1. DECIDE TO BUY A HOME
You can take time to think about it, but this rings true: "if you sleep on it tonight, you might not be able to sleep in it tomorrow." If you truly want to transform your rent payments into equity on a home you own, you'll have to make the decision to get serious about your finances, contact a lender and figure out a practical timeline of when you're able to buy, and when you want to move. This is something an agent can help you with, but you need to make the decision to be all in about this important step in your life.
If you're selling your current home and buying another, it can be an emotional step. Maybe your family is growing, maybe it's shrinking. Maybe you need a change, maybe you're relocating for a great new opportunity. Whatever the reason, the sale of your current home will likely impact your ability to buy your new home so committing to putting it on the market is important.
2. GET PRE-QUALIFIED AND SAVE SOME MONEY
Just like when you buy a car or apply for a credit card, your lender needs to get a peek into your finances to see how much you’re qualified to borrow. By calling a lender, you’re going to give them some permission to get information about your employment history, credit score and other factors that give them and you a better idea of how much house you can afford. They'll issue a pre-qualification letter which simply gives us a reasonable ballpark of how much house you can afford, and it helps us focus in our properties that are within your budget.
Take this time to also set aside from cash for earnest money. When you decide to make an offer on a home, you'll have to cut a check or provide cash called "earnest money" to act as kind of a security deposit. When your offer is accepted, the seller takes their house off of the market to work with you. The earnest money is a way to help them know that you're a committed buyer. At the closing table, your money will be credited back to you.
Typically, earnest money is 1-2% of the sale price on a home. Looking at a $275,000 house? You should have at least $2700 set aside and ready to be held for up to 45 days.
3. DEFINE YOUR NEEDS & WANTS
Once you know your budget as defined by your pre-qualification letter, I think its a great idea to narrow down what you need vs. what you want. When I was looking for a house, I had a dog, so I needed a backyard that was big enough for him to run around and chase a ball. This helped us exclude condos, and townhomes with small yards or concrete parking pads. I wanted it to be fenced, but that wasn't important as having the yard itself. You can always add a fence, you can't necessarily add a backyard. Same goes for sheds, decks and even appliances. Think about the house, the location and the other features of the home and decide what's a breaking point and what you can work with later on.
By setting your expectations, I’m better able to find properties that suit you and I also know which things are absolute nonstarters. If you say you ABSOLUTELY need a basement to have as a workshop and den, I'm not going to show you properties that don't have a basement. I might reccomend a few properties that have an outside workshop - just to consider - but at the end of the day, it's your house and I only want to show you what you'll like.
4. LOCK DOWN YOUR FINANCES
Did you think we were done with the money part when I said "pre-qualification letter"? Well, not quite. When you’re working with a lender, get ready for quite a bit of paperwork. This isn’t because they want you to be miserable, they just want to make sure they’ve checked everything thoroughly to make sure your loan package is as solid and secure as it needs to be for you and your future home.
While your lender processes all of your forms, definitely don't open any new lines of credit. Don’t buy anything really expensive like furniture or tools for your new house. Don't buy a riding mower. Don't buy caviar and champagne. Don't make it rain. Don’t take out any additional loans, don’t make any big deposits outside of your regular paycheck into your bank account. When your financial situation changes at all, your lender needs to account for that money and it can throw a wrench into the process.
5. LOOK AT HOUSES
Phew. We made it. Now we know how much you can afford, you've got the money in the bank to write a check for earnest money when you find the perfect place, and your finances are all in order to make the loan underwriting go smoothly when we're under contract. Let's go look at houses! No two buyers are the same. Based on your criteria, I'll scour the listings each day to find appropriate properties to look at. I'll reach out and coordinate times to make sure we see them before someone else puts an offer in. I'll also reccomend getting set up on HomeSnap - an app I'll add you to as a client and we can message back and forth about properties we like.
When we meet to discuss your needs, we'll figure out how we work best together. The most important part is to actually see the houses that fit your needs, drive around the neighborhood, calculate the commute and determine when you want to make an offer. When you do, then it's time to let me take it from there...