Using your tax refund to pay down your mortgage can be a great way to…
How do you start buying your first Omaha NE home?
The hardest part about buying your first home is just knowing where to start. Do you find the home first? Do you meet with an agent? What about the home financing? It can all be a bit overwhelming. And the truth is most first time home buyers have a bad experience purchasing their first home simply because they started the process in the wrong place.
I will go through the step by step process to purchase your first home here.
I am a local mortgage broker serving Omaha, Papillion, La Vista, Bellevue, and all of eastern Nebraska. If you have questions on the Omaha housing market I’m happy to have a conversation with you.
- Getting pre-approved for home financing
- Meeting your agent for a consultation
- Making a list of what is important to you in a home
- Starting the home search
- Making your offer
- Starting your home loan
- Closing on your home
Getting pre-approved for home financing
I know you are going to say I’m biased since I do home financing, but starting with the financing is crucial. This goes against how most people finance their purchases. Think about it. When you buy a car you pick it out on the lot and then sit down to go over the financing. You probably got your Target card because you had a cart full of stuff and the cashier asked if you would like to save 10% off your purchase. We have been taught to find the stuff and then figure out how to pay for it.
…Home financing is different.
Start with a good loan officer
Whether you are three months, six months, or even a year out from buying, a conversation with a loan officer the best place to start. Even if it is just an email exchange, starting early with a mortgage profession will make a world of difference. The rules for financing are specific and something that you may think is minor could be an issue on your home loan approval. The sooner we can tackle any issues the better. Now here I am a bit biased, but you should be using a local lender that is familiar with the state and can sit down with you if needed to figure out your loan approval.
Complete an application
As a loan officer, I can answer a lot of your questions with just a conversation about your credit, income, and assets. But to really know if you qualify and what you qualify for you have to complete a loan application. This can be done online and it is where you provide all the details about your employment, income, assets, and provide me with the information to do a full tri-merge credit report.
Provide your documentation
After a review of your loan application the next step is to collect any documents needed. The standard documentation is your pay stubs, W2s, recent bank statements, and photo ID. This will allow me to confirm the information provided on the application. Depending on each buyer’s unique situation other documents may be required.
It is important to complete the application and provide the documentation before moving forward. Most buyers have heard some story from friends or family of a home purchase going south or falling apart at the last minute. Almost all of these are caused by an offer being accepted on a home when the lender has not collected all documents. What a buyer makes at their job and what can be used for financing can often be different. How much money the buyer has in the bank and how much of it can be used for financing can also be different. Only by providing your lender with all the documents will they know exact what can be used as qualifying income and assets. If a lender does not have a chance to review these prior to an accepted offer, a buyer can lose their approval while under contract.
Follow these dos and don’t while you are pre-approved and shopping
Just a quick list of things to do and not to do after you have been pre-qualified:
- Don’t take out new credit debt
- Don’t change jobs
- Please don’t make any large purchases…Tempting when you are buying a new house 🙂
- Don’t move large amounts of money into your account
- Don’t run up any credit cards
- DO inform your loan officer if any of these “Don’ts” cannot be avoided. If we know ahead of time we can plan around it.
Simple enough. Try to keep everything relatively the same and keep your loan officer in the loop about any changes.
Meeting with your real estate agent for a consultation
Okay so I know getting the house is the end goal of all of this, but there is just one more step before you start shopping. You need to meet with an agent, at their office or over coffee, for a buyer consultation.
Shopping for a house can be exhausting. You could be driving all over Omaha for several weekends looking at dozens of houses and still find nothing that fits your needs. You might not be able to totally avoid this marathon, but a buyer’s consultation can cut down on time and gas money.
A good realtor will want to meet for a consultation either right away or after you see your first house. The purpose of this consultation is to narrow down what is important to you in a home.
You can’t always get what you want
This can be the frustrating part about buying a home. Most buyers will be purchasing a “used” home. It will have been lived in and have flaws. A used home will have a bit of wear and tear. Sometimes you cannot find 100% what you want in a home. But, with a consultation, an agent can figure out what is the 80% that is most important to you. They can even help you figure out how to take that “almost perfect” house to perfect after you buy it. A good agent will also remind you that a pink bedroom can be fixed with a coat of paint. You would be surprised how many buyers pass on a near perfect house because they did not like the wall color.
Make a list of your priorities
Is the school system the most important part of your new home? Or is it the large backyard? I’m sure you have an image of what your perfect house would be. With a buyer’s consultation, your agent will be able to tell you where to find a house that fits all your criteria in your price point. They will also be able to tell you if your perfect house fits in your price point. This is another area where you might not be able to get everything. Perhaps your perfect house is just not in the price you are willing to pay, but an agent can narrow down what is most important in a home. With this information, they can make sure you are looking in the right areas.
Start getting the list of homes together
At the buyer’s consultation an agent will be able to put together a list of homes that might meet your wants and needs. Pick a few and get out there to start looking. If my team and I are your lender we can put together some rough numbers for each home. This is it! You are now looking at homes.
Start your home search
The buyer’s consultation should have narrowed down your home search to only the homes that will most fit your needs. But it can still take a while to find a home. That is okay. It is your agent’s job to show you homes so don’t hesitate to reach out to them if you see something you like online. If you see a home you do not like make sure to tell your agent the reason why. This will help them narrow your search even more. It is possible that after you get out there and start looking your priorities will change. You may have to adjust your price point or even go back to your lender to figure out some creative financing options.
I’d like to take a moment to look out for your realtor. This does not happen often, but a few times in the past home shoppers felt bad for asking their agent to show them so many houses. Rather than continue to “bug” their agent, they go out on their own to look at homes. In some cases they have even made offers directly with the listing agent at an open house. If you are no longer confident in your realtor or would like to switch that is totally fine. But if you like your realtor make sure to use their services every time you look at a home. They are their to protect you in your home search and in your contract negotiation.
Making an offer
This is it. The art of the deal. 🙂 Playing hardball can be fine…But there is such a thing as playing too hard. The important thing here is to listen to your agent. If your are making an offer on the house you want follow your agent’s advice. If they tell you the house is worth what they are asking or that there could be multiple offers on the home then don’t “low ball” the offer. Too many buyers, against their agent’s advice, make an extremely low offer thinking this will get the seller to meet in the middle. If your agent thinks this is a good idea by all means try it. But if they are recommending you put in a stronger offer then take their advice.
Making an unreasonable offer could leave you without a home
I have several buyers on my list that have been looking for almost a year. They continue, against their agent’s advice, to make offers on homes that will not get accepted. The desire to find a “steal” on a home is leaving them exhausted and discouraged. A good agent will make sure you get a fair deal so be sure to listen to them. If you need to be put in contact with a good agent who will be looking out for you, I can help with some recommendations. If you find the home you want make sure to submit an offer that has a chance of being accepted.
Starting your home loan
This is the fun part…Or at least as fun as taking out a huge loan can be. Depending on how long it has been since you submitted your documents for a pre-approval, we may need to update some things. A credit report last 90 days so if the closing date is more than 90 days past the date the credit was pulled, we will want to check that again. We will need updated bank statements and pay stubs as well.
Once we lock the loan in and you sign the initial disclosures (these will usually be emailed to e-sign) we are officially starting your loan approval process. Speed is important here. Personally my goal is always to clear everything except the appraisal and title report (these items are from a third party and can take a bit longer) in one week.
During the loan approval it is important to answer or return all calls, text and emails. Communication is key at this point. While I will try to get all documents needed at the beginning, the underwriter can, and often does, ask for items after they have reviewed. I will get that list out to you, but it is important to get those items back to me immediately. For the few weeks between the start of the loan and the closing we will be besties. I will reach out at least once a week and likely more until the close. A smooth home purchase requires participation from everyone involved. Your agent and I cannot get you in your home without your help.
Closing on your home loan
You should have received estimate numbers when you started your loan. The “estimated” part is what throws a lot of people off. I get it. You are making a major purchase and we cannot pin down exact numbers until after you have an accepted offer and we are well into your loan. But there is good reason for this.
First you are not just getting a home loan when you take out a mortgage. You are also setting up a new insurance policy for your homeowners and getting ready to start paying your property taxes. These items have to be calculated into your payment and into your final numbers. Often we do not have the exact amounts for these at the start of the loan. I can get close based on experience, but it is difficult to get exact.
There are also a few third party companies helping to close on your loan and transfer the deed to the property into your name. Primarily this is done by the title company. They will have their own set of fees for this service and it is tough to pin down the exact amount until title has been received. Because title is not ordered until you have a contract, we will not have these fees until after you have signed the contract.
I will do a full walk through of the final number and compare them to the original estimates so you are aware of any differences. Nine times out of ten it is the escrow that is a bit off. Don’t worry I will get those final numbers together as early as possible and give you that walk through.
Follow these steps and you will have a better home buying experience
We are always trying to find a balance between providing a stress free experience and staying compliant with all the regulations. Trust me I am on your side even when I keep asking for stuff and it gets on your nerves. Follow the steps above and you will have great memories of your home purchase.
Other useful links
- How to improve your credit
- The 20% down rule on conventional
- What is Escrow?
- How is income calculated?
- Why your assets matter
- Mortgage Calculator
- Is Credit Karma accurate?
- FHA vs Conventional, which is better?
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