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Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
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Before you do anything else, find a mortgage lender and get yourself pre-qualified. Unless you're paying cash of course. I'll let everyone else chime in about the next steps.
Yes, local customs will vary. Find a lender and have them hook you up with a buyer agent or call a buyer agent and get them to hook you up with a lender.
Before you do anything else, find a mortgage lender and get yourself pre-qualified.
Unless you're paying cash of course. I'll let everyone else chime in about the next steps.
^This points out the distinctions between what the buyer/seller need to (or should) do...
and what the lender will require in order to borrow the money.
Too often buyers (and sellers too) will mix up which entity is asking for what.
(this assumes you will be financing your home). This also assumes you know the area wells and comfortable buying in that area.
1. Get pre approved for mortgage (or at least know ball park figure how much lender will let you finance a property for).
2. Select property and negotiate a price. Once contract is accepted. Normally earnest money deposit is required to be put in escrow. Normally anywhere between $1000-5000 earnest deposit. (this protects the sellers because they will be taking home off market potentially and losing valuable time once contract is signed and you the buyer get cold feet and want to back out).
3. Depending on contract, there may or may not be a home inspection (you pay for inspection). Normally $350-500 dollars. Unless seller insists on waiving inspection, spending $350-500 on inspection is well worth the money. Seller will normally have an "X" amount of repairs they will do. Normally they will set the limit anywhere between $1000-3000 or X percentage of purchase price. If repairs cost more, than contract can be voided.
4. Appraisal. Buyer (You). Pay about $350 for this. Depending on financing needs. If appraisal is lower than expected amount, than you as the buyer can back out of the deal if this will affect your financing. Say home contract is $500K. You plan on putting down $100K and financing the $400K. If appraisal comes back as $460K. Than for best rate, bank still wants you to put 20% down. That means the bank will only let you finance (460K-20%) so you either get seller down on price or you come up with more money to get down to bank's approved financing number.
5. Choose home owner's insurance (if you have a mortgage).
6. Wait and close. Financing may take anywhere between 3 weeks and 2 months. You need to get your act together. That means gathering W2's, tax returns for past 2 years (or longer if self employed). Investment accounts. Bank statements from at least the past 3 months clearly showing where money is coming and going. If you've recently applied for a line of credit, be prepared to write a letter and explain the reason for the credit application (new car? etc)
(this assumes you will be financing your home). This also assumes you know the area wells and comfortable buying in that area.
1. Get pre approved for mortgage (or at least know ball park figure how much lender will let you finance a property for). Do NOT "guesstimate" how much you think you'll qualify for. That wastes your time, your agent's time, and the time of sellers whose homes you'll be looking at that you think you can afford but can't.
2. Select property and negotiate a price. Once contract is accepted. Normally earnest money deposit is required to be put in escrow. Normally anywhere between $1000-5000 earnest deposit. (this protects the sellers because they will be taking home off market potentially and losing valuable time once contract is signed and you the buyer get cold feet and want to back out). Here, earnest money is negotiable but is customarily 1% of the sales price.
3. Depending on contract, there may or may not be a home inspection (you pay for inspection). Normally $350-500 dollars. Unless seller insists on waiving inspection, spending $350-500 on inspection is well worth the money. Seller will normally have an "X" amount of repairs they will do. Normally they will set the limit anywhere between $1000-3000 or X percentage of purchase price. If repairs cost more, than contract can be voided. Here (practice and laws vary from state to state), the seller doesn't get to waive an inspection. The buyer chooses whether or not to have one, and a wise buyer will have one, even if they are not going to ask for repairs. The seller can either agree to the repairs requested or decline to do them/give credit for them.
4. Appraisal. Buyer (You). Pay about $350 for this. Depending on financing needs. If appraisal is lower than expected amount, than you as the buyer can back out of the deal if this will affect your financing. Say home contract is $500K. You plan on putting down $100K and financing the $400K. If appraisal comes back as $460K. Than for best rate, bank still wants you to put 20% down. That means the bank will only let you finance (460K-20%) so you either get seller down on price or you come up with more money to get down to bank's approved financing number.
5. Choose home owner's insurance (if you have a mortgage). It's a very good idea to get homeowner's insurance even if you don't have a mortgage.
6. Wait and close. Financing may take anywhere between 3 weeks and 2 months. You need to get your act together. That means gathering W2's, tax returns for past 2 years (or longer if self employed). Investment accounts. Bank statements from at least the past 3 months clearly showing where money is coming and going. If you've recently applied for a line of credit, be prepared to write a letter and explain the reason for the credit application (new car? etc)
The more I think about it and the more experience I have over the years, the more I think #6 might be the FIRST step in buying a home - find all those items that you're going to need in order to be able to get approved for a mortgage to pay for it.
The more I think about it and the more experience I have over the years, the more I think #6 might be the FIRST step in buying a home - find all those items that you're going to need in order to be able to get approved for a mortgage to pay for it.
Depends how informative you are with your finances. The 3 homes I have brought I have never gotten a pre approval letter. I tell sellers I am putting at least 20% down. I buy homes way below my means. But a mortgage usually less than 3x ur income along with 20% down is a very safe guess. (once again assuming zero debt).
So if u make $100k. You should be able to get approved for a $300k mortgage easily unless you hAve other revolving debts and make 20% downpayment. There is very little guessing.
If you're getting ANY mortgage loan, they're still going to want to have documentation - the days of "just trust me" loans are long gone, and with good reason. So the first step should be to get all that paperwork together so that you're not up at two in the morning with a deadline breathing down your neck trying to find that one piece of paper that isn't where you thought it was but that you're not going to get a loan without.
I did that many years ago with the loan on the ranch (before I was a real estate professional), when we could have paid cash for it but had other uses for the funds. We'd refinanced the house in town a couple of years before, so I just went through all the things that the lender wanted for that and got the information and the paperwork together and took it with me on my first visit to the lender. That meeting turned out to be a LOT shorter than either one of us had expected because I was able to just hand her a list with the information she was going to get out of me with her long form, and I had copies of all the documents she needed, as well. Only bobble in that loan (which closed in half the time that loans were normally closing in at that period of time, and this was a farm and ranch deal, which normally took a LOT longer than residential) was our income/debt ratio - we didn't owe enough for the amount of money we made and they found that suspicious.
Depends how informative you are with your finances. The 3 homes I have brought I have never gotten a pre approval letter. I tell sellers I am putting at least 20% down. I buy homes way below my means. But a mortgage usually less than 3x ur income along with 20% down is a very safe guess. (once again assuming zero debt).
So if u make $100k. You should be able to get approved for a $300k mortgage easily unless you hAve other revolving debts and make 20% downpayment. There is very little guessing.
I would never let my client accept an offer without a pre-approval or proof of funds. If you bought these three properties through an agent shame on them. If it was via FSBO's then they didnt protect their own interest by not asking for either.
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