Are you searching for your first home? Then congratulations! You are making a solid decision.
It makes more sense to stop throwing your hard-earned cash into your landlord’s pocket, and instead, invest your money by building equity in a home that you can sell later. You can even use your proceeds from the house sale as a downpayment for a better home later when your family lifestyle changes!
But where do you start? The multiple steps and information overload can be overwhelming! I understand because I work with first-homebuyers all the time.
First, you need financing for the house. Talk with a lender at a mortgage company or bank who listens to your needs while you consider conventional loans or government loan programs, such as FHA, MHDC, VA or USDA loans. Depending on your credit and earning capability, some of these programs may help you buy a house with no downpayment or costs at closing!
Once you are pre-approved through your lender, it’s time to hit the home search with the help of your real estate agent! (**Cough, cough** call or text me: 816-752-1428).
The good news is that your buyer agent will work with you for free because the seller of the house pays our commission. Your buyer agent helps find the right homes on the market that work with your loan. Your Realtor uses resources to determine if homes are priced right on the market and negotiate the sale and repairs.
After you find the right house, your Realtor helps you write an offer that will give you the best deal possible while still satisfying the seller. Sellers may refuse an offer that doesn’t satisfy their needs. Don’t be discouraged if your first offer falls through: at least start the conversation. Also remember that you could be outbid because there are many other homebuyers who might be making offers on that same home!
Your offer will be presented with your earnest money, which is deposited into an escrow account once the offer is accepted, because it is only a legal contract when consideration (the exchange of something with value) is offered with the contract. Usually you write a personal check or cashier’s check for the amount agreed upon. Depending on your loan, you may get your earnest money back at closing or pay towards any costs associated with closing the transaction.
Once your offer is accepted, the inspection period allows time to hire a home inspector thoroughly investigate the house and find any issues that should be addressed. Sellers won’t always make repairs that you request, but many times the seller will repair major issues or finance the repairs in order to make a deal go through. Otherwise you can walk from the deal and search for the next home.
You don’t know until you ask.
Once the inspection notice is agreed on by both parties, your lender will send an appraiser to make sure the home is worth the asking price. Always ask your agent to write an appraisal contingency clause in the contract that allows you to walk away if the house does not appraise at the sale price and the seller still won’t budge on price. Again, a good agent does his or her research to determine if the asking price is reasonable to begin with.
After the appraisal and any more repairs are satisfied, you wait until closing while your lender continues work with the underwriters. If you haven’t already, this is a good time to talk with your insurance agent about homeowner’s insurance. Then at closing, you sign a mountain of paperwork and receive keys to your new home! Congratulations!
It’s a crazy world out there, and it helps to have an agent to guide you. Happy home hunting!