Buying your first home is very exciting. It’s easy to think the first thing you should do is get out there and view a ton of homes. But, there is no point on getting your heart set on something you can afford or will be gone before you get a loan approved. Lets break down the whole home buying process.
Before You Buy
This is where we start, and it’s a free check. What banks want to see is as close to 700 credit score as possible. If you are under 650. You may need to seek out some credit repair help.
Get Pre-Approved
This part is very important. It lets you know how much house you can afford and shows sellers you are serious. Until you get this, there is not a point of even looking. These are to be attached with any offers you make. Banks will look at a few key factors.
- Credit score
- Debt to income ratio
- Overall salary
- Job stability (minimum 2 years)
- Money available for down payment.
You will need to supply ID, 2 years of W-2 tax forms, 2 months of Paycheck stubs, and some other paper work.
Make sure you have savings for a down payment
Lets say you are buying a house for $250,000 with an FHA loan with 3.5% down. You will still need some additional money to cover your closing costs, inspections, appraisals, and move in money. So realistically I recommend you have aprox 6-7% of the purchase price saved up. On a $250,000 house that is about $17,500 saved.
Figure out how much you want to pay per month
Use this calculator here. Don’t forget to add any additional HOA fees, and utilities.
Making an Offer on a Home
Lets say you find a home you like. Realistically if you get your offer accepted it will be about 30 days until you actually move in.
- First is the due diligence period-This is where the home inspection takes place. Typically 5-10 days
- Next we negotiate any items from inspection
- Bank order appraisal to make sure the homes value is same as your loan-10-20 days
- Final approval from bank-20-35 days
- Schedule the closing and get your KEYS!