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First Time Home Buyers

Buying your first home can be a daunting task. As a matter of fact, anytime you buy a home it can be overwhelming when you consider
all of the variables that can come into play. We at HomesandFood thought it was necessary to give you an outline of exactly what to do throughout the process of that purchase. The main reason is that the country right now is experiencing a huge influx of homes being purchased by first time buyers. Here's a step-by-step process for what to do in:

1. What's Your Payment Threshold? Initially you need to determine what you are comfortable with paying on a monthly basis for your new home. In many cases, buyers often qualify for more than they're willing to pay. What is that number? Nobody wants to be "house poor" and eat Ramen Noodles most of the week. Take a look at you monthly budget and find out what your comfort level is. Don't compromise this at all! Don't let pier pressure, your loan officer, your real estate agent, or your friends influence you on over-leveraging yourself. They don't pay your bills.

2. Get Qualified. If you have heard the news over the last few months, you know that the mortgage industry has gone through a real "weeding out" process. Your mortgage company decision can be the difference between a totally smooth transaction and an outright nightmare. First of all, I believe that a buyer should choose a strong, local mortgage company. Do yourself a favor and do not go with a mortgage broker. A mortgage broker does not fund their own loans and acts as a middle-man between you and a lender that does fund their own loans. In essence, you will pay more in the process because they have to get paid too. In addition, I can't tell you how often I was working with a buyer who was dealing with a mortgage broker and the buyer wasn't able to close. We often found out a day or two before closing, which creates a tremendous amount of stress with all parties involved. Buyers are sometimes told what they want to hear and not the facts. Not only do you need to choose a legitimate mortgage company but you also need to choose the right loan officer. The loan officer runs the show on that end and if they leave your file on their desk until a few days before closing, you're going to have a problem. If you're confused on what to do, consider asking your realtor their opinion. Your realtor also has a stake in the transaction and doesn't want you to have any issues either. For example, over the years I have worked with lots of loan officers and companies, trying to find my elite group of vendors to use in all areas of my business. Right now I have several loan officers and companies that I use, depending on the client, that have done great jobs for clients in the past. My first obligation is to my client and I want them happy. Okay, once you have found who you want to work with, you need to get pre-qualified. The loan officer will want to get your work history, credit score, debt-to-income ratios, and assets. Be prepared to give them this information. There are 3 steps to the process: pre-qualified, pre-approved, and approved. When you submit an offer on a home, sellers typically want to see a pre-approval letter along with the offer. You are absolutely free to look at homes before you get the mortgage process going but it's always good to know that you are qualified and for how much.

3. Find a Realtor. This will be difficult to write without being self-serving so let me get that stuff out of the way and then I'll move on to more general information. I am a realtor in Hampton Roads and northeast North Carolina. I am the owner of www.homesandfood.com and dedicated to assisting my clients in any way humanly possible. I work 7 days a week and often never see less than a 10 hour day. My commitment is to you and, of course, I would like to earn your business. Alright, let's move on. In Hampton Roads, there are over 7,000 real estate agents. So who do you choose? A lot of times buyers know of an agent through friends or family who have used someone in the past. The majority of buyers, however, start their search online and use an agent that provides them with the most information and help. As with any industry there will be all kinds of personality types and you should choose an agent based on one that closely resembles yours. Some agents (okay most agents) will want you to sign a buyer broker's agreement that commits you to them and their company. You are signing a document that legally binds you to working with this agent. Personally, I don't agree with this and have never used this method. A lot of the brokerage companies in the area require their agents to have buyers sign this and agents have no choice. I, on the other hand, do have a choice and choose not to use the buyer broker's agreement. I feel that if I'm doing a great job for my client then the client will want to use me regardless. Wouldn't it be shame to sign this document on the first day you meet your agent only to find out that the agent is worthless? As a buyer, you want someone who will look after your best interest in finding you the best home, at the best price, and with the least amount of hassle.

4. Search for Homes. Most agents have websites that you can utilize to search all of the available homes that are for sale in Hampton Roads. These sites are tied directly into our MLS company The Real Estate Information Network or REIN and contain the most up to date information on new listings. With these thousands of websites, you get to choose which one best works for you. Of course, I'm a little biased and believe that this site is the most comprehensive in the area but you get to make that choice. After you determine your price, city, neighborhood, school district, square footage, and etc., you are off and running. Simply, put in your search criteria and viola, all of those listings will appear.

5. View Homes in Person. Usually once you perform your search and find a few homes that interest you, you will want to contact the owner of the site in order to see the property in person. Most of the time, there will be a link on that listing that will easily allow you to do this. This link will often times be a fillable form that will immediately email the site owner regarding your request. You will need to contact the agent in order to get into the home. Here's an important point. Always remember that there are usually two agents involved in every transaction. The sign in the yard of the property has the name of the agent that represents the seller "only". You will need a buyer's agent who will look after your best interest. The buyer's agent can be from the website that you performed your initail search.

6. Write an Offer. Once you have found "the one", you will need to get with your agent to write the offer. Most agents are well-versed with our contracts and can assist you with all the clauses that are contained within them. It's important to know what rights you have as a buyer regarding contingencies, time lines, and laws. Don't let your agent breeze through this process. Notable terms of the "offer to purchase" include the names of both parties, the property address, personal property that conveys with the property, offer amount, how closing costs are addressed, earnest money, type of loan, home inspection, and homes owners association information. Earnest money is needed for all transactions from the buyer and is considered good faith money. Should a buyer choose to walk away from the ratified contract with no legal reason, the seller would be entitled to this earnest money. On the flip side, there are several ways where a buyer is allowed to leave the transaction and not lose their earnest money. Be sure to consult your realtor. When it comes to earnest money there aren't any standards only typical occurances. Usually under a sales price of $300,000, $500 earnest money is sufficient. Above $300,000, sellers often want to see $1000 or more. The amount of earnest money typically shows the seriousness of the buyer. As long as a buyer has not defaulted on the transaction(which is most of the time), the earnest money will be credited to them at closing. Contingencies are things that have to happen in order for something else to happen. Common contingencies in an offer to purchase are a home inspection, selling a current property, and home owners association.

7. Negotiating. Most of the time, the seller will not accept your initail offer. This really falls into the experience of your realtor to help you get the most that you can possibly get.

8. Acceptance of the Contract. When both the seller and the buyer agree to the terms, you have a legally binding ratified contract. At this point, all parties involved are moving towards closing based on the terms of that agreement.

9. Removal of Contingencies. Once you have a ratified contract, the buyer and agent will set up the home inspection. When the inspection is complete, the buyer will have the opportunity ask for certain repairs to be made by the seller. Also, at this point the seller will order the condo or home owner's association documents, if applicable. The buyer will have the opportunity to accept these documents. If the buyer has a home to sell first, well, they need to get on the ball. This is a tough contingency, especially in our current buyer's market. After ratification, the termite and moisture inspection will also be ordered.

10. Complete the Mortgage Process. Finalize everything with your loan officer and get your full approval if you haven't already done so. They will need a complete copy of your contract as well. The appraisal for the home you're purchasing will also be ordered at this time by your mortgage company. The appraised value of the home must be the same or higher than your loan amount or the seller will have to lower the sales price to meet the appraised value, if not, the buyer may terminate the agreement.

11. Title Search. There's not much for you to do here. Just make sure that you choose your settlement company or get a recommendation from your agent. Once you've selected a settlement company they will need a complete, legible copy of your contract.

12. At Closing. Bring your license so everyone has proof that you are who you say you are. Review the HUD Statement(a 2 page document showing all of the figures affecting your purchase) with your settlement officer to make sure that everything is what you were expecting. You should actually be able to get a pre-liminary HUD before closing so there's no surprises. Your closing agent will be able to explain all of the aspects of your closing. Don't hesitate to ask them questions. Sign all of the paperwork. Congratulations, you're a homeowner!!

There are several people that are involved with the home buying process: realtor(that's me), lender, home inspector, termite & moisture inspector, and settlement company. Over the years I have developed a strong, professional sphere of colleagues to help in these areas. If you are unsure who to use, just ask.

Typically, first time buyers are purchasing homes that are under $200,000. Over time, I will add neighborhoods below that are great for purchasing these properties. You'll be able to find condos, townhomes, and single family detached homes that fall in your budget. If you don't want to wait for me to highlight these areas(because there's a lot!), simply email me or give me a call. I can send you all of the homes that match your search criteria. Jeff Nelson / 757-749-1616 / The Real Estate Group

Neighborhoods that feature homes under $200,000:

Princess Anne Plaza
Greenbrier

 

 

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