I work with a lot of first time home buyers that I educate to understand what they need to do in order to purchase a home. I figure there are quite a few people out there that are sitting on the fence as they don't really quite know where to start, what kind of money they need to save, and what it takes to get to the point of fully owning a home. I have put together a guide for the basic things you need to know in order to begin your home buying journey, and some basic home buying etiquette:
1) GET PRE-QUALIFIED:
Speaking with a lender is paramount if you're considering buying a home. There are hundreds of loan programs out there for you to choose from, and it is the lender's job to show you the best options for your budget and income. It is extremely important to know 1) IF you can qualify for a home (you may have credit issues that need to be addressed, etc.) and 2) HOW MUCH home you can afford. You can't begin looking at property just assuming what your price range is going to be. A mortgage payment is made up of PITI (if the lender escrows for and pays your property taxes and home owner's insurance). PITI = Principal, interest, taxes and insurance.
Once you are successfully pre-qualified, you can then begin the home search!
Some of the things you can expect the lender to ask for in the pre-approval process include:
- Full name
- Social Security numbers
- Dates of birth
- Two year living history (with addresses and phone numbers)
- Two year work history (with name of company, address, phone, salary and position)
- Asset account information, name of bank, account number and balances (checking, savings, 401k)
- Address of property that you are purchasing or refinancing.
- Pay stubs covering 30 days
- Last 2 years W-2s
- Most recent bank/asset account statements (2 months)
There are several GREAT programs for first time home buyers out there right now.
FHA is a wonderful 96.5% financing program. It allows up to 6% seller concessions (this is huge), which again can be used towards your closing costs or pre-paids. The HUD website has a wealth of information about this fantastic program: http://www.hud.gov/buying/index.cfm
Rural Housing Services program: Wachovia has a loan program that is up to 100% financing for buyers looking to specifically purchase rural property. At this time, there is no PMI (mortgage insurance that most lenders require on loan programs where the customer is putting less than 20% down) and no reserves. More information including guidelines and a reference map of potentially eligible property can be viewed here: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do
This program can be used for manufactured homes and land as well, but ONLY if the manufactured home is BRAND NEW off the lot.
2) I'M QUALIFIED. NOW WHAT?!:
NOW you know how much you can afford, so you can begin trying to find a home. You may search the various resources on the internet for MLS listings or For sale by owner listings. Now, as a real estate professional, I at this time would go into a lengthy catalog of reasons WHY you should develop a relationship with a Realtor, but I'll hit a few highlights instead:
- Buyers use Real estate associates because properties listed in Alachua County on the MLS have the seller's paying for the commission. That's right, a source for you to use to help you find a home and assist you through the process for FREE. Let's do this!
- Your Real estate rep will assist you in finding a home by showing you listings that meet the criteria you give them, which includes scheduling any appointments necessary to get you into the properties you'd like to take a look at.
- Your real estate rep will compile all the necessary paperwork related to the offer once you find a property you'd like to acquire and submit it to the party representing the seller.
- Once you have a fully executed contract (you and the seller have had a "meeting of the minds" on the terms and price there-in), your rep will assist you with scheduling any inspections you wish to have done on the property. It is HIGHLY recommended that you have a home inspection, termite inspection and any other inspection (such as a mold inspection, foundation inspection, roof-specific inspection, septic tank or well inspection/water test where applicable, a lead based paint inspection for home built prior to 1978, a radon test, or any other test you could possibly want). You will be responsible to pay these service people REGARDLESS of if the deal actually closes.
- Your rep will compile a repair request for anything found on the inspections that can be asked for, according to your contracts terms if the home is not an "as is" sale and will submit that request to the seller's representative.
- Your rep will also assist with ordering the survey (if necessary).
- They will assist with ordering an appraisal if a lender is not involved or if the lender is not responsible for ordering it.
- And of course, your rep will be there for you as a well-spring of knowledge for any real estate related questions, concerns, or inquiries you may have and to (hopefully) keep everything running smoothly in your home purchase. They will need to be in touch with the lender to keep up to date on the progress of your loan and make sure things are on track, as well as send the executed contract over when it comes in.
- When you find a Realtor, either on your own or through a referral from someone you know, and they are someone you feel comfortable with and seem to be available for you (good communication and actively trying to find something for you in a timely fashion) PLEASE stick with that person. They are meant to be your "go-to" source if you are on the internet or driving around and see a property you'd like more info on on. Call your representative, NOT someone else. Some Realtors are respectful of others in that they don't try to "steal" customers from others. The customer often times doesn't know any better than to call someone other than their Realtor. The person you call may try to set up an appointment for you to see their listing and if you go and decide you want that home, THEY will most likely be the procuring cause and the other person that has been working hard for you may be cut out of the picture, without any compensation for all the time and effort they spent in assisting you with your home search. Please be loyal to whoever steps up to the plate and is really doing a good job for you. Also do not go to an open house unattended because your Realtor may not be able to assist you with the transaction any further!
Part 2 of this blog will cover potential expenses you may face in regards to closing costs and pre-paids if you are using a lender. Stay tuned and I hope this was helpful. Please feel free to post any questions you may have and I'd be happy to answer them!
Angela Elliott is a licensed Florida REALTOR® with Classic Properties in Gainesville, FL. Please visit my profile for more about me and browse my Gainesville, FL real estate website for additional Alachua County information and listings. Your phone calls are always welcome at (352) 256-7038 as are your e-mails to firstname.lastname@example.org. A portion of all my closed sales will be donated to the Alachua Co. Humane Society (View my mission statement).