your risk of buying a house that has major issues lurking beneath the surface, like mold or cracks in the foundation.
When you offer to buy a home, your lender will need to have the home appraised to make sure the property value is enough to cover the mortgage. If the home appraises close to the agreed-upon purchase price, you’re one step closer to settlement — but a low appraisal can add a wrinkle.
The last stage of the home-buying process is the closing. This is when you sign the final ownership and insurance paperwork and make it official.
Now that all of this is done, you’ll have the keys to your new home. Congratulations!
Bob Walsmith Jr. is a native to Southern California and a Realtor® with Berkshire Hathaway HomeServices California Properties in Santa Barbara. During his work with the Santa Barbara Association of Realtors, Bob has served on the CORE Committee, Education Committee, been Chair of the Budget & Finance Committee, and the Multiple Listing Service Committee. He also is on the Board of Directors of the Alpha Resource Center of Santa Barbara. Bob lives in Goleta with his beautiful wife Julie. When not working, Bob enjoys playing golf, fine wine, fine dining, and walking our beautiful coastline. Bob can be reached at 805.720.5362 and/or firstname.lastname@example.org
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