Steps to buying a house

Buying a house can be an overwhelming process so in this video I’m going to break the home buying process down to help you understand the first steps to buying a house.

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The process of buying a house

The first step of the home buying process starts with you figuring out a budget of how much you can and are willing to spend every month on a mortgage payment or PITI (principal, interest, taxes and insurance). This sounds silly but starting with a budget is where the process should begin as you may actually qualify for more home than you are able to spend and knowing your budget upfront will allow you to have a conversation with your mortgage professional to work backwards and determine how much home you can afford to purchase with that budget in mind.

Once you have established your monthly budget, the next step is to speak with a mortgage professional to start the pre-approval process. I would always recommend getting a referral from someone rather than just going into your local bank and trying to get approved. Your lender is going to ask you to fill out a mortgage application (commonly referred to as a 1003) as well as request a series of documents from you like your tax returns, pay stubs and asset account statements. In addition, the lender is going to ask you about how much you have for a down payment and will run your credit report. From there the lender should have enough information to tell you exactly how much you can afford to purchase. They use what is called a DTI (Debt to income ratio) to determine how much home you can afford to purchase based on guidelines that are set by Fannie Mae, Freddie Mac as well as any other institutions that may be lending their own money.

Now that you are pre-approved, the next step is to meet with a REALTOR. You can always meet with a Realtor prior to getting pre-approved but keep in mind a Realtor can’t really help you with the home buying process until you have been pre-qualified so ideally when you meet with your Realtor, you’ve already starting the pre-approval process.

When meeting with your Realtor for the first time, you want to be as specific as possible in what you are looking for in a home. It’s not realistic to think that you are going to find every single thing you want in a home unless you have an unlimited budget but make sure you are letting them know the items that are non-negotiables as that will set proper expectations from the start and put your Realtor in the best place to help you find the perfect home.

Depending on how your Realtor runs their business, they may set you up on some sort of automated email that will send you properties that match the criteria that you originally discussed with them. In my experience I find that most buyers are still looking on other websites as well as the emails that get sent to try and find the right home. I always encourage home buyers to see as many homes as possible both online and in person as I believe it really helps you know what you want in a home. The more homes you see, the more of the subtle details you start to notice.

Once you find the perfect home,the next step is putting in an offer with your Realtor. Because you have already been pre-approved with your lender and you know your budget, you should already have a good idea of what your payments will be on the home. Nevertheless, it’s always a good idea once you find the right house to have your lender rerun the numbers so you have a more accurate idea of your monthly payment as rates could have changed, etc……

In order to submit your offer, your Realtor will need to verify a few things with you in order to correctly fill out the residential purchase agreement (RPA).

This is the general process for buying a home but I will do a 2nd video that picks up the process once you go into escrow in order to keep this video on the shorter side.

If you have additional questions about buying a home, please comment below or contact me directly.

Thank you for taking the time to watch.

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