First Time Homebuyer Guide
Congratulations! I am so excited you decided to check out my first-time homebuyer guide. Purchasing a home is an exciting time, however, without the proper team, it can be a little challenging. Here you can find a very brief overview of what you can expect on your journey to homeownership!
Step 1: Create your team:
Know who you need on your side.
A Buyer’s Agent (like me!)
A Mortgage Broker or Mortgage Banker
A Real Estate Attorney
I know it sounds like a lot. But before you decide its already time to check out, start by finding a Realtor (me again!). I have several mortgage brokers, attorneys, and home inspectors that I work with. We want this process to go as smoothly as possible for our clients and you should be working with professionals who have experience and knowledge of the real estate industry as whole.
Step 2: Know that you have options:
Applying for a mortgage can be a little scary, especially if you have never done it before. There are a lot of people asking for a lot of information. So, when it comes to mortgage loans, let me help make it a little less scary for you.
It is important to know that there is an over whelming amount of loan options that help make it possible for all types of buyers, and there are many programs set up to help first time buyers just like yourself! From FHA, to VA and even USDA loans, we mean it when we say, there is something for everyone! This is part of the reason it is so important to assemble a team of trusted, and well-respected individuals to assist you in the home buying process.
This industry is not one size fits all, and as a real estate agent, I have many contacts I reach out to for my clients depending on their specific needs.
Step 3: Get Pre-Qualified – Do not forget to ask about available programs and grants:
Although a mortgage pre-qualification is not required, the chances are low that a seller will accept your offer without one. Obtaining a pre-qualification letter from a mortgage lender or bank not only gives you an estimate of what you can afford, but it proves to the seller that you can afford what you are offering.
Many states, including Massachusetts offer First time home buyer programs and grants. Be sure to speak with your mortgage broker about what options Massachusetts has available to you.
A list of some of those options are available here:
So, what do you need to get pre-qualified?
Proof of income
Employee verification letter
Pay stubs from the past two months
IRS wen W2 forms and tax returns from the past two years
Proof of assets
Investment account statement
Your Credit reports
Your debt-to-income ratio
However, being pre-qualified does not mean you automatically have a mortgage. It only means you COULD qualify for a mortgage of that amount. You still must go through the loan application process, (which I and my trusted professionals will walk you through), in order to secure the mortgage.
Step 4: Start your home search!
This is the easy part, right?! Well, yes, it should be, and believe me I try and make it be, but *spoiler alert* it can also be grueling.
Here is a list of things I like to discuss with my buyers before we set up showings.
What is your budget?
You might be approved for $600,000 but you might only be comfortable spending a mortgage worth $450,000. Know not only what you can afford, but what you are comfortable spending. Trust me, in a hot sellers’ market, this can really work in your favor to help out-bid other buyers
Are you a city lover? Country Fan? Or a little of both? What is important to you? Good schools? Close to work? Nice views?
LOCATION, LOCATION, LOCATION. Narrowing your ideal location to about 3 or 4 cities or towns is so important! If you are not sure what you are looking for, lets chat! I would love to help you find your ideal location.
What type of property are you looking for? Single family colonial? Raised ranch? Townhouse? Two family?
There is no shortage of options when searching for real estate. Think about where you see yourself in the next few years. What are your real estate goals? If you are thinking that you are just purchasing a “starter home” or investment property, let us think about resale value, and what types of tenants you may want.
Keep an open mind.
Try and remain realistic and look at the whole house. You want to make sure you are seeing all its potential and recognizing the features that can’t be changed. You say you needs 4 bedrooms so one can be for your office. What if there is a property with only 3 bedrooms but it has a finished basement already made for an office, will this suit your needs just the same?
Must have vs. would be nice to have
Know the difference. Do you really need a house with all the bathrooms and the kitchen renovated? What if there is a house in your ideal location, the right square footage, renovated bathrooms but the kitchen is outdated?
Step 5: Make an offer!
YAY! We have found your home!
When it is time to make an offer, the first thing we will discuss, is how much you are willing to pay for it. Keep in mind, the list price is not set in stone, but part of the reason having a buyer’s agent (ME!) is so important, is because we help and negotiate for our clients the highest and best offer they can and are willing to give. When a buyer’s agent is helping you to come up with an offer, they should be taking into account location, the local market, comparable properties in the neighborhood, how long it has been listed for, and if the property is in any obvious state of repair.
Step 6: GET A HOME INSPECTION!
Within about 7 days of your accepted offer, you will want to have a home inspection. This is strictly for your benefit, and trust me, you want to have this done. The home inspectors work for you, and it is their job to give you a full picture of what you are buying and can uncover any potential issues with the property. It can also offer you a safe way to back out of the deal. Keep in mind, a seller does NOT have to agree to fix anything that is uncovered at a home inspection.
Step 7: Sign the Purchase and Sale:
The Purchase and Sale is worked out between your attorney, and the seller’s attorney. Both the buyer and seller will review the P&S with their attorney’s before confirming that you are ready to sign. Do not worry, about having to keep up with all the details. I am there to communicate with your attorney to make sure all the fine details we have discussed are written into that P & S, so that all you have to do, is review and sign.
Step 8: Apply for a mortgage:
You will be working closely with your lender to get your finances approved. Be sure to send in all the needed documentation in a timely manner and do not do anything that could jeopardize your credit score or finances in the meantime.
Once you have reviewed the mortgage options with your lender and have submitted your application, an underwriter will review your application, credit score, credit history, employment history, income stability, debt to income ratio, assets etc. Basically, it is a more in depths pre-qual process.
Based on the findings, the underwriter determines if you are approved, denied, or suspended. If you are approved, HURRY, move on to step 9. If you are suspended, the underwriter likely needs more information before they can proceed. If denied, DON’T PANIC. The underwriter should be explaining why your application was rejected. You can then continue to work with the mortgage lender to resolve the issue and apply again.
Step 9: Obtain a home appraisal:
Before a final mortgage is issued, a lender requires borrowers to obtain a home appraisal to ensure they are not over borrowing. In short, the bank who is giving you a mortgage wants to be sure that in the event you don’t pay and they have to foreclose, they will be in a position to receive their payment.
What does an appraiser review?
Current Market Trends, General condition of the home, Sq Footage, Number of Bedrooms and Bathrooms, Additional space (basement, attic etc.), Building materials, Foundation type, Home improvements and upgrades as well as any added amenities, Neighborhood, Lot size, Comparable properties that have recently sold
Once the appraisal is complete, the underwriter reviews their findings for final approval. This is when your mortgage lender will work with your mortgage broker to lock in your final interest rate.
Step 10: Final Walkthrough:
A day or two before closing, we will do a final walkthrough of the property. During this time, we make sure any issues the seller agreed to take care of have been completed. We make sure the sinks are running, the toilets are flushing, and that the property is still as it was when you first decided it was the one!
Step 11: Closing time!
Before the closing, your attorney will review all the documents and assemble them accordingly. Your attorney will be there to walk you through signing all the loan documentation, (and there will be a lot of it). You will be responsible for paying closing costs which could include an appraisal fee, an origination fee, legal fees, title search and insurance, escrow fees and more. How much this all costs vary depending on your mortgage options, so be sure to discuss closing costs when you meet with your mortgage broker!
Step 12: CONGRATULATIONS!
You are officially a homeowner!
Thanks for checking out my first-time homebuyer guide. If you have any other questions about the home buying, selling or decorating process, let’s chat! I would love to talk to you about how I can make your real estate dreams come true!
RE/MAX Executive Realty
Marlborough, MA 01752