First Time Buyers
Buying your first home can come with a myriad of questions. After all, buying a home is the single greatest investment in most people's lives and the first home they purchase can have a large effect on the rest of their lives.
The Home Buying Process
In order to understand the home buying process, we must look into its five main components; Getting Pre Qualified, Preliminary Home Search, Making an Offer, Escrow, and Close of Escrow.
Getting Pre Qualified
The first portion of the home buying process is to get Pre Qualified. This is the process of working with a lender to see how much home you can (or want) to afford. You can get a quick idea of what you can afford by using our Mortgage Calculator and our Pre Qualification Calculator.
The lender will do a comprehensive analysis by looking at your income and your debt ratio. This can be done for a single borrower, multiple borrowers, or even a co signer. The lender will look at the total income and total debt (car loans, credit card debt, student loans etc) and come up with a debt to income ratio. The usual target for a debt to income ratio is 45% (Total income / Total debt). If your debt to income ratio is too high, you may need to pay down some debt in order to qualify. The lender will also look at your FICO scores. You have three major scores; Transunion, Experian, and Equifax. The longer your payment history and lower your indebtedness, the better. The lender can pull your FICO scores with your permission and can provide you with a copy.
Preliminary Home Search
Once you are Pre Qualified, you want to begin the preliminary steps in your home search. This would involve; choosing your type of financing (VA, FHA, or Conventional Financing), choosing your desired neighborhood, desired budget, and desired price range based on your Pre Qualification. A Realtor can help you with this by guiding you to neighborhoods that have the amenities you are looking for that are within your designated budget. A Realtor can send you new listings straight from the MLS complete with pics, stats, and maps for each property. They can also set up showings so you can see your favorite homes in person.
You can also Search the MLS to find homes that you would like to see with your Realtor as well as download apps for your phone or tablet such as Zillow or Trulia to help find the perfect home, depending on how involved you would like to be in the home search.
Making an Offer
Once you find the perfect home, it's time to make an offer. It is crucial that you look at comparable properties that have recently sold in order to decide what price you would like to offer for the property. Offer too low and you may risk insulting the seller. Offer too high and you will end up paying too much for the property. A Realtor can help you decide the best starting point for you and your offer. The seller will have the opportunity to accept, reject, or counter your offer. Your Realtor will assist you through the Negotiation Process to help you get the best deal possible.
The Escrow Process
Once your offer is accepted, the property will go into Escrow. An Escrow company will oversee the purchase process ensuring that all parts of the contract (accepted offer) are completed. Typically, there will be an appraisal and home inspection done during Escrow to make sure the home is worth the contract price. An escrow can be anywhere from 15 days for cash, 30 days for a conventional loan, or about 45 days for an FHA (government) loan.
Close of Escrow
Upon the close of Escrow, you will be handed the keys to your new home by your Realtor and the home will be officially yours!
If you have any questions regarding the home buying process, please feel free to call me direct at 951 201-3427 or email me at JSMBroker@yahoo.com and I will be glad to guide you through the process!