If you are a first-time homebuyer you may not even know how to get started. If you’re even thinking about becoming a first-time homebuyer, then you actually have started the process. Becoming a first-time homebuyer does require you to do a little homework and make a commitment. It can also help you create wealth. According to an article published in the Huffington Post, ” In 2015, the average net worth of a homeowner in was $195,400, compared to just $5,400 for a renter, according to the Federal Reserve. The significance is even more staggering for people of color. Wealth from equity in a home constitutes 51% of total wealth of the average white household, but 71% for black households. Essentially, if you are part of America’s fastest growing populations, it’s highly likely that without a home, you don’t have wealth.”
So if you want to become a first-time homebuyer and build your family wealth let’s look at the steps you should take. I’ve included this
info graphic that many Real estate companies suggest is the proper steps but I would recommend the following modifications.
Review your finances- and get prequalified
The easiest way to do this is to give me a call at 214-945-1066 or apply online here. When you speak to a licensed mortgage professional like myself with over 17 years of experience, I have the opportunity to help you review your finances, tell you how much money you’ll need for your down payment, and tell you what your credit score is and if there is any improvements that you could make. Do you need to go with a first-time home buyer program, a down payment assistance program, or just a regular conventional mortgage.
Although it is voluntary at this stage, it is highly recommended that you provide to your lender proof of your income and assets. Here is a list of items most commonly requested.
• Last two months (60 days) of your actual statements from all depository accounts listed on your application: retirement fund(s), stock, mutual funds, checking, savings, etc.-all pages – transaction histories are not acceptable
• Your driver’s license
• The last 30 days of your pay stubs;
• Most recent 2 years of W-2’s
• Most recent 2 years of tax returns all pages all schedules
• If you own any real estate and wish to retain it past your closing date please provide the most current property tax bill, insurance declaration page, and HOA bill if applicable.
• If you own more than 25% of a business or LLC, the last 2 years of business returns and K1’s are required.
• A current year Profit and loss statement for your business
• A current year balance sheet for your Business
Establish a budget
Sit down and actually complete a budget worksheet. This will give you an idea of how much you can realistically afford and also how much money you are currently wasting that can be put aside for your down payment and closing cost.
Create a wish list
Write down what you’re looking for in a home, what locations are acceptable to you, and what type of home you are looking for. Do you want a fixer-upper or new construction? Do you want to live in a location where there are many other first-time homebuyers?
Select a Realtor
A highly qualified professional Realtor can make the process a lot easier for you. Ask me or your loan officer for a referral. I work with some of the best realtors in the city. They should be able to explain the process to you in detail and have systems in place to make the process easy for a first-time homebuyer.
Start shopping for homes
If you are using a professional Realtor, they should be able to help you start shopping for homes by sending you listings as they come on the multiple listing service. Depending upon the market, you should be prepared to make offers right away but as a first-time homebuyer, be cautious and not overzealous.
Make an offer
So you have found a home, now you need to write an offer. Your realtor will have you sign a purchase contract. You will need to provide an earnest money check written from your personal accounts, and in Texas, you will write an option fee check. The option fee check is provided to the seller which temporarily removes the home from the market while you conduct your due diligence. As a first-time homebuyer please make sure that you write these checks from your account. If they come from any other source they may be hard to document as an acceptable source for your down payment and closing cost.
Schedule a home inspection
During your option period, Texas homebuyers should schedule a home inspection. I recommend using a licensed home inspector. Your Realtor should be able to give you a referral. A licensed home inspector will go through the house and make sure that it is mechanically sound and provide you a report indicating any deficiency. Often time first-time homebuyers can be overwhelmed by this. Just remember, the house doesn’t have to be perfect. You can live with some things but the things that you are uncomfortable with you can ask the seller to repair. Your realtor will then write an amendment to the contract and ask the seller to repair those items. The seller does not have to repair these items and Texas first-time homebuyers can then withdraw from the contract if they wish without losing the earnest money. If all agree, then you move forward.
Complete the mortgage underwriting process
So you have completed the home inspection and decided to move forward. The next step is to order the appraisal. An appraisal is conducted by a licensed appraiser. The appraiser determines the value of the home to ensure that you are not paying more for the home than it is worth. If the appraisal comes back acceptable you will work with your loan officer to collect any additional documentation required by the underwriter. Be prepared to return calls and request for documents quickly to make sure that you stay on track for closing. This process normally takes about 30 days.
Complete a final walk-through and receive your mortgage clear to close
At this stage we will assume the underwriter has completely approved your file and your loan officer has provided a clear to close. You will take one last walk-through the house to ensure that the sellers have left it in acceptable condition.
Closing is the final stage. At least three days before the closing date, hopefully, your lender has provided you a closing disclosure. This is a document that details the amount of money you need to bring to the closing. You will either provide the title company a cashier’s check or wire the funds to the title company. Get your fingers loosened up as you will be signing a lot of paperwork. Make sure to bring a valid state issued ID to the title company closing. Once you have completed the signing of all the documents and provided the funds for your down payment and closing cost, the title company can then request funding from the lender. This can take some time and varies from lender to lender. Normally it is less than an hour. After that you are officially a first-time homebuyer.
If I can be of any assistance in your pursuit of becoming a first-time homebuyer, please feel free to give my team a call at 214-945-1066.