Nogui's Blog

Let's get down to the basics of the home buying process. Buying a home, especially your first one is a challenging and thoroughly rewarding experience. The joys of home ownership can only be experienced when you buy your first home and not before. Happines will ensue at closing and even people will say, "oh so and so is doing well. She bought a house last year."

Here are a few tips to get you started.

1. Establish your budget. Add up your monthly expenses and subtract from monthly net income. Car loans, credit cards, healthcare, grocery bills, savings, leisure expenses. Whatever you have left, plus whatever your paying for rent is what you will be able to afford.

2. Start saving! You will need about 3-4% of the purchase price on average for closing costs, down payment, inspections, etc.

3.Talk to a lender. The lender will check your score, and will review your finances, debt to income ratio to determine how much they are willing to lend you. Do not confuse what they are willing to lend you with how much you are willing to pay. Go with what you are most comfortable with.

4. At this point you are ready to speak with a real estate agent. You may already started working with an agent. Your agent can recommend several lenders, home inspectors, closing attorneys, etc. Your agent will help you locate homes that fit your needs. You can also view tons of homes online.

5. Determine what type of home your going to need. If you have kids, bedrooms and school district matters. If you have animals, you may want to look at fenced in homes with decent yards or if the home is not fenced, you need to be able to fence it in at some point.

6. After locating a home, your agent will run the "comps" (comparables) or evaluate market values in that particular neighborhood. Things to look at; recent sales of comparable homes (same size, amenities etc.).

7. Your agent will then put together an offer based on those values. You will need a check or certified funds for anywhere between 1-2% of the asking price to the seller's agent for "earnest money" or deposit. This is your way of showing the seller that you are committed to buying their home and will put forth your best effort to do so.

8. The offer will have a contingency that will allow you to inspect the home for repairs and wood destroying insects and submit those repairs to the seller for remediation. The seller with then have a choice to remediate or fix those problems. If the seller opts not to to do so, then you have the choice to accept the home as is or you can terminate the contract at that point and have your earnest money returned. Its important to note that you will bear the expense for any inspections. Sellers will typically choose to repair and complete the sale.

9. After successful negotiations of the repairs, your closing attorney will be handling the title search on the property. At this point, you will need to line up your home hazard insurance and schedule to switch your utilities. Make sure you have your mail forwarded as well and notify your credit card and other companies of your new address.

10 At the closing, you will be presented with a mountain of paperwork to sign. The lender will have a loan package, usually mailed 2-3 days before closing. Sometimes the loan package doesn't arrive until the day of closing. The closing attorney will review with you the "HUD"- a two sided sheet of paper that lists all of the costs associated with the closing for both parties.

Congrats, you've just bought a home. Make sure that you have a beer on the porch and reflect this wonderful time in your life. I'll buy the first round!