1. The Big Questions
The home buying process is far from easy. But before asking how to buy your first home, you need to ask an even bigger question — why are you buying your first home?
Is it for security, economic reasons, or because you just feel you should?
Once you have answered to your own satisfaction, it’s time to hash out the basics.
What’s your purchase timeline? What do you need in a house? What would you like in a house? What’s your budget? Which local San Francisco talent is going to represent you in the buying process? Will this house serve your needs in 5 years time? 10? 30?
Get concrete. Write out your answers in a word document so you don’t get blown off course by the inevitable twists and turns of the hunting/purchase process.
2. The Approval
You’ve hashed out the core questions in your mind. Now it’s time to hop on a mortgage calculator to work out the basics, and get pre-approved for a mortgage. You’ll be needing:
> Proof of income: think W-2 statements, pay stubs, and tax returns
> Proof of assets: bank statements and investment account statements
> Personal documentation: social, driver’s license, and a signature
> A solid credit score: we’re talking 740 or above
> Verification of employment: this overlaps proof of income, but lenders may want to call your employer as a safety measure.
The more prompt and cooperative you are with lenders, the faster the approval process. Of course, if you’re one of the lucky few paying up-front, none of this applies.
3. The Hunt
Congrats, you just got approved for your first mortgage! Now comes the fun part: house hunting.
Refer back to the set of parameters, needs, and wants you hashed out in step 1.
Before starting any conversations, get fluent in real estate terminology — for your own sake, and the other party’s.
4. The Offer
After more tours and open houses than you thought you could handle, you’ve wound up with a short-list of options. Offer time.
Most westerners are not used to haggling: things cost what they cost. But to get the best deal on your new home, you need to learn the subtle art of negotiation — a blend of reasonability, firmness, intuition, and proper tone.
Of course, your realtor should help you at every stage of the negotiation process — but no third party cares as much about this deal as you and the seller do.
Remember, there are no hard and fast rules for making offers on a house, just a broad set of considerations which include:
How under pressure is the seller. Are they moving? Recently divorced? What’s thrown in with the offer? Furniture? A nice grill? Appliances? What constitutes a lowball? Will this flag you and end negotiation early? Who is the seller? Building a personal relationship can smooth the transaction and mark you out from competing buyers
5. The Escrow
The word escrow is most closely associated with real estate, but it refers to any deal where a third party holds on to something valuable while the two sides are negotiating. Essentially, it minimizes the risk of the seller running off with a large scale money transfer.
In the home purchase process, an escrow officer will ensure all the conditions of your pre-agreed contract are met on both sides. They will also make sure all necessary inspections and qualifications are met on time.
6. The Homework
So you’ve got the escrow sorted, but what sort of due diligence has to be run? Some common house inspections include:
- General home inspections are surveys of a house’s overall condition. They encompass structural assessment, a look at the piping and sewage, the condition of appliances, and a rank ordered list of issues minor to major.
- Wood Destroying Organism (WDO) inspections look for termites and other insects that erode wood over time.
- Lead-based paint inspection tests for the presence of lead-based paint inside and outside the home – and is legally required for any home built before 1978.
All these tests and inspections may seem like unnecessary bottlenecks, but it’s better to get a full picture of what you’re buying before you close than after (when the pipes have burst and your garage collapses from wood rot).
7. The Final Week
The inspectors have done their job, and everything checks out. You’re one week away from being able to move into your new family home.
During this stressful 7 days you can expect a final walk-through of all legal documents, a review and signature of the closing documents, your final deposit, and the actual funding of the loan you worked so hard to get.
8. The Big Day
At long last, the day has come. You’ve put your foot on the property ladder.
In this pivotal 24 hours your escrow will close, seeing the middle-man off. Your deed will also be recorded — meaning it will placed into the official records of the County Recorders or Recorder of Deeds office.
And finally, you will receive the keys to your new home — a logistical consideration that feels equally symbolic.
With this thin strip of metal you now own your very own home.
All you have to do now is start and raise a family. Simple.
Bonus: Know Your Tools!
To help you in the buying process we’ve aggregated all of our most helpful tool in one place. Check them out below: