How to Buy a House for First Time Home Buyers in 2020
Your Dream Home Awaits.
Buying a home is a huge investment — and it’s even more so when you’re making a purchase for the first time. Naturally, you want to ensure that your decision is a sound, wise one. And for first-time homebuyers, it’s normal to have plenty of questions, such as:
Where should I start?
How do I know if I’m ready to make such an important investment?
How do I set a budget for it?
What factors should I consider when shortlisting potential homes?
Should I get a real estate agent to help me?
Am I even qualified to buy a house in the first place?
Fortunately, this course on how to buy a house can address all those questions and more. This comprehensive, 10-step program teaches first-time homebuyers and newbie real estate investors the ins and outs of the purchasing process, from start to finish.
Through this course, you get to:
Find the right agent for your homebuying needs.
Easily get pre-approval for home loans.
Get the best bang for your buck and find the best home for your budget.
Become financially savvy and make mortgage payments without breaking a sweat!
Learn how to do DIY home maintenance to up your property’s market value.
Watch instructional videos and listen to lectures that walk you through the entire process of buying a home, from budgeting, bidding, to closing the sale.
And that’s not all! On top of those mentioned above, you get these bonus perks:
Get the advice of professional real estate agents. Have a question? Ask away! The course provides practical tips and suggestions from professional, licensed real estate agents.
Monitor your progress. After finishing a section, take a quiz to see if you’re ready to move on to the next step.
The course comes with Action Steps, complete with worksheets and forms, to spur and guide you on your homebuying journey.
Gain access to external resources. Professional advice and tips from trusted sources such as government agencies and realtor sites are easily accessible.
Stay updated. By enrolling in this course, you’ll get lifetime access to periodically updated material on homebuying and real estate.
At A Glance: Course Overview
Don’t be intimidated! This course is specifically designed to be newbie-friendly, especially to those unfamiliar with homebuying jargon and the processes involved in purchasing property. Don’t worry about being left behind either. This course is totally self-paced, so you can take your sweet time learning the ropes on how to buy a house.
In just 10 easy steps, you’ll finally realize your dream home!
Step 1 – Understanding the Basics
When is the right time to buy a house?
What does due diligence mean?
What’s the difference between renting and buying?
What are the requirements in purchasing a home?
What are my rights as a homebuyer?
Step 2 – Finding the Right Agent and Lender
Do I really need to hire a real estate agent?
Where do I begin looking for the right real estate agent for me?
How do I get started on home loans?
How should I look for lenders?
What makes a good lender?
Step 3 – Getting Pre-Approval
What does pre-approved mean?
Why do I need to get pre-approved?
What loans, grants, and programs are available for first-time homebuyers?
What are my options for home loans?
What is a good faith estimate?
What’s the difference between fixed and adjusted rates?
How do mortgages work?
What’s the significance of loan durations?
Which loan duration is best for me and my budget?
Step 4 – The Search
How do I begin house-hunting?
What’s a fixer-upper? Should I settle for one?
What’s the difference between foreclosure and short sale?
What are probate properties?
What should I watch out for when I’m looking at homes?
What are the make-or-break factors I should keep in mind when house-hunting?
Step 5 – The Shortlist
How should I finalize my search for the perfect home?
What type of property is best for me?
What are the pros and cons of each type of property?
What are housing cooperatives?
What are the must-dos and no-nos when drafting my shortlist of potential houses?
Step 6 – Budgeting and Funding
How do I get started on applying for a home loan?
What happens during loan processing?
What is home loan underwriting?
Step 7 – Making the Offer
When is it the right time to make an offer?
What factors do I need to consider before making an offer?
What mortgages am I qualified for?
My offer was accepted. What’s next?
What do I need to know before signing the contract?
What are contingencies for a home purchase?
Do I need to get a home warranty?
What is a pre-inspection agreement?
Step 8 – Getting Insurance
Why do I need to get home insurance? How does it work?
How extensive is the insurance coverage for exterior and interior damages?
How extensive is the insurance coverage for loss of personal belongings, as well damages caused by me and/or my family members?
What kinds of home insurance are available?
Step 9 – The Closing Process
What do I need to know about the home closing or settlement process?
What happens during a home inspection?
What should I look out for during a home inspection?
What warrants a renegotiation of home pricing?
What other details should I take note of before finalizing the deed of sale?
Step 10 – Settling Into Your New Home
What should I expect before, during, and after moving in?
What’s the difference between a bi-weekly and monthly payment?
What goes into the home maintenance checklist?
Buying a home is an intricate process. Aside from budget, there are other factors at play: location, insurance, size, shape, people to deal with (agents, lenders, sellers, etc.), and more. With so much going on, it’s easy to become overwhelmed. Thankfully, with this course on how to buy a house, you’ll be a whiz at purchasing your dream home in less than 3 months!
While this course is being offered to US residents only, there are no other prerequisites for taking up this course. As long as you are willing to learn everything about buying a house and are committed to becoming a smart, savvy homebuyer, you are fully welcome to avail of this course.
Step 1: Preliminary Research Phase
How to buy a house introduction
- Best investments you can make in a lifetime
- Can you afford buying a house ?
- Best investments you can make in a lifetime
- Allotting around 32% of your entire gross income towards funding your house
- Have as clean a credit history as possible
When should you buy a house ?
- Real estate follows certain market trends that influence the value of properties.
- Seller's market or Buyer's market
- Worst and best season for buyers
Due Diligence when buying a house
- Investigate the property
- Research is done even before the first offer is even made.
- Conducting property inspections and appraisals as well as doing environmental assessments, checking the zoning and insurance documents
Renting vs Buying a house, pros and cons of buying a home that you should consider:
- Build up equity
- Tax breaks given to homeowners
- Your principal and interest payments the same for the rest of the loan
- Your home is your investment.
- Home maintenance
- illiquid asset
- Home lose value
Requirements to buy a house
- Ordering a free credit report
- Eliminate your consumer debts.
- Approach a lender.
- Determine the down-payment
- Get your pre-approval letter.
Build up your team
- Real Estate Agent
- Mortgage Broker
- Real Estate Attorney
- Property Inspector
- Closing Agent
Keep yourself protected when buying a house
- Fair Housing Act.
- Real Estate Settlement Procedures Act (RESPA).
- Borrower's Rights
- Predatory Lending
- Should I (continue to) rent or buy?
- What are the advantages to renting or to buying?
- What are the disadvantages to renting or to buying?
- Where should I look?
- How much space do I need?
- How many bedrooms and baths do I want?
- Do I want to live alone or with friends?
- Do I want an apartment (or condo), a townhouse, or a single-family home?
- Do I want to pay more for a better location?
- How much would I feel comfortable spending on housing each month?
- What's the difference (if any) between a buyer's agent, a listing agent, and just a regular agent?
- How do I find a good agent?
Step 2: Finding the Right Agent and Lender
Why should I get a real estate agent?
- Real estate agents earn a high commission
- Do you even need a real estate agent?
- Paperwork is usually very hectic
- Negotiating - an agent's strong point
How do you get the best real estate agent?
- Talk with the clients
- Look up the license
- CRS - Certified Residential Specialist
- ABR - Accredited Buyer's Representative
- SRES - Seniors Real Estate Specialist
- National Association of Realtors
- Choose peer winners
- Look at credentials.
How to Select a house lander
- good broker will be able to find you a good lender
- lender with good credentials, a solid record, and proven ethics
- Senior Loan Officer
- Loan Advisor
- GFEs and TIL (Truth-In-Lending) statements
- Should I get my own agent (a buyer's agent)?
- Will I save money if I deal directly with the listing (the seller's) agent?
- Should I ask my family and friends for agent recommendations?
- How many agents should I consider and interview?
- What should I expect an agent to do for me?
- Who pays the agent? Will it cost me anything?
- What's the difference—if any—between a real estate agent, a Realtor, and a broker?
- How do I find the right lender?
- Should I consider a lender if my real estate agent refers me to him?
- Does it matter if I use a mortgage broker or a lending agent with a single lender?
- Should I talk to more than one lender?
Step 3: Getting a Pre-approval
Types of Home Loans
- VA (Veterans Administration) Loans.
- FHA (Federal Housing Administration) Loans
- Conventional Loans
- Fixed vs Adjustable Rates
- Loan Durations- 15 years vs 30 years
- 15-year loan allows you to pay your mortgages faster
The Pre-Approval and Good Faith Estimate
- Good Faith Estimates
- Pre-Approval Letters
Why Get Pre-approved before buying a house?
Significant difference between being simply pre-qualified and being pre-approved. Pre-qualification is nothing more than a verbal approval that gives a potential borrower the basic guidance on which price range. It is based solely on what you declare. In contrast, pre-approval is a complete process that requires you to submit documents relating to your income and your assets.
- You have never owned any real estate.
- You have not owned or have not had any ownership interest in your principal residence for the last three years.
- You meet the income and the purchase price limits, as well as the credit score (which may vary greatly depending on the institution.
- You purchase a home within a designated area (mostly for those programs issued by the state or local government.
- You should purchase a specific kind of residence -- usually, these are single-family properties. This mostly excludes mobile homes and properties with more than one unit.
First Time Homebuyer Grants
There are also specific grants that are given to first time home buyers, coming from Federal agencies. Unlike loans or mortgages, grants are not to be repaid. Usually, these programs are meant for areas that the government is targeting for revitalization purposes.
- American Dream Grant
- HOME Investment Partnerships Program
First Time Home Buyer Loans
Just like in the programs and grants, first time home buyer loans are also meant to help make the entire process more accessible. While we have discussed some special loan types such as the VA and FHA, you do not necessarily have to male these loans. There are specific first-time loan programs
- What is a pre-approval?
- What is a pre-qualification? Is that different from a pre-approval?
- Should I get pre-approved or pre-qualified?
- What documents will the lender want?
- How long does it take to get pre-approved or pre-qualified?
- Once I'm pre-approved, does that mean that they've got to give me a loan?
- After I get pre-approved, are there things I should or shouldn't do? [Example: buy a car]
- One I get pre-approved, how long is that good for?
- If I don't get pre-approved or pre-qualified, what do I do then?
- If I'm turned down by one lender, will I be turned down by all of them?
- Are there grants or programs for first-time homebuyers?
Step 4: Looking at Homes
How to narrow down your home search
Even without the finances in question, there is always a certain difficulty when deciding to choose between one home to another. What more if you are given a full list of homes with attractive characteristics? There are a lot of major deciding factors, such as the quality of the community, the quality of the school district, the commute time to your office, and to other areas you need access to, etc.
Types of Home Status
- Foreclosure vs Short Sale
- Probate properties
Previewing homes for sale
Three different ways that a buyer can view a home nowadays -- personally, through an open house; virtually, through the Internet; or vicariously, through the eyes of the real estate agent.
- Do I select the homes to look at, or does my Realtor?
- I've found homes online that my agent says aren't available. Why is that?
- If I find a home on my own, is it OK to contact the listing agent myself?
- How specific should I be with my agent about the type of home I want?
- Do I tell my agent how much I want to spend? (If I do, won't he/she just show me properties at the top of my budget?)
- My agent keeps showing me homes that aren't what I'm looking for. What should I do? Should I get another agent?
- Are foreclosures (or short sales) really good bargains?
- Should I consider a fixer-upper?
- If I buy a fixer-upper, can I include the fix-up costs in my mortgage?
- Should I consider FSBOs (for sale by owner)?
- How can I tell if the community is safe?
- How can I tell if the nearby schools are good?
- How can I tell if someone died in the house I'm looking at?
Step 5: How to Choose the Ideal House ?
Strategies to lock down the ideal house
minimum of 10 properties personally: We have already discussed the different techniques you can use in order to narrow down your search for the ideal house. At the start of that session, however, we made a disclaimer: we discounted the financial factor. This time around, we will include just that and all the other things you need to know in order to finalize your search.
Single family house.
- Zero-Lot-Line Home.
- Patio Home.
- Multi-family Housing
- Duplex, Triplex, and Quadruplex.
- Housing Cooperatives
Top 5 Mistakes to Avoid when shopping for a house
- Buying with the intention of moving
- Putting down a nominal downpayment
- Never forget to put everything into paper
- Never be too complacent
- Brand new is not for everything
- What's a condo?
- What's a coop?
- What's the difference between a condo and a coop?
- What are the advantages and disadvantages of buying a townhouse?
- What are the advantages and disadvantages of buying a single-family home?
- If a house has well water, is that good or bad?
- If a house is on a septic system, is that good or bad? If the house is just a block from a school, is that good or bad?
- Should I buy a new house or a pre-owned one?
- What problems is a house built in the 1970s likely to have?
- What problems is a house built in the 1950s likely to have?
- How important is a garage?
- Is a house with a swimming pool good or bad? Should I buy a house that's underneath high power lines? I like a house, but my [spouse, partner, significant other, parents] doesn't. What do we do?
Step 6: How to Get the Funds
Submitting the Loan Application
When applying for a loan, you will be asked several questions and asked to file a lot of documents. It may actually feel like the most complicated financial task you will have to undertake. But the entire process can be cut down into clear steps.
Home Loan Processing
During the processing of the loan, the verification is performed. This is the most significant part of the entire application, when the lender checks the validity and authenticity of all your submitted documents. They also make sure that all data submitted has been completed. Among the details that will be checked are your:
- Employment details
- Bank statements
- Other debts
Home Loan Underwriting
The loan underwriting process is initiated once the lender has verified that all the paperwork has been completed. The underwriter is an agent from the lending party, whose job is to review the guidelines under which the loan can be approved
- How long does it take to get the mortgage if I was pre-approved?
- How long does it take to get the mortgage if I was not pre-approved?
- If I've been pre-approved by one lender, can I go to another one to get the loan?
- If I'm buying a house for $300,000, how much will the lender lend me?
- What happens if the house I'm buying for $300,000 appraises for $400,000, and I'm applying for an 80% loan?
- Does that mean that the lender will lend me 80% of $400,000—or $320,000?
- Can I borrow my down payment?
- What is a co-signer?
- How do I know if I need one?
- I know someone who is willing to co-sign, but he says he wants to get off the loan in a few years so that he can buy his own place. Will that be a problem?
- Why is there a difference between the interest rate I was quoted and the “APR”? Mortgages usually include not only principle and interest (the loan) but also taxes and insurance. What if I want to pay the taxes and insurance myself?
- What are the different types of loans?
- I'm planning on renting out a room in my home to help pay for the mortgage. Does this affect how much I'm able to borrow?
- Are there any 100% loans where I don't have to provide a down payment?
Step 7: Making the Offer
Things to consider before making an offer
- What things should you consider?
- What are your long-term goals?
- How much (and what type of) mortgage do you qualify for?
- How much cash do you have on hand?
- What does your agent say?
- What can you say?
Home Buying Negotiation Tips
Contingencies for the home purchase
The standard contract will always include different conditions that have to be met before the closing takes place. This covers issues like inspections, insurance, financing, and a lot more.
Making the Counteroffer
Since negotiation is a matter of convincing the other party, learning how to break a stalemate through a counteroffer is an essential skill. Technically, a counteroffer is simply when one party changes the terms of the original offer. Legally, this has the implication of voiding the original offer.
- Should I offer the listing price for the property?
- What's considered a “low ball” offer?
- When I'm buying a house, do the appliances come with it?
- How do I know what repairs the house needs?
- How do I know what those repairs will cost?
- How much should my earnest money deposit be?
- Who does the earnest money go to? The other Realtor? The seller? Someone else?
- When a house is owned by a bank (a foreclosure), is the bank willing to negotiate on price or repairs?
- How do I find out if there's mold in the house? Or a radon problem?
- If the seller isn't offering it, should I ask for a homeowner's warranty?
- I made an offer and the seller came back with a counter-offer. What are my options now?
- I made an offer and the seller rejected it. What are my options now?
Step 8: Getting Home Insurance
Why you need Home insurance?
With all the safety tips we have discussed so far, you would think that you are already perfectly covered. There is the title insurance, a home warranty, and others. However, this is just the tip of the iceberg.
What does Home Insurance Cover?
- Coverage for interior and exterior damage
- Coverage for loss or damage of personal belongings
- Coverage for damage caused by you or family members.
- Coverage for allowances while your home is being rebuilt.
The Impact on Premium when filing a claim
The most part, homeowners would rush to the insurer's office to file for such a claim. However, it will be in your best interest to think twice about this decision -- filing a claim can have a major impact on your premium, even if the accident was minor and was not your fault.
- Are different companies all going to charge me the same amount?
- My real estate agent recommended an insurance company. Is that good, or is my agent just getting a kickback for the recommendation?
- What does homeowner's insurance cover?
- What does homeowner's insurance not cover that I'll have to get other coverage for?
- If my home needs repairs and I need to move out for awhile, will my insurance cover my living expenses elsewhere?
- What affect my insurance rate?
- Can my insurance costs be affected by something the previous owner did? If so, how can I find out what the owner did?
- I'm going to buy the house, have it rehabbed, and when that's done I'll move in. How will this affect my insurance?
- If a tree on my property falls over and damages my neighbor's home, whose insurance pays for the repairs?
- If someone's visiting me, slips, and gets hurt, will my insurance cover that?
Step 9: The Closing Process
Home Closing or Settlement Process
Closing or “settlement” as it is known elsewhere is used to denote a point in time when the title to the property is transferred to you, the buyer, and a mortgage (or “deed of trust”) is given by the buyer to the lender.
The Home Inspection: What does it cover?
The home inspection process is a visual one. It looks at the structure and components that may not be performing correctly or those that may be potentially unsafe. If a problem is found, the home inspector will describe it in a written report
Issues during Inspection?
- Roofing problems.
- Leaking windows, inefficient doors
- Bad grading and drainage
- Cracked or sinking foundations, termite-damaged or rotting floors, and falling windows/door headers
- Electrical issues, heating defects and defective plumbing
Renegotiating Home Price
How exactly does one renegotiate the price when significant physical problems are found with the property?
- Do I choose the settlement company, or does the seller?
- If I choose, how do I decide on a company?
- I've heard of doing a final walk-through of the house the morning of closing. Why do people do a final walk-through?
- What happens at closing?
- How do I know how much money to bring?
- Will someone explain all the papers I'll be asked to sign? If so, who?
- If I'm married, does my spouse have to be on the deed and on the mortgage?
- If I'm not married, can my partner be on the deed and on the mortgage?
- How long will closing take?
- I had a home inspection and the inspector found some problems. The seller agreed to have them fixed. How is this handled at closing?
- As soon as all the papers are signed, am I the legal owner of the house?
Step 10: Finally ! Settling into your new home!
Getting the keys and moving in your new house
Home Maintenance checklist (Monthly, Quarterly, Biannually)
- Inspect, and even change out the HVAC filters when needed
- Clean the kitchen sink disposal
- Clean the range hood filters
- Inspect fire extinguishers.
Quarterly and Biannually
Home Maintenance checklist Annually by Season (Spring, Summer, Fall Winter)
The Mortgage Payment, Explained
- The Principal
- The Interest
- The Tax
- The Insurance
Biweekly vs Monthly Mortgage Payment
Talking about the mortgage price and duration, you might have received a note from your mortgage providers that you will be able to chop off from six to eight years from your loan by paying every two weeks instead of every month. The logic is that paying more frequently does not allow the interest to build up too much, and the years equating to the interest can be eliminated altogether.
- When can I move into my new home?
- Should I have all the locks changed?
- When do I contact the utility companies about switching the utilities over to my name?
- How do I find out about things like garbage pickup?
- When do I contact the moving company about moving my possessions into my new home?
- How do I find out about the homeowner's association (if there is one) and any rules and regulations, especially affecting the exterior of my property?
- How do I know where to send my mortgage payments to? And condo association or homeowner association dues?
- How do I get information on service providers for the property—appliance repair, pest control services, gutter cleaning services, etc.
- How do I find out how to operate the equipment? Such as the furnace, HVAC, alarm system, or sump pump.
- I moved in and a month later the furnace needed a repair. Who pays for the repair?