4 Steps to Buying Your First Home
Buying a home can be stressful or a total breeze. Our process was pretty easy and stress free so I'm going to give you the rundown of the steps we went through to get from point A (knowing we wanted to buy a home) to point B (closing day.) If you're planning on paying 100% cash, this post won't be as helpful for you since you don't need financing (lucky duck) so you can skip through all of that.
Ok, so you've decided you want to buy a home. Whether you're going to be a first time homeowner (SO EXCITING!) or this is a second home purchase+, you really need to evaluate what it is you're looking for and what it is that is pushing you to move. We had a lot of factors affecting our desire to move, but the underlying factor is that we knew we'd want to buy a home somewhere. The thing that kept us from buying sooner was simply not knowing where we wanted to live. For me, my career would flourish a lot faster if I was in Los Angeles or New York City. You need to be at events, in front of brands constantly, schmoozing, building relationships and living that social life. This is why we thought maybe we wouldn't buy in Tucson. However, the more I traveled to LA and NYC, the more I realized I didn't want that to be my home base. I'd be burnt out too quick, and I wanted to live a calm life. I wanted to make sure I wasn't distracted by the city lights and always out in the world, because at the end of the day I have a lot of computer work (admin work, tasks, etc) that NEED to get done. If I lived in NYC, I would literally never be at home, because I'd want to be out in the nightlife. I'd be out to dinner with friends until midnight, going to shows once a week and all the influencer events. That is what life would be like in the city, ok. Anyway, I digress but eventually I told Aaron I wanted home base here in Tucson and I can travel where ever.
You're in the market.
When I say you are in the market, I mean you are actively looking and planning to move forward ASAP if you can find the right house. The first step of being in the market (in my opinion) is ensuring you have a 20% down payment in cash ready for the house. This means you'd be looking for a house where the price is something you can afford 20% of, and of course a long-term payment. You can pick which financing option will make the most sense for you long-term, but if you are planning to get financing from a lender, you better have 20% in cash ready. While it's possible to get a home with less of a down payment, your initial application will be much more appealing if you can front that cash right away. Likely the seller will choose the person with the higher down payment and 20% is the average. If someone is paying in cash and you're financing, the seller will usually always pick the cash offer. But if it's between you putting down 20% or someone putting down 18%, then they'll always go with more upfront. That's super common.
Find a realtor.
We went back and forth on this part, because it had been a long time since Aaron had been in the market and I was a completely new home owner. I had barely ever even looked at Zillow before, and I didn't even know the first thing about financing for a home. Several friends told me I didn't need a realtor, and then the more I looked online, the more I realized it would be idiotic not to have a realtor. I don't pay any more for having a realtor. They are typically not an expense to you, but are taken out of the seller's fees towards you in the closing costs.
"Most often real estate agents get paid real estate commissions based upon the sale price of a property. The commissions of a real estate transaction are negotiable and tend to range anywhere from 1% all the way up to 10%. For our purposes here we will use a 5% commission rate example. So for a $250,000.00 property, the 5% commission paid upon the closing of that property will be $12,500.00. That does not mean that the agent walks away with $12,500.00. The broker of record will receive a predetermined portion of the commission." - Real Estate Express
If you choose not to have a real estate agent (and you are not a real estate agent yourself), the selling real estate agent will get all the commission rather than it being split 50/50. Therefore, it is in your best interest to get a real estate agent who will fight for you, get the cost as low as possible, ensure all the broken pieces throughout the house are fixed before closing day, and so forth. It's kind of like hiring an attorney because you need someone who is well versed and knowledgeable to fight for you and your well being in the purchase of the home. The realtor just doesn't come with the $500/hour price tag.
We went with Jim Jacobs, a real estate agent here in Tucson who works for Long Realty. If you'd like to explore using him, you can contact him through his website. He is extremely knowledgeable when it comes to Tucson, especially north Tucson and Oro Valley area. He's been in the game for many years, and I truly trusted his opinion. Not to mention he knew everything about our house (inside and out) before we put in a bid, which helped us negotiate a lot upfront.
As you explore the market, you tell your real estate agent what you're looking for in your new home and what you absolutely need to have in the house. Aaron's one requirement was that the house had a garage. I was the one with a list a mile long, and I knew i could totally make that garage happen.
Renovated or remodeled
Specific style of tile
Bright, lots of windows
Interior modern design
I'm not sure if you know the market in Tucson, but remodeled or renovated in the specific neighborhood we were looking in, was definitely not an easy find. A lot of houses were overpriced and not modern at all. One of my biggest pet peeves here is that people like carpet next to square orange tiles (southwestern style) and that is so not my style. I'm a millennial after all, houses might as well all become modern as more millennials buy homes. We waited for several weeks to see some listings, and by the time we found our realtor there were two houses that fit our very detailed descriptions. I called Jim and let him know I would see both houses first, before I decided to show Aaron. I made sure to take a lot of videos and photos of each property, so I could explain to Aaron what I had liked about my favorite of the two.
The first was in a beautiful neighborhood that had such a scenic drive, mountain views and it was truly just an experience getting to the house. It had everything we both wanted (checklist covered) and then the inside of the house was just insanely beautiful. The tile I'd always dreamed about, the fireplace I'd drooled over in my past life, and everything in between was simply perfect. There was something about the house that was just magical to me.
When we visited the second house, there was just something just so grandiose about it. Not to mention it was 100k more than what we wanted to pay, but I just felt like a guest in a potential home whereas the first house felt like home.
Once you're on the search for the house, and you feel you're closing in on it, I think you'd be better off with a mortgage lender that has some serious customer service. While you can always go with Chase, Wells Fargo and some of those larger corporations, I personally think it's ideal to go with a local company that will take care of you and get your paperwork in in a timely manner.
This is why we went with Sunstreet Mortgage here in town, and specifically Todd Abelson. Another expert who has been working with customers in town for years and years. He knows the process in and out, and his Office Admin, Dawn, was so on point. She helped us during the government shutdown time period and emailed us on the weekends. Both of them knew how important it was for us to win the house of our dreams, and they really went into overdrive for us which we really appreciated. Below, I broke down the step by step process of how you begin the mortgage lending process, all the way to when the house is yours.
You need financing.
Credit Report Pulled
Loan Pre-Qualification issued
Loan application taken & Loan Estimate (LE) Issued
Signed Loan application w/Intent to Proceed rcv'd
Loan term, rate and points have been locked
ALL supporting documentation rcv'd from borrower
Loan file Submitted to Processing
Evidence of insurance received
Loan File has been submitted to Underwriting
File approved by U/W WITHOUT conditions
Initial Closing Disclosure (CD) is being prepared
Signed Initial Closing Disclosure (CD) received
Loan docs sent to Escrow - Call Realtor for appt.
The wire funding your loan has been ordered
Your new loan has Recorded - Thank You!
Once the loan is recorded, the house is yours. Closing day is the day the loan comes through and you get the keys from your realtor. When I first started this process, I had no idea what I was doing. I went to 4 mortgage lenders in town, asked a lot of questions and a lot of them were snotty and didn't want to give me the time of day. Especially Chase (one of the big mortgage lenders) and this is ultimately why I went with Todd at Sunstreet. I wanted customer service, and I was okay with paying a little more in closing costs for the customer service he provided me. He answered my questions, he helped me understand how I'd find the right home (if it doesn't feel like home when you walk through it a few times it won't be home long-term.) Jim was the exact same way. They understood that buying a home for the first time (for me) was a really big deal and they walked me through the process. The customer service and help we got was incredible and I couldn't recommend this duo enough.