First Time Homebuyers Guide
Thinking about buying a home for the first time but not sure where to start? Don’t worry, we specialize in that!
First start by preparing yourself financially
That means saving for a down payment and preparing to get a loan. If you are renting, make sure you are not missing any payments and put utility bills into your name so you can start building credit. Credit repair agencies can repair bad marks on your credit for a fee if you need. Start putting some money aside to save for a down payment—at least 5% of the price at the top of your budget. Make sure you also have saved up for closing costs, which are usually a few thousand dollars. Also save up a few months of expected monthly payments. You will spend at least $1,000.00 a month towards your loan, plus other living expenses. Saving to buy a house now will be a great investment in the long run. You will build equity that will grow as time goes on.
After you’ve saved and prepared financially, find a lender to work with.
We always recommend working with a lender you have a personal connection with, but if you need BRES is able to refer you to our preferred lenders. Feel free to look into multiple lenders and compare their mortgage rates and fees, it may save you money. Schedule a time with the lender you’ve decided on to discuss a loan. Pull together documents verifying your income such as paystubs and bank statements. Every lender has different qualification requirements, but most include a credit score above 550, 2-year job history, and information regarding your previous living history. Ask if your lender knows any Texas or local down payment assistance programs that you may qualify for. A lender will be able to accurately tell you what home you can afford based on the information they gather, and what you would pay for a down payment. You will avoid paying mortgage insurance with a down payment of 20% or more, but it is possible to qualify with a down payment as low as 3.5% in some cases. This will be included with a prequalification letter which you will use to prove you are a willing and able buyer when you submit an offer. But first you must find the house of your dreams! —that is where we come in.
We will send you a list of properties within your budget weekly or as often as you want (daily, weekly, biweekly, monthly).
Think of us as your personal homebuying employee, we are here to work for you. BRES will handle all correspondence between us and other realtors and property owners. As you start to find homes that interest you, we visit them whenever you are free. We have found the most efficient process is to schedule multiple showings in a day, setting aside 30 minutes to walk around each property before going to the next one. Your BRES agent will handle scheduling them with the listing agent, which usually involves reserving time slots. Map out the best route before-hand with your agent and schedule it in that order. As you visit these properties, note proximity to businesses and new developments. Try to get a feel for the neighborhood as you drive up. Figure out as much about the property as you can while you are there. Notice the quality and age of finishes, and keep in mind that anything you don’t like can be replaced in the future—at a cost. Take pictures and notes to review later along with the other properties. Let the first impressions sink in before making a decision.
When you find one you know you like, we suggest making an offer as soon as possible.
We will help you fill in the blanks on the offer and submit it on your behalf. Besides the offer price, the most important aspects of your offer are the earnest money, option fee, closing costs, time, type of financing etc. The option fee gives you the right to back out for any reason within the option period, so that is the time to schedule an inspection to make sure the house has no significant issues. Ask if the inspector is also doing a pest inspection, which requires a separate certification and may need to be done by a third party. Make sure to give yourself enough time to review the inspection report and request any seller repairs before the option period ends. These other aspects will make the difference between offers with similar price. Once an offer is submitted, we must wait for the seller’s agent to present it to the owner. They can accept or decline, but they usually counter with small or significant changes.
Once you and the seller reach agreement, you will execute the contract and we will send to the title company along with a check for earnest money and option fee.
The contract will also be sent to your lender so they can formally approve you. You will now be in a binding contract to purchase the property at a later date. While you may feel a sense of relief, there is still work to do during the contract period such as scheduling the inspection and survey. When you receive the inspection report, ready through it completely and make note of any repairs you want the seller to pay for. The title company will research the property to make sure that the property can be legally sold, and identify any legal issues associated with the property during the contact period. All of their research will be summarized in a title commitment which will be given to you prior to closing. Once received, you will have a certain amount of time to read it and object to any issues you see. Review the title commitment along with the survey with your agent, and a lawyer if you prefer.
After the inspections, title commitment, and survey are satisfactory to all parties there are a few more steps to take.
You will need to purchase home insurance which is required by the lender. You may also opt to purchase a home warranty policy that covers appliances and fixtures, but it is not required. Make sure the lender has everything they need from title company and seller. Your lender will handle ordering and reviewing the appraisal, but they will likely need personal information from you to complete their paperwork. Closing will be scheduled once the lender notifies the title company of the “clear to close”. On the day of closing you will go to the title company’s office to sign multiple documents related to closing. Be sure to ask the title officer any questions about what you are signing, as they can best explain it. After you sign, be aware that the bank still needs to fund the purchase before you can move in, which may take a few hours.