February 3rd, 2016 By Kristi Navarre in Blog
Getting an Income Tax Refund? Thinking of Purchasing Your First Home?
Here is what you need to know…..
So, you have worked really hard the past year and are getting a pretty sizable income tax refund. You are currently renting and thinking about buying a home.
What are the first steps? What do you need to know?
One of the most important parts of purchasing a home is financing the home.
1.The first thing you need to do is check your credit score. If you are not sure of your credit score, you can go to Credit Karma’s website to check your credit for free. In order to purchase, you will need at least a 620 credit score.
2. Find a reputable, caring mortgage lender and call or apply online to get pre-qualified for a mortgage. My preference for you is to go to meet with the mortgage lender since you are unfamiliar with the process. The mortgage lender should take the time to explain all the different types of mortgage financing and together both of you can determine which best meets your needs. The lender will tell you how much of a down payment that you need so that you can set that money aside. You will receive a prequalification letter from the lender.
3. Be prepared for other out of pocket monies that you will need. These include earnest money, monies for home inspection(s) and monies for appraisal. (You can ask the mortgage lender about this or discuss this with your real estate professional).
4. Begin to gather all the documents that the mortgage lender has requested from you including W2’s/1099, pay stubs, tax returns, bank statements. The lender will require a lot of financial information from you so be prepared.
Finding the Home
5. To help you find a home, it is wise to choose a real estate professional to be your agent, called a buyer’s agent. It is preferable to have your own representation rather than calling the agent who is listed on the sign in front of the house you want to purchase. This agent represents the seller.
In choosing a buyer’s agent, make sure that the agent is very experienced. As a buyer, you want to benefit from the agent’s knowledge and prior transactions to help serve you. You can certainly call several agents and interview the agents to determine a good fit for you. – Questions to ask your buyer’s agent could include how long have you been in business, how many transactions were you involved in last year, how many buyers did you assist last year? I would suggest a minimum of 5 years of experience and minimum 20 transactions per year.
6. Once you have chosen an agent, the agent will need a copy of your pre-qualification letter and will have an initial conversation with your lender. You and your agent should then discuss the out of pocket monies that will be needed for your purchase to ensure you are aware of the process and will have the monies ready at the appropriate time.
7. Together, you and your agent will choose the homes best suited for your loan. (Many buyers do not realize that a significant number of homes do not qualify for all loans. The job of your real estate professional is to help you choose homes that will work for your financing (saving you time).
8. Once a home is chosen, your agent will write an offer for you making suggestions about price (based on comparable homes sold), closing costs, days of inspection and many other items. This offer will be presented to the seller.
9. When accepted, your inspection will begin. Once the inspections are complete, the lender will order your appraisal.
10. At this time you will also begin working with your mortgage lender to begin processing the loan. If you have not already given all the paperwork (W2’s, bank statements, pay stubs, tax returns) to the lender, you must do so now.
After all these processes are complete, a closing date will be scheduled. You will arrive at the designated attorney’s office and sign all of your lender’s paperwork so that you can obtain the mortgage. Once this is done, keys will be given to you. Pop the champagne cork, the home is yours.
If you are interested in more information or in purchasing a home, I am happy to assist you. Call, text, email or message me through Facebook or my website. I would love to hear from you.
Kristi Navarre, Associate Broker, 770-841-1111 (cell)
*This information should be used only as an overview for a first time home buyer purchase.