Buying Your 1st Home 101
You’ve been looking at homes on the internet for months or even years and now you’ve decided the time is right to get you own place. One problem though, you have no clue where to start. Looking at the big picture at once seems a little overwhelming, but it’s not that bad if you just follow the steps, one at a time.
1. Check your finances and credit to see if you are truly ready to buy. Do you pay your bills on time? Are you able to save up or are you living paycheck to paycheck? Do you have money saved for a down payment? If your money and credit are good, you should call your bank, your credit union, ask a Real Estate Broker for a referral, or a mortgage broker and get pre-approved or at the very least pre-qualified. By starting with talking to a Mortgage Broker, Banker…., you will know exactly what you can be approved for so this will help make your home shopping more realistic.
- If you are unsure of your credit score, there are many free sites on the internet. I like www.CreditKarma.com as I find it the easy to use and it’s 100% free.
- Pre-Qualified – this means the everything you told your mortgage banker (income, time on job…) and your credit check meets the standards of getting the loan. All information will still need to be verified. A basic pre-qualification can be done in as little as 15 minutes.
- Pre-Approval – When everything above is verified, and you meet all the qualification for that loan. (This is obvious the best to start out with and the best for negotiations, but not always available right when you start looking).
- There are many levels of qualifying in between and the stronger the bank backs you with your verified information, the stronger your qualification will be.
TIP – Talk with your potential lender, get them what they need as quickly as possible and keep the communication open.
TIP - DO NOT buy ANYTHING with your credit cards! Use cash or debit card. A $50 purchase can change your score a few points and make you not "credit worthy" for a new home. Many people get excited once they find a new home and want to start purchasing items for it. WAIT until after closing.
2. Call a Real Estate Broker. Most buyers don’t realize that in most cases using a Real Estate Broker is FREE. They get paid by the Sellers, but that doesn’t mean we work for the Sellers, we work for you. Working with a Broker is a great advantage for you.
-We know about the new properties that come on the market before others who are not working with a Broker. This is so important. By you know about a home before others, let you see the home and make the offer before your buyer competition.
- We are skilled negotiators. We negotiate. That is what we do for a living, and we love to do it 😊 (at least I do). I love getting the best deal for my clients – it’s a rush.
-We know the in’s and out’s of buying homes and can advise each step of the way.
-We know home inspectors, bankers, lawyers and a ton of other vendor and contractors that can help you along the way, if needed.
-We have access to the homes for sale.
-We help you write out your offer.
-We keep the process moving along.
-And there is always so much more. Every sale is different and it’s essential that you work with someone whose business is helping you with your real estate needs.
-We can help you come up with realistic prices (offers) to help your chances of winning the offer.
-Most important – in MOST cases, it’s FREE. I’ve been a Agent/Broker for over a decade and still have never came across any instances where I needed to charge a buyer.
3. You figure out your Want’s vs. your Need’s and where you would want to live. By figuring out what is the minimum you need, your search can have a baseline and anything above your minimum that still falls in your price range is a bonus. This helps you see more clearly what your budget can afford. For example, you may decide that an extra bedroom is more important than an updated kitchen.
4. You receive a list of homes available in your price range, you look at pictures and read about the room sizes and either mark each property “Interested, Maybe, or Not Interested”. By doing this your Broker will understand more clearly what you are looking for and know the properties you like. You now drive by the properties you are interested in and see if you like the neighborhood, street, how far it is from work….and let your Broker know if you would like to tour the home(s). You then go out on the home tour until you find a home you love and you make an offer on the property. The Sellers either accept, reject, or counter your offer.
- Accept the offer – The Sellers agree to your complete offer with no changes. They accept the price, closing time frame and all the details – this RARELY happens.
-Counter – (Most common). The Sellers disagree with 1 item up to all items you offered and they counter-offer you something they feel is more pleasing to them and hopefully you. Then you have the chance to accept, reject or counter. This will continue until everyone agrees or if everyone can’t come together, there is no contract and you continue to the next home.
-Reject- There are a few reasons an offer can be rejected but the 2 main reasons are A.) You completely insulted the Sellers with your offer and they refuse to counter (yes, this does happen) or B. There are multiple offers and the Sellers accepted another without counter-offering the group.
5. Your offer was accepted. The next step is to get your contract over to your lender and your lawyer. While your lawyer is reviewing your contract, we will be making arrangements for your home inspection. Your Home Inspector will thoroughly inspect the home you want to purchase to see the overall condition. When your inspector finishes, in 24-48 hours you will receive an inspection report and decide what you want fixed (if anything), renegotiate your original contract if there are major problems, ask for a credit if there are a lot of small issues or you may want to walk away from the deal. I usually call this Negotiation #2, as some form of negotiation happens MOST of the time.
6. When we get through the lawyer review and inspection period, your bank will now order your appraisal. This is done to ensure the lender that the money they are lending you for your new home is worth at least what you are paying for it. If the appraisal comes in under the amount you offered to purchase it for, you either come up with the difference or Negotiation #3, to get the Sellers to come down to the appraised price.
If you get through the top 6 steps and you continually give the lender what they need and you have had no major life changes, you should get your Clear to Close. Your Broker arranges your final walk through to make sure all the agreed repairs were done correctly and the home is in the same or better condition it was when you made the offer. Your lawyer will let you know your final numbers so you can go to the bank for your certified check or arrange for the wire, go to the closing and get your keys.
I told you it’s not that hard 😊
Note: If you are a visual person like me, you can watch this short video : https://www.youtube.com/watch?v=CQY95HbRjNI&t=1s
If you need Home Buying/Selling help, call or text me at 708-278-6996 I’m Karyn Murphy, the Owner and Managing Broker of KamBri Realty, LLC in Mokena, IL.