THINKING OF BUYING A HOUSE AND NOT SURE WHERE TO START?

November 27, 2019

By Daneel Kendalo

Buying a house can be many things, but easy and straightforward is not one of them, at least not when you have to go through the process alone. For whatever reason, you have decided that maybe buying a house is not such a bad idea after all. You might be sick of paying someone else's mortgage or you are simply ready to set your roots in a place that you can call your own. People buy houses for many other reasons but those are the big two.

Let's jump right into it. By the end of the article, you will have a better understanding of the process of purchasing a house!

Start by looking at your credit score and credit history. As with anything, credit plays a big role in the process of buying a home. Use an app such as Credit Karma to check your credit score and credit report for free. You can also use AnnualCreditReport.com, which allows you a free report once a year from the main three credit-reporting agencies: Equifax, Trans Union and Experience. The items you will want to keep an eye on with your credit report is: payment history, amounts owed (your debt), length of credit history, new credit and types of credit (car loans, credit cards, student loans, etc.). Your home loan interest rate is directly influenced by your credit score and credit history. Simply put, the better the score the better the interest rate.

Next, you will want to know how much of a home you can afford. The factors that go into deciding how much money a lender is willing to lend you are as followed: monthly income, assets, debt payments and savings. The lender will collect all the information previously mentioned and create what we call a "Debt-to-Income Ratio". Basically, based on your debt, how much income do you have left to devote to paying a mortgage. Keep in mind that lenders will only allow a small percentage of your income to be dedicated to mortgage payment. For example, an FHA loan ( a loan where only 3.5% of the house price is needed as down-payment) requires a maximum of 31% of monthly income to be devoted to paying the mortgage payments. Finding out what you qualify for if crucial; there is nothing worst than falling in love with a home you cannot afford. Do your homework, find different lenders and have them provide you with a pre-qualification, then compare rates.

Congrats! Now that you have determined how much of a house you can afford, you can finally start looking at homes.

At this stage, people will typically browse some popular sites such as Zillow and Redfin. This is when you start seeing house ads as you scroll through social media. Do not be overwhelmed, get a real estate agent and stick with them. Real estate agents are paid by the seller, so it would be a no brainier to skip them. When looking for a REALTOR®, make sure you find someone you can feel comfortable with, you will spend a lot of time with them during this process. Meet them out for coffee and interview them before you make the decision to work with them. As a REALTOR®, I can assure you that we are not all made the same. Ask them questions such as "Will you answer your phone when I call you 5 in the morning and 12 at midnight?", "What makes you different?", "Are you full time or part time?", "Do you have a plan of execution?", and any questions you feel are important to ask based on your personal needs.

After choosing a real estate agent, he or she will be able to show you as many homes as your heart desires! Once you have found "The" home, your agent will place an offer on the house. After offer is accepted, the home will be inspected and home repairs will be negotiated.

The closing date is the day you will receive the keys and post on social media that you are officially a "Home Owner". Congratulations on living the American Dream!

While the process seems long and tough, having the right people on your team will make all the difference in the world. Feel free to schedule a free consultation with me, let me tell you what sets me apart from the other 30,000+ real estate agents working in the valley.