First Steps for a First-Time Home Buyer:

by Cameron Gunnels

First Steps for a First-Time Home Buyer:

This might be a long one, so for those of you who like to skip the appetizer and get straight to dessert, here you go:

Identify a 3-year life plan.
Identify your wants and needs.
Connect with a realtor or lender within your network.
Get pre-approved for a mortgage.
Do a personal financial assessment.
Start your home search.
Make an offer.
Home inspection & negotiation.
Unlock the beginning of your next chapter.

Now that we have that out of the way in the rest of today’s blog, I want to talk about why each of these steps are crucial and explain what happens during each phase. But before doing so, let's take a few minutes to discuss the importance of homeownership.

The Importance of Ownership:

Since the 1940s owning a home enclosed in a white picket fence has been the poster image of the American Dream. America was characterized as the "Land of the Free" and "Home of the Brave" where anyone, no matter their background, could create a life of their choosing free of oppression. If we go even further back in time, the Declaration of Independence highlights the natural right of all people to "life, liberty, and property". Rewinding another 2000 years we notice that property was still regarded as a supreme priority. Figures such as Alexander the Great, Genghis Khan, and other ancient conquerors dedicated their life's work to acquiring as much land as they could. It is evident that since the beginning of time property, real estate specifically, has had a direct correlation to wealth, power, and freedom.

Accumulating wealth and owning real estate are so closely correlated that in some countries you cannot even buy real estate. Everything is owned by governments who aspire to control the flow of wealth.

Here is a modern statistic for you, today in America, the average homeowner has a net worth that is 189% higher than the average renter. See the importance now?

First Steps for a First-Time Home Buyer in Detail:

Despite the obvious long-term benefits of homeownership, purchasing real estate for the first time can still be a daunting task. I hope the information below will help you navigate this process with ease.

Identify A 24-Month Life Plan:

In the early stages, take the time to think about how the next two years of your life might look. Do you plan on starting a family? Will you have roommates? Could your job ask you to relocate? All these things are important to consider when purchasing a home as they will contribute to the criteria of your home search. For example, if it is possible that you could move out of the area within the next 2 years maybe instead of purchasing a single-family residence you consider buying a 2-unit apartment building, and then if you do move, you have the option of renting the apartments as an investment!

As with anything, having a plan when investing in real estate is important. With that in mind, I urge you not to become paralyzed from overthinking. Your plan does not have to be iron-tight, just a general direction will do.

2. Identify Your Wants and Needs:

Ask yourself what is important to you? Do you love a big kitchen or a spacious closet? Is outdoor space a requirement for summer nights on the grill? Having an idea of these things will make the home search much more enjoyable and help your realtor guide you to homes that fit your preferences.

3. Connect With a Realtor or Lender Within Your Network:

At this point, you have done enough thinking, and it’s time to act by finding a realtor or mortgage lender. There are no rules on who you contact first, but I highly recommend that you choose to work with a realtor or lender that is within your network. Both realtors and lenders work largely on repeat and referral business. By working with someone that has already done business with friends and family you can vet their credibility via your network. Additionally, they will feel a greater responsibility to ensure your experience is positive since you are already connected to one of their current clients. Negative gossip amongst friends is bad for business.

4. Get Pre-Approved for a Mortgage:

During the pre-approval process, you will provide a mortgage lender with bank statements and financial documents. From here, they will determine a price range that your income can support. The number that they provide will be the foundation of the home search.

If you connect with a realtor first, they will schedule an introductory conversation with you to gain a clear understanding of your wants and needs, then they will introduce you to a mortgage lender for pre-approval. If you connect with a mortgage lender first, they will have the same conversation with you, give you a pre-approval, and then introduce you to a realtor. Whoever you contact first, I recommend you work with the realtor or lender that is referred to you by the other. During this process, your realtor and lender will need to work closely to ensure the deal closes without any setbacks. When these two have worked together previously and have a pre-established relationship it makes it easier for them to do whatever it takes to get you into your dream home.

5. Do a Personal Financial Assessment:

Even though a mortgage lender will have already told you the maximum amount that they are willing to lend based on your income, still, take the time to evaluate your income & debt ratio to determine how much you are comfortable with spending. Just because you are approved for a larger amount does not mean you have to spend a large amount. Don’t let anyone tell you how much money to spend, you know your comfort level better than anyone else!

6. Start The Home Search:

Now it's time to go shopping! You and your realtor will search the city touring and evaluating houses that fit your criteria and are within the price range recommended by the lender. Remember this part of the process should be the fun part, don’t get stressed if you can’t find the home of your dreams immediately. Great things take time, and this is not a decision you want to rush.

7. Make An Offer:

Now it’s time for your realtor to put the game face on and use their market expertise! Consult with them to come up with a competitive offer. Remember, your realtor does this for a living! You wouldn’t tell a professional baseball player how to swing a bat, or a chef how to season an entrée, so trust their judgment. They are the professional. If your offer is accepted, you will move on to the next phase of home inspection and negotiation.

8. Home Inspection and Negotiation:

Once the offer is accepted there is usually a 30-day contractual period when the buyer has an opportunity to hire professionals to inspect the property for damages or defects which can then be used at the negotiation table. During this timeframe, the lender will also be finalizing the mortgage and running final credit and background checks.

9. Unlock The Beginning of Your Next Chapter:

Finally! Closing Day has arrived, throw on your most photogenic outfit and get your signing hand ready. Closing day is a joyous occasion where everyone involved in the transaction meets at a neutral location, here, the funds are transferred, and final documents are signed. At the end of this meeting, you will officially be a homeowner!

If there's one thing I want to impress upon my readers, it's the importance of taking that first step, just get started. Don’t be afraid to fail. In the end, everything we do is a learning experience and meant to shape us into the person we will become tomorrow! I am extremely excited for you, and if you made it to this blog that means you're already moving in the right direction. Please do not hesitate to reach out to me directly with any questions, I am a licensed realtor and happy to help in any way that I can.

Happy Hunting!

Go Change Your Life!

-Cameron Gunnels

Cameron@gunnelsrealty.com

Sources:

First Steps for a First-Time Home Buyer:

by Cameron Gunnels

GET MORE INFORMATION