In the process of becoming a homeowner, there are 3 essential steps that all buyers must do: prepare their finances, go house hunting, and lastly, close the sale of their new house. This home buyers guide will walk you through how to complete each of the steps and provide helpful links to other resources.
Step 1-Get your finances ready
Check Your Credit Score
The first thing you need to do when considering Check Your Credit Score buying a house is to check your credit score. Credit scores usually range between 300 and 850 and help banks to determine which loans and interest rates you are qualified for. Typically, conventional and jumbo loans have higher credit score requirements because they aren’t insured by the government, while those that are backed by the government, like VA loans, have lower credit score requirements. If you are unhappy with your score after checking it, take the time to improve it. Often credit score is treated like a mysterious number that one has little control of, but you can improve your score. Even a small change and improve your choices of mortgages and loans.
Shop Around for Mortgages & Loans
Once you know where you stand, it is time to see which mortgage lender and loan is right for you. When it comes to choosing which mortgage lender to go with, the rule of thumb is to make sure you have interviewed at least three companies. While it might be tempting to take the first enticing offer, especially for first-time buyers, you can potentially save thousands of dollars by shopping around. When looking for a mortgage, you need to understand what type of loan is best for you. Each loan type has a varying percentage for down payments and eligibility requirements. While there are a lot of loan types, the most utilized ones are:
- Conventional mortgages
- FHA loans
- VA loans
- USDA loans
Mortgage loan contract
Unlike a pre-qualification letter, which is informal, a pre-approval letter is an official letter to loan you a specific amount within certain limits. The lender will have reviewed your financial portfolio: your credit score, income, assets, and debts, and decided how much the bank is willing to give you. A pre-approval letter puts you in the fast lane, so to speak, in the house buying process, as it proves that you have the means to purchase the house you want.
Step 2 -Preparing for house hunting
Decide What Kind of House You Want
It’s important to know your priorities: what must the house absolutely have to feel like home to you? It is best to make a list of things you need, want, and things that are additional perks at this stage. For example, if you have children, a good school district is a need, a big backyard is a want, and a pool would be an additional perk. No house will have 100% of what you are looking for so establish the top 3-4 absolute needs.
Step 3 – Finding the right partner
Find the Right Real Estate Agent
Here is the final tip–find the right partner. The real estate agent is your representative in the house buying process so they have your best interest at heart. Buying a house is a complicated and, at times, emotional undertaking, and your agent can guide you through all the nuances, confusion, and pitfalls. They will help you find homes within your budget and criteria, go to open houses and showings with you, and most importantly, help you write and negotiate your offer. The best way of seeing if the agent is right for you is by asking a lot of questions. Your prospective agent should have strong local market knowledge, experience, and a track record of success. Feel free to ask for references who are previous clients. Ultimately, you need a partner to help you through this process. Make sure that they understand you and he/she is the right fit for you.
As a top producing agent with 20+ years of experience in the East Bay, I have helped hundreds of clients buy their dream homes in the Greater San Francisco Bay area and the counties of Alameda and Contra Costa. My experience as a former appraiser allows me to help my clients understand the market and make the right offer. If you have any questions, I am here to be a resource for you.