Entering the real estate scene as a first-time homebuyer might make you feel like you’re trying to gulp down water from a fire hose — an overwhelming rush of jargon and complexities. But don’t let that initial overwhelm stand in the way of your homeownership dreams!
You certainly don’t have to tackle it alone — here at Team Goché, we’ve got your back! I sat down for an IG Live (watch it here) with Team Goché team member, Maria Ta (@hanhstayshome), our go-to agent for first-time homebuyers, and we broke down the home buying basics, covering:
- The financial prep needed for your first home purchase
- Unpacking why you should buy a house
- Making the shift from renter to homeowner mentality
- Navigating negotiations, earnest money, inspection periods, appraisals, and more!
Over here, we’re strong believers in getting a head start. So even if you’re just thinking about buying a home in the next few years, now is the perfect time to start gearing up and building your home buying team!
Let’s dive into the nitty-gritty together…
If you’re new here, I’m Lauren Goché — a Portland realtor with a decade of experience backing me up. Which means I’ve weathered more than a few market shifts over the course of my career, and specialize in making sure you can make the most of the market for your goals. Read more about me here.
Meet Maria Ta:
Maria (@hanhstayshome) is one of the trio that is Team Goché! Her focus is on buyers, specifically folks who are only buying, not selling.
As a first-generation Vietnamese American from Philadelphia, she’s experienced housing insecurity firsthand. When the pandemic hit, she took a leap of faith and moved to Portland. Since then, she’s been passionate about helping others achieve homeownership, a dream that often feels out of reach for many like her who grew up in unstable housing markets.
When she’s not assisting buyers, she’s exploring Portland’s culinary scene, playing video games, discovering hiking trails, or spending time with her dog, Heidi.
Benefits of Being a First-Time Homebuyer
You might be asking yourself: why should I even buy a house? There are plenty of reasons why, here are our top 3:
Reaching Housing Stability
Over here, we’re no strangers to the difficulties of housing insecurity, it’s something both Maria and I have personally grown up with — and gotten out of! Having a home, a place that’s truly yours, where you don’t have to worry about rent hikes or sudden eviction notices will give you a feeling of stability like no other.
Building Generational Wealth
Here’s a fact: The majority of wealth in the US comes from real estate. Investing in real estate is the most consistent way to reach financial stability — it sure has been for me. Buying my first home helped me get out of credit card debt AND buy my current home… Truly life changing stuff.
Home Sweet Home for Everyone — Including your furry pals
Let’s not overlook the perks of owning a home for your furry family members! Picture a house with a backyard where your dog can run free. It’s not just about you; it’s about creating a space where everyone – pets included – can feel right at home.
So, why own a home? Well, when you think about it, the real question is: why wouldn’t you want to?
Step 1: Find Out What You Can Afford
Before we even tour, you need to get pre-approved for a loan. So, how exactly is it determined what you can afford? It’s a mix of factors like your down payment, existing debt, credit score, and annual income.
The good news? You do not need 20% down to get started. In fact, for conventional loans, you can go as low as 3% plus another 2% for closing costs. So in total, you’ll need a minimum of 5% down for your home.
Preparing Your Finances
Here are the things you have to prepare financially to buy:
- All your W2s from the past few years
- Statements from your checking and credit accounts
- Your Debt-to-Income Ratio (DTI). That means any debts you might have, whether it’s a car loan, student loans, or credit card balances.
Talking to a lender
Believe it or not, who you choose as your lender is just as important as who you choose as your realtor. We suggest you literally plan this years in advance, so reach out to us now (especially if you’re self-employed) so we can connect you with the best of the best. They will strategically coach you through what debt to pay down first and how to increase your credit score so you get the most bang for your buck.
In my ten years in the real estate game, I’ve seen the magic a great lender can pull off.
What if your budget is a little tight?
If you realize during discussions with your lender your budget is tighter than expected, it’s time to get creative. Maybe it means a plan to pay down debt in the next year. Or you might need to be flexible in deciding between a lengthy commute or a different area than you were originally considering.
Step 2: House Hunting
Let’s say you saved up diligently for your down payment, you worked on lowering your debt with the expertise of a lender, and you’re pre-approved. That’s when you find a realtor… which you already did — Congrats you’re ahead of the game.
Now comes the fun part – house hunting. We’ll meet up and chat about your current and future needs, what you’re looking for, and your deal breakers. Then the fun begins!
Things you should be thinking about:
When looking at homes, we’ll be coaching you on going from a renter mentality to homeowner mentality. If it’s your first time looking at homes, you’ll likely get seduced by the cute homes, but renters tend to forget you can easily change things like paint colors because, hey, you haven’t been able to. That’s why we always preach Buy Ugly, Sell Cute,
What we suggest you should pay attention to is the location and the internal layout of the home. Try to visualize what your lifestyle will look like, including your morning/evening routine and commute to work.
Things we are thinking about:
As you’re visualizing your future life in a home, we’re looking at:
- Is this house going to need a ton of work in the next 10 years?
- How old are the systems; water heater, furnace, etc.?
- What if you want kids in the next 5 years?
- What’s the neighborhood like, how far off is it from a busy street?
- Gutters.
- … and we’re not even going to say shit until we see the basement where all the secrets are held.
The time-frame on the house-hunting process can vary. Sometimes it takes months to find the right home and sometimes you just see three houses and you fall in love! We’ve seen it happen both ways!
Step 3: Making an Offer
Let’s say there’s a house you love and we don’t hate it (believe me, we tell our clients no to waaaaaay more houses than we say yes to), how do we make an offer?
We have a solid system on this that we will go through together. The offer will include:
- how much should you offer if there are other offers on the table,
- what type of loan you will be using
- how long you have to inspect the property (usually 10 business days, but could be a lot shorter depending on how competitive the property is)
- when you would like to close on the deal (standard is about 30 days)
- a lot of other details!
During this time you will also have to disclose your down payment funds sources (i.e. if it is gifted from family) and come up with your earnest money. Earnest Money is a portion of your down payment which is a deposit made to show that you are serious, or “earnest”, about purchasing a property.
Step 4: Inspection Period
The inspection period and what it entails is the part most buyers are nervous about. Which is fair — it is a big deal. Here’s what to expect:
As soon as the offer is accepted we will schedule inspectors to inspect several aspects of the house, especially to look for health and safety issues. This usually includes a general home inspection, a sewer scope to make sure that everything is in order in the sewer, radon testing, and underground oil tank inspection, and any other inspections we deem are needed, etc.
This usually costs $900 to $1200 depending on how big the home is, and what additional inspections we need.
What if it’s in way worse shape than we thought?
Let’s say we find a million things to repair and decide it’s definitely not worth it? In that case, we officially terminate the transaction within the inspection period. You are entitledto get your earnest money refunded in this scenario.
What if we like it but it needs some work?
This is when we negotiate credits or seller repairs based on results of the inspection. We get a couple bids from different contractor about necessary repairs, then we go to the sellers and see what we can negotiate in your favor.
Sometimes the seller doesn’t give you anything. Sometimes they agree to do the repair before closing. Other times the seller will credit the amount of the bid to pay for closing costs so you have more cash in your pocket to do a repair yourself, after you close.
Step 5: Receive Seller Disclosures
In most cases, the seller will provide you with Sellers Property Disclosures. The intention is to inform you of any deficiencies that the seller knows about and help you understand the home’s history. Although sometimes they aren’t super informative. In our experience, it could be jam-packed with info and awesome, or mostly useless.
Step 6: Appraisals
The appraisal is ordered by the lender to ensure that the property’s value matches or exceeds the agreed-upon purchase price. This step is crucial for the lender to determine whether the loan amount requested by the buyer aligns with the property’s appraised value.
If the property is appraised for less than the purchase price, it means the bank might not lend you enough money for the full price. This can play out in a few ways:
- you might need to bring extra cash to make up the difference between the appraised value and the agreed-upon price
- the seller can agree to drop the purchase price,
- you can strike a deal in between the two scenarios above.
- You decide to walk away from the deal. In this case, you would be entitled to get your earnest money back.
If the property is appraised for more than the purchase price it means that you already have built-in equity — that’s when you celebrate!
Step 7: Closing the Deal
Closing is when all of the hard work you put in comes to fruition. The typical closing timeline is around 30 days. Signing day should be a stress-free process, guided by the escrow officer, where you’ll sign all of the loan and title documents. A day or two later, is closing day! And on that day all you really have to do is show up, get the keys to your new home, and celebrate your achievement! Congratulations!
You just bought a house! That wasn’t so bad, was it?
Wrapping Things Up…
Here is a breakdown of what to expect when buying a home:
- Step 1: Find Out What You Can Afford
- Step 2: House Hunting
- Step 3: Making an Offer
- Step 4: Inspection Period
- Step 5: Receive Seller Disclosures
- Step 6: Appraisals
- Step 7: Closing the Deal
We know that was a ton of information, especially for you first-time homebuyers, and it might sound super intimidating. But remember, there are no dumb questions, and we’re here to answer your questions over and over again.
We’ve Got Your Back
Are you thinking of entering the real-estate game? Come buy a house with us! Get in touch super duper early so we can start preparing you way in advance.
