How To Start Buying Your First Home
Buying your first home is an extremely daunting task full of blind corners and potential pitfalls, but let's think about the light at the end of the tunnel for a moment..
- The money you spend goes towards something you actually own
- Properties are an investment and can earn you more money down the road
- You can finally move out of your parents house
The reasons to buy a home are obviously there, but I’m not here to convince you of why you should be buying. Rather, I want to walk you through the initial process that I personally took in buying my first home. Getting started is often the hardest part of any new task, so here are a few key steps I took to get on the right path.
Self Guided Research
Reading articles (like this one!) is the most fundamental place to start because you will immediately be exposed to a wide variety of learning content. Start taking notes. Not everything will make sense right away, but by writing/typing them down you will begin to immerse yourself in the property owners world. Law of attraction! One thing you will immediately find is the plethora of new vocabulary. Here are just a few terms that you will come across:
- Single family home: a free standing residential building, as opposed to a condominium or duplex
- HOA: Homeowners Association, they provided general rules for the property and usually collect a fee
- Enjoyment: An owners rights to possess and use their property without disturbance
If you didn't know that definition of "enjoyment" in the context of property law, then you’re not alone. I was pretty embarrassed when a realtor mentioned it, and I casually responded with yes, of course I will enjoy having my own home.. There are plenty of great resources online, do a Google search today.
Take a Home Buyers Course
I don’t work for Redfin, but I will say that their first time home buyers course is very helpful. We met at a restaurant in town (free food btw) with a group of about 20-30 people and sat through a presentation that covered the entire home buying process from start to finish. All those terms I had learned from my own research made understanding the presentation way easier. Plus I looked really cool when I asked the presenter if down payments greater than 15% on FHA loans release me from needing mortgage insurance. You can see upcoming events in your area on the Redfin website.
The presenters were also active realtors/lenders with years of experience, and our group had the opportunity to pick their brains for all that sweet, juicy real-estate knowledge.
Meet with Lenders and Realtors
This is where things start getting serious. Until now you’ve just been gathering data, feeling out the general temperature of the home buying world and setting up mental checkpoints for what to expect on the horizon. Now, you need to secure the team you will be working with and evaluating your specific case. There are two key individuals you will be working with throughout this process:
- Realtor: the person that will correspond on your behalf with the seller, lender, city (for deeds, etc) and procure all documentation for you to review and sign. Realtors do not review your finances, in fact the only finances they work with is the selling price of the home and the underwritten, approved loan amount you recieve from your lender.
- Lender: the person that will deep dive into your financials and, after a careful review/underwriting process, present you with a loan package that you qualify for. Your lender is someone who you need to feel comfortable with, as you will be working with them for quite some time about a very sensitive subject, money!
As you can tell, these two individuals are critical to your home buying experience- with great power comes great responsibility. Finding a realtor and lender that you have a strong relationship and excellent rapport with is an absolute must. With the amount of hoops that have to be jumped through, it is very easy for a "bad" realtor or lender to act without your best interest in mind. The best way to avoid a toxic situation is to meet with multiple realtors/lenders before choosing one to move forward with.
The biggest thing that I look for in both individuals, is transparency. As someone who works in tech, I am highly detail oriented, and don't feel satisfied until I fully understand the process at hand. Realtors and lenders should always be patient and help you work through your uncertainties. If they don’t, I strongly suggest looking for someone else to work with.
Purchasing a home is a huge financial undertaking. The better equipped you are to understand what’s happening, the less likely you will find yourself in a risky situation. At the time of this article (July, 2018) I am in the lender/realtor choosing phase, sitting down with multiple people each week to find the best relationship to move forward with.
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