HOLY MOLY. I was honestly hoping for a few responses, so THANK YOU! I’m still working my way through reading all of the comments, but keep them coming! This post has become such a wealth of information and I’m very grateful for that. I’ve learned that where many of you live, our 5% we have saved would in fact be a 20% down payment, which is slightly depressing. I also really appreciate the comments discussing the current market and the downsides to buying right now. Again, thank you all so, so much! • • • • •
I’m not being facetious, I’m genuinely asking if someone can explain to me (like I’m five) the steps to take to buying a house.
We will have around 5% to put down in a month or two, and that’s all I’ve got so far.
Do you get pre-qualified for a loan first? Is the bank a best place for that?
Do I just go on Zillow and set up tours? Is a realtor better?
People always mention closing costs…does that need to be something you save for separately? Or do you factor that into the loan?
We will be first time homebuyers. We don’t have any family near by and have two small children. We need the help and are looking to move close to family. Renting isn’t going to be an option because we will never find a house to rent in our price range that will allow our dog as well. Thank you for the help!
7 Likes
You need to meet with a mortgage broker at a bank or brokerage to get an idea of what they will lend you. Since the amount you want to put down is limited, they will see if there are loans that allow for that. They will ask about your earnings and credit score. They can give you your price range and a general idea of closing costs. They can prequalify you got a loan at this time if you have all your documents. You can also shop around to see who will give you the best deal. It is helpful to do this first if the real estate market is moving quickly.
Next, you find a realtor you like. You don’t have to go with the first one you meet, I thought mine was helpful. She sent me listings, was able to get me into houses as soon as they listed and sometimes they know of houses that haven’t been listed yet. She walked me through all the steps of buying a home, arranged all the inspections, could tell me what each part on the inspection report would cost to fix and recommended contractors.
3 Likes
And just because they tell you can afford X amount does NOT mean you can actually afford that amount. You have to account for food, utilities, gas, and any other expenditures that the mortgage lender does not.
2 Likes
The state I previously lived in had a program for first time home buyers with low income where you could apply for a grant to cover your down payment. I would look into programs like that. The grant I looked at would cover 5% down and so long as you lived in the house for 20 years (I believe? I can’t remember exactly) you wouldn’t need to pay it back.
2 Likes
Thank you so much, I’ve definitely heard about programs for first time buyers and will look into them!
2 Likes
You typically have to make under the medium income to qualify. Where I was it was 40k a year and I made 42 and didn’t qualify. So something to look into and consider if you are in a two income household.
2 Likes
There is a podcast called How to Buy a Home by David Sidoni that helped me SO much. He even lays out exact numbers of what you would need for down payment/ closing costs for each price point. We just bought our house in March and the podcast was invaluable.
2 Likes
Mortgage Officer here. A lot of banks offer a USDA govt program where you literally don’t have to put any money down for a down payment assuming the house and you meet the specific guidelines. The first thing you need to do is find a mortgage Officer you trust. They will ask you a bunch of questions to see if you qualify for specific loan programs. They can give you a number that you can qualify for, and then you can start making offers on homes within your price range.
1 Like
I would recommend getting a realtor at any time, but especially now when the market is ridiculous. A good realtor will not only protect you during the home buying process, but they’re going to know about houses that are hitting the market before they actually hit the market. In my area, anything in a good school district for less than $250k seems to be sold within 48 hours. Unless you have an inside track with a realtor, you aren’t buying anything.
I talked to my bank to get pre-approved for a mortgage – and then laughed at the amount of mortgage they approved me for. Please remember that just because the bank gives you a number, doesn’t mean you have to spend all of that number. I got a home for about half of what they approved me for (but I also bought in 2017 before the market went entirely berserk).