[MUSIC] Like any big investment, purchasing a house can be pretty complicated. How do you figure out what type of home that you can actually afford? What's the difference between getting prequalified or getting pre approved for a mortgage? Do you need a real estate agent and what is escrow even mean, basically, what is the process of buying a home? Being able to buy a home does require laying out some groundwork ahead of time. But it's not going to be super complicated by educating yourself in planning in advance, you can put yourself in a much better position and ultimately become a property owner. In this video, you're going to learn about the basic steps that are included in the home buying process. Start off by doing your homework. Before you even get started in your home search, you may want to get a sense for the lay of the land. This could be in considering the type of home that you'd like to buy and ultimately, what kind of neighborhoods you'd like to live in to begin with. Then you should do some research to see what similar homes have sold for in the recent past. That should give you a pretty good idea of whether or not your resources align with your dream house or whether you need to re-evaluate and take a step back. It might be a good idea to familiarize yourself with the home buying process. How much of a down payment you'll need to save and what it's going to take to qualify for a home loan lenders are going to have different factors that they review when they're approving borrowers for a mortgage. But typically your credit score and your debt to income ratio will both come into play. You can figure out what your debt to income ratio is by dividing your total monthly debt payments by your gross monthly income and then multiplying that result by 100 to get your overall percentage. Most lenders will also be looking to verify your income and looking at at least two years worth of steady consistent employment and that ongoing income, such as let's say, trust a retirement income that comes into play. Keep in mind that not all income sources are going to be eligible to qualify for a mortgage. Most conventional mortgages also require a down payment between 3% and 20%, or it could be a little bit less if you're going with the government insured via a loan. With a conventional mortgage, you're likely to pay private mortgage insurance if you put down less than 20%. Knowing this kind of information well in advance of actually looking for a home can ultimately help you get your finances in order, and then improve your chances of qualifying for a mortgage. Once you find that home, next up will be getting prequalified for a home loan. This is going to be the next step in the buying process and the overall timeline and you'll need to figure out what kind of home you can actually afford. One way that you can do this is by getting pre-qualified with a mortgage lender. This is going to involve the lender reviewing basic information related to your personal financial situation, and then providing an estimate for how much you may be able to borrow and at what rates you'd be able to borrow at. Lenders likely going to ask you about your income, your assets and then your debt. They may also do a credit check, although typically it might not be verified at this stage. Getting prequalified with several different lenders can help you get a sense of what kind of home you can afford. And it will allow you to actually compare what those monthly payments would be and interest rates would be with different types of lenders. Next up, you'd be looking to find an agent, it's not required, but the vast majority of homebuyers hired agent to help them find their house and help them ultimately seal that deal. You can hire you the realtor or a real estate agent to assist you in your search. Both are professionals that are licensed to help people buy real estate. Really, the main difference is that a realtor must belong to the National Association of Realtors, which is going to require them to stick to a code of ethics that includes honesty and putting a client's best interests before their own. Agents only get paid when you close on a home, depending on local customs, the seller typically covers the commission for both the listing and the buyer's agent. If you're bidding on a home that's up for sale by owner, then you may want to check with the seller about covering this cost. A realtor or real estate agent will help you find property listings that fit your preferences and help you visit them to make sure that they're up to your standards. Once you choose an agent, they can also help you write offers and counter offers along with attending inspections, helping you negotiate and overall working with you to make that deal. When any obstacles come up, when you're looking for an agent, you can start by asking around with people that you know for some recommendations. And you can look at even just signs that are in your area and what those names are and reading reviews online. It could be a good idea to reach out early on in this process and speak to multiple agents until you find the one that really feels right, and then maybe considered an expert in your area that you really want to buy home. And next up in the process would be getting pre approved for a mortgage. Once you're ready to start seriously looking for a home, most people really look to start locking down that funding, and you can do this by getting pre-approved with a mortgage lender compared to a pre qualification. This is going to be a more involved process. You'll fill out a detailed application and you're going to allow the lender to do a hard credit check to verify your finances. Once you're preapproved for a mortgage, you want to know exactly how much you can borrow and at what terms you'd be borrowing at. That's because the entire credit portion of the loan which includes your credit, your income and the assets are going to be verified at this stage. Remember that you don't have to take out the highest amount that you qualify for, if you find a more affordable home. In that scenario, you just ask your lender to adjust the preapproval letter based on the actual bid that you're going to be making on a home showing a seller the lenders preapproval letter. Typically it's going to be valid for let's say 90 days can help you rise above the pack. If multiple offers are in play and in a competitive market it may be a requirement to submit an offer. Next up, you look at shopping for a home and that's really going to be a part of the process where you start shopping for the home of your dreams. If you have an agent you'll probably sit down with hammer her and outlined the parameters of what you're looking for. Then the agent's going to start bringing you properties that might fit the bill and you'll attend some viewing some open houses and explore online. Honestly, these days, there's a ton more that you can do to jumpstart or your home search on your own. There's websites like truly a Redfin, Zillow, and others can help you find out about all the different properties as soon as they become available on the market. Next step in the process will be making an offer and this is once you find that perfect home, you're ready to make a formal purchase offer. This involves not only letting the cellar no how much you're willing to pay, but it would also provide some evidence that you'll be able to afford the costs and when you expect to close on the property. The offer also details what you expect the seller to do before closing when you look at this stage. Many buyers also provide earnest money, which is a deposit that can be up to 10% of the negotiated price. And the offer may include some contingencies which are ultimately going to be looked at as conditions that need to be met in order for you to proceed with the transactions. Some common contingencies would be a home or a roof inspection and this would be fairly common in an ultimate virus discretion. Others could be more based on the valuation or tied the loan approval or even contingent on the ability of you to sell your current home. If you currently live in a house that you would need to sell before purchasing a new house, there's all different types of inspections as well that are going to be common for you to take advantage of at this stage and used as a contingency. Next up will be closing on the home and moving in. This is the exciting part. Once you the seller, you're on the same page about the price the house goes into escrow. Really, this is going to be the part of the process where you make this transition. Your real estate agent at this point is going to help you make sure that any home inspection that you order takes place. And if there's any unwelcome surprises, the agent might need to help you renegotiate the selling price or go into the details and what you want to do about those unexpected surprises. If it's significant, you look at potential home repairs that may be needed or you can just have them make concessions in the selling price. Once that's all set, and you have the offer in place and everything is signed by the underwriter. You'd be issued a final loan approval. Following that, you'd sign the paperwork, take out the mortgage and you would finalize that home purchase. They can take a few days for the purchase money to wire and ultimately reach the seller and for the county records to reflect the transfer of the sale. And then that houses all yours and you can move in and enjoy your new dream home. [SOUND]
