Blog with MAE Capital

First Time Home Buyer 101

September 6th, 2019 2:56 PM by Gregg Mower

If you have never purchased a home before you are reading the right article.  This blog will give you some tips and show you the transaction flow of a typical Real Estate transaction.  These are the steps and the tips that will help you move smoothly through the process.

  1. Down Payment Requirement: Unless you are a Veteran you will need a minimum of 3.5% of the purchase price for a down payment, if you have more to put down great. If you put more than 20% of the purchase price as a down payment you will not have mortgage insurance in your monthly payment. If you are a Veteran, thank you for your service, and you will need no money to put down on a home. Know also that your Agent will ask you to put a earnest money deposit upfront when you make an offer on a home. The earnest money deposit goes towards your overall down payment requirement. If you are a veteran you could get that money back when the transaction closes, but make sure your lender know this upfront.

     

  2. Getting Qualified for the Home Loan: The next step you will need to be approved for your home loan unless you have cash to buy the house without a loan which most fist time home buyers do not. To prepare for this you will need to gather income items and bank account information. More specifically you will need to provide your lender with current pay-statements for the last 30 days, and you W2s for the last 2 years. You will need to provide tax returns if you are self-employed in any capacity such as a hairdresser or an independent contractor. You will need to provide your last 2 months of bank statements, investment statements, and retirement account statements to show where the money is coming from for your down payment. If you are getting a gift for you down payment you will need to provide a gift letter from the person gifting you the money and you will need to get a bank statement from them showing where that money is coming from. You will need to provide the lender with a valid picture ID as well. With this information your lender will be able to qualify you for a loan amount and a sales price and provide you with a letter of approval. Here at MAE Capital Real Estate and Loan we do all this for you.

     

  3. Shopping for your Home: After you have been approved for a loan amount and a sales price you now can start looking for home in your price range. It is highly recommended that you obtain a Real Estate Agent that works for you. This means that you want to have an Agent that does not represent the seller of the home you are interested in buying. I know we live in a digital world now where you can shop for house online, which is great as you get to see what is on the market in the area you wish to live in. It is not so great for you to use the Agent who also represents the seller as Real Estate law states that an Agent must look after the seller’s best interests first. Having your own Agent does not cost you a thing either, that is the best part, as when you buy a house the seller will your Agent from total commission already negotiated.

     

  4. Making an Offer on a House: Once you have found the perfect house in your price range you will want to make an offer to the seller to purchase their home. Your Agent will do this for you all you have to do is tell them what you would like to offer on the house. Your Agent should be able to tell you if there are any other offer that the seller has already received and the strategy that you should take to get the house. A good Buyer’s Agent will know exactly what to do in the market you are looking in. You should listen to the Agent as their advice at this stage can save you money and get you the house. The Agent will prepare all the paperwork and you will sign it, usually it will be done in digital signature form sent to you in your email where all you have to do is open and click. Once you have done this the Agent submits the offer to the seller. Be prepared to go back and forth if you have offered lower than the asking price. Once you have agreed on a price with the seller you now are in contract to purchase the house.

     

  5. Inspections: After your offer has become accepted by the seller you are officially “in contract” and within the contract are dates that all the buyer’s inspections must be done by. Your Agent will know the people that can get these inspections done for you in the times set forth in the contract. Inspections are very important especially for a First Time Buyer that may not know anything about houses and how they are constructed. These inspections will tell you the life of things in the home and the condition and if they need repairs. The pest inspection tells you not only if the house has termites or bugs it also tells you the condition of all the wood surfaces inside and out. You roof inspection will tell you the useful life left on the roof and if it needs any repairs. As a First Time Home Buyer you don’t want to buy a house that will require thousands of dollars of repairs after you buy it. Once you have received these inspections you will go over them with your Agent and they will recommend what, if any, work they want the seller to complete before you buy the house. Sometimes Sellers don’t want to do any work and it will your responsibility if you buy the house and sometimes sellers will do all the work you request them to do.

     

  6. Closing: Once all the inspections and work has been done on the house and the lender has everything they need and the loan has been formally approved they will issue a closing disclosure called the “CD” with a summary of the fees in the transaction and the final amount of money you have to bring to the closing Agent. You will have 3 days to review the fees and if they are not acceptable this is the time to get that fixed. If everything is OK on the CD you will have to wait 3 days before you can sign your final loan documents with a Notary. During this time you will have an accurate date to which you will own the house so take this time to move utilities, and set up people to help you move in.

 

This process is the same for every house you will purchase.  It looks an sounds complicated but your team at MAE Capital Real Estate and Loan we will walk you though the process and tell you what you have to do and when you have to do it by.  We try really hard to make a complicated process fairly easy.  We look forward to assisting you with your home buying needs.  Call us today at 916-672-6130 or click here to have one of our team members call you.


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MAE Capital Real Estate and Loan

CA DRE #01913783|NMLS #806170

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Rocklin, CA 95677