First Time Home Buyers Guide
So you have made the decision to buy a home—Congratulations!
Buying a home is a process, a series of steps that will lead to the ultimate goal of owning your own home. The first step is deciding where to buy when to buy, and who to hire?
Next up: your credit score. The higher the better, but you will need at least a 580 to qualify for an FHA loan since they require only 3.5% down payment. Last is your work history, you'll need to show proof of at least 2-years of steady employment (doesn't have to be the same job).
Credit Score Loan Qualifications:
Please note—this is just the basic info, there are more programs available, feel free to ask us, or a qualified Mortgage Lender!
If your credit score is:
500-570, you'll need 10% down payment
580 (FHA loan), you'll need 3.5% down payment
620 VA (Veterans Loan), NO downpayment
640 USDA Loan, NO downpayment
620 FHA 203k Loan (this is a rehab loan for homes that are in need of major repairs)
620 Conventional Loan, usually 10-20% downpayment
640+ These higher scores can possibly qualify you for NO DOWN PAYMENT!
These are basic credit score requirements,and there are hundreds of different loan programs available. A qualified Mortgage Lender can find the best program for you.
You need a mortgage preapproval. This is done through a mortgage lender. This lender will have you fill out an application and will ask for various documents such as tax returns, pay stubs, and your identification such as your license. They will run your credit score and with all factors considered determine just how much home you can afford and issue you a mortgage preapproval. If you are paying cash, proof of funds is needed. We can help you with preapproval by sending you to one of our most trusted lenders. A realtor CANNOT submit an offer without either a preapproval or proof of funds.
Since we are realtors and you're reading this, we'd love to work with you! We would be you’re ‘buying agent’. There is NO charge to you for this—we get paid by the seller of the home once the transaction is complete. After we've determined that you have a preapproval, and ask a few brief questions regarding your price range and what sort of home you prefer, we jump into the search and the fun begins!
Once we find a house that makes everyone happy, we will write up an offer! This is the price you want to pay for the house. Your offer will be accepted, countered, or rejected. Once an agreement is reached, it takes 45 days for the entire process to be completed. Usually, a deposit of $1000 or more is given at this time which comes off the price you have offered, so you do need some ready cash...
Once your offer has been accepted a home inspection is recommended, paid for by you. This must be done within 10 days of contract signing. A good home inspector will check your future home from roof to basement, all mechanical and structural functions of the home, plumbing electrical panels, etc. If something major is found, you can withdraw from the contract and get your deposit back with no penalty. A home inspection usually runs from $300 to $600 depending on the size of the home and required tests. Some homes are sold "as is" which means just that, they will not repair anything in the home and the inspection is for your info only.
At this stage, an attorney must be hired to prepare the closing documents as well as perform a title search of the home. Usually, the attorney's fee is included in the closing costs.
The closing costs are the fees paid by the buyer at the time of the closing date. These fees include taxes, home insurance, appraisal fees. Closing costs can vary but they usually range around 6% of the home price. Sometimes the seller will agree to help with the closing costs.
The walk-through is usually done the day before contract closing to make sure that everything is as it should be and that nothing in the house has been damaged or removed.
The big day! This is the day when the home officially becomes yours. Typically, the closing is held at your attorney's office, papers are signed and the keys are handed to you!
Costs of buying a home:
Deposit- Usually $1000-$2000 at the time of initial offer.This will hold the home for you and also comes off the total price you are offering.
Inspection- This is NOT a requirement,but we always suggest it! A qualified home Inspector will run around $400-$600 depending on the size of the home.
Appraisal Fee- Ordered by your lender,and if seller is agreeing to cover closing,you will be reimbursed.Usually runs around $300-$400.This is done by the bank to make sure the home is worth the money you are paying for it!
Closing day- This is the BIG day! You are now responsible for your down payment,which can vary.