The current coronavirus crisis has led many people to contemplate their living situation: a small one-bedroom apartment with no yard is fine when the city’s restaurants, cafes, movie theaters and other entertainment options are open, but when a long winter is looming, space, both indoor and outdoor, seems especially attractive.
As contradictory as it might sound, there are many people looking into buying a house right now, and many of them are first-time buyers who are going in unprepared. But, says Lisa Palmer, a senior loan officer at 1st Security Bank of Washington, the home-buying process — while it can feel overwhelming — can be easy to navigate by following a few simple steps.
1. Meet with a loan officer and assess your situation. “I really love to have an initial appointment with new buyers,” Palmer says. She spends as much time as it takes with her clients to give them the lay of the land. “That information arms them for every mortgage that they may get,” adds Palmer. “It’s more about a willingness to spend time before they jump in.”
2. Get your paperwork ready. First things first. Break out your W-2s, tax records, bank statements and other financial documents from the past two years. Prepare for a credit check. Gather any other documents that show how much money you’ve been making, saving, and are on track to make in the coming months. Self-employed people will have to do the same but might have to dig deeper for more records to demonstrate long-term stability.
3. Get pre-approved. Once those documents are in hand, says Palmer, prospective buyers can fill out an application and get one of the two levels of approval before meeting with a real estate agent: pre-approval with automated underwriting, or a “true credit” approval from an underwriter. “But most agents really love to have the full credit approval by an underwriter,” says Palmer.
4. Find a real estate agent. Once you’ve talked with a few agents, you’ll sit down for an initial consultation. Heather Dolin, a real estate agent with Windermere who specializes in the Seattle urban market, says she will ask a series of in-depth questions that go beyond cost and number of bedrooms. “Sometimes it’s like, ‘Well, we want an office or two,” and that office doesn’t necessarily have to be in an official bedroom. So it’s not just the number of bedrooms and bathrooms, it’s how they’re going to use them and where they are in the layout.” Dolin will also want to know if the buyers want a move-in ready property or a fixer-upper, if they want a single-family home or a townhouse or condo, and how much outdoor space and storage they need.
Since the real estate agent will have your pre-approval in hand the clients will know the boundaries of what you can pay. “Sometimes people are approved for more than they want to spend. So I just tell them to determine what their comfortable price point is, as it relates to their monthly payments, and then we can look based on that,” says Dolin.
5. Go house shopping. Now comes the fun part. Many first-time buyers have spent years idly window shopping online, looking at apartments and houses for sale and dreaming those dreams. Now, you get to shop for real.
6. Get the dream home inspected. Once you know which house you want to bid on, you have to jump through several more hoops, including getting an inspection, which will determine if you are buying a money pit with much-needed repairs not visible to the naked eye, such as plumbing or roof fixups. In competitive situations, sometimes sellers will offer to pay for the inspection; but sometimes it’s wise to do your own.
7. Make them an offer they can’t refuse. You might be surprised to learn it’s not always just the biggest bid that wins. Here’s where getting a good home-buying team comes in handy. Heather recalls a first-time buyer, a couple looking to bid on a house for $861,000; and even though their offer was $13,000 less than a competitors’ bid, they were the winners of the bidding war. “Not all pre-approval letters are created equally,” says Dolin. The preapproval process needs to be thorough with all of the I’s dotted and T’s crossed. It can soothe the nerves of an antsy seller. “It’s emotional for people,” Dolin says.
8. Teamwork makes the dream work. After the real estate agent has the bid, the process circles back to the bank for the purchase contract, where the finer details of the home are sent for final approval to an underwriter.
Whatever you do when shopping for a house, says Palmer, don’t go it alone. “First-time homebuyers should not be fending for themselves trying to figure out and negotiate the mortgage stuff,” Palmer says.
Dolin agrees: “I always tell my buyers that they need to build their team to have a successful buying experience,”
9. Move in! After everything is approved, one of the final steps is making it through the mandatory three-day waiting period. After that, you sign the papers, the loan closes and finally, the big day: you can move in. Congratulations, you’re a homeowner!
At 1st Security Bank of Washington, we take a personal approach. We live in the communities we serve, so our branches are tailored to their communities. We believe that relationships make the difference, and that sets 1st Security Bank apart.