Going through the buying process was stressful for me, but not because I was worried about lenders, mortgages and down payments. I was worried about closet space, 2 car garages and a nice kitchen. All the things I shouldn’t have worried about. Looking back now I wish I had taken the time to learn what was happening around me. I would just smile & nod when our relator talked numbers or specifics and silently think to myself “this little 900 sq foot house in the North End is HOW MUCH?… no thank you”. Down the road when we buy another house I will definitely be more involved with the hard stuff. I can’t promise I’ll be less concerned about closet space, but this is a step in the right direction! Jen has given you & I both a great starting ground for the whole process. So if you’re just as clueless as I am- this ones for you, dear! Don’t forget Jen is always available for questions or to help you find a relator in your area. You’ll want her help, head over to her site to look at listings, or to view home trends in your area. Enjoy!
You are ready to buy a home…so now what??
As a first time home buyer it is difficult to know where, or who, to start with. How much can you afford, how much money upfront do you need, what are closings costs compared to a down payment and in general what is the first step?
The internet has put public home searches at the tips of your fingers. There are so many websites that allow you to see what homes are selling for and what homes are available for sale. Although it is fun to do these searches…DO NOT GUESS WHAT PURCHASE PRICE YOU CAN AFFORD!!!
Below are the typical steps, in order, you should take before getting very deep into online searches.
- Step One…Hire a real estate agent. It is very important to hire a real estate agent first. Many homebuyers, not just first time homebuyers will hire their lender first from a friend or family’s recommendation. This is not a good idea for a couple of reasons. The lender more than anyone involved in your purchase is imperative to the process running smoothly and they most directly effect a homebuyer’s stress level (and everyone else involved in the transaction to be honest). Real estate agents work with lenders every single day, they know the good ones and the ones to STAY AWAY FROM!! Also, your realtor will be the one helping you navigate through the process, every step of the way.
- Where to find a real estate agent? Your best bet is a referral from a friend or family. Unlike with a lender our responsibilities stay the same in each transaction. If we are a skilled negotiator-we are every time, no matter how tricky the transaction. Also, it would be a great idea to get 2 or 3 referrals and make sure you feel comfortable with the one you have picked.
- Step Two…Get pre-approved by a lender. Again, it is a good idea to get this referral from your real estate agent. Your real estate agent’s job is to make your purchase as seamless and easy as possible. They will not refer you to a lender they do not trust as it just makes their job that much more difficult.
- Types of lenders. There are 3 main types of lenders you can choose from and one type is FAR superior to the other two. They are:
- A Bank An example of this type would be Wells Fargo or Bank of America. These entities are restricted on the kinds of loan programs they have to offer you and their transition through the loan process is typically much slower…which puts you in jeopardy of not closing on time. I have many buyers who want to use their bank to get a home loan because of how happy they have been with the banking side of the business, but it is two totally different animals.
- Lender who ONLY brokers out their loan This type of lender is like Orbitz. They shop around on the open loan market and find you a “deal”. The companies they work for do not have any of their own money to lend. This is the worst kind of lender to work with, by far. Just like Orbitz has no control over an airline’s customer service, additional fees such as bag fees or schedule changes these kinds of lenders have no control over the investor’s timelines. This means you are at the mercy of people working on your loan and those people have no relationship with you or the lender you have chosen. Your lender in this situation is essentially the MIDDLE MAN.
- The Hybrid This would be a lender that works at a company that is designed to do loans. They are not a bank but do lend their own money. They have more loan programs available to you to choose from than a traditional bank and they prefer to use these loan programs. Turn times on working through your loan are traditionally the quickest with this type of lender. In the event your financial situation warrants it these kinds of lenders CAN go to the open market like the previous type of lender, but they prefer not to.
- Step Three…Start Shopping!! Once you have interviewed and chosen your realtor and have been pre-approved with a trusted lender you are ready to start looking at homes! Your realtor should set you up on a search via the Multiple Listing Service. This will allow you to see homes that fit your criteria immediately once they hit the market, which will give you a competitive edge on other buyers who are just using public searches. Once you find “the one” aka the home that you can imagine living in you are ready to MAKE AN OFFER!!
Every home buying experience is different, some buyers find a home right away and the entire process takes 60 days or less, whereas some are in the process of finding a home for a year before they find the right home. This is why it is important to choose a good team to work with and be loyal to them.
*Finding a good real estate agent is like finding a good hair person…Once you click with them you stick with them!
If you are interested in buying (or selling) or know someone who is please feel free to contact me. I am based out of the Seattle area but can set you up with a great realtor anywhere in the country.
253-686-1036 ~ www.jendanielsgroup.com ~ firstname.lastname@example.org