Home Buying 101: The First Step
Searching for a great home means searching for a great lender.
Interested in buying a home but aren’t sure about where to start? Talk to a lender first, before looking at any houses. I know, I’m sending you somewhere else other than me! It’s important to have a budget so the home search is narrowed down to homes you can afford.
A lender will ask for some basic information to be filled out in an online application. This is the absolute first step to buying a home! Do not skip this step!
Basic information will include income and any debts you have (like a car payment, rent, or student loans), and they will run a credit check. The better the credit, the better deal you’ll get on your loan!
If you’re worried about mistakes you’ve made in the past or are working to repair your credit, a lender can also help direct you on where to focus first to get the fastest and best results at raising your credit score. I always say that bad news doesn’t get better with time. If you want to raise your score, there’s no better time to start than today!
Once the application is filled out, a lender will provide a pre-approval letter and shopping may commence! Any offer submitted must have that pre-approval letter attached to be considered by the seller.
Assemble Your Team.
Your realtor and lender make up part of your home buying team. They will work together to make sure you can qualify for, and purchase, the home you want. Often they will communicate during offer submittals and negotiations to ensure the offer made is within the means of the buyer.
Then you’ll join your trusted local realtor in searching for homes, which can be the fun part!
That is a lot to think about.
I have your lender fears covered. Check out this interview with Austin Foss, a local lender here in Central Texas.
Hey friends it’s Kathy Sokolic here with you today again and today my guest is austin foss and he’s with mutual of more of omaha and he’s a mortgage lender so we’re going to talk to him about uh what it takes to get a loan and buy a house and maybe some misconceptions that people might have about the home buying process hey austin
hey kathy thanks for having me really happy to be here
yeah so tell me a little bit about uh mutual of omaha
first so mutual of omaha has been around for over a hundred years we started out um as a company mostly just doing insurance so you know home insurance auto insurance stuff like that and then we branched off into mortgages you know 50 60 70 years ago before i was walking the earth and you know huge company i think it’s very good because it bridges the gap between a very small company that maybe doesn’t have as much capital behind it and a big big big huge you know quote-unquote big box lender you know like the big banks that you see and you know for example like chase wells fargo or something like that it’s kind of in the middle so i think we’re very very fortunate as far as that goes um everything is done in-house as far as underwriting processing funding we are the banks so we don’t have to send it out to six other places for underwriting too so it’s a great very streamlined process for all of our clients
that’s awesome um you know i have a lot of clients who uh think that the first step in buying a house is going out and looking at properties but that’s not really true is it what should they do first
it’s not the first step you always want to take is is speaking to a lender to atleast get an idea of what your realistic price point is and if there’s going to be any sort of obstacles along the way because it’s going to do two things the first thing it’s going to do is help you establish where you need to keep your search the last thing you want to do is spend time looking at a house that’s going to be 325 000 if in the end you can only get approved for a house that’s 275 000. you’re just literally spinning your wheels wasting your time you know um and the second thing that speaking to a lender does is it gives you a timeline you know some people you know they have
great credit it’s a w-2 job for the last five plus years 20 in the bank you can go look at a house tomorrow be good to go but sometimes you have other things where maybe there’s something with your credit maybe it’s the type of income that you have where if you speak to a lender the lender can let you know like hey here’s what’s going to happen um here’s kind of your timeline for purchasing whether it’s two months two weeks two years what have you it gives you a game plan to be able to buy and that’s the most important thing
yeah i think that’s a good point too like a lender doesn’t want to turn people away and if possible they can figure out a way to make a loan work for each individual client yep because there’s no mortgages are not one size fits all they’re probably the furthest thing from that um every literally every situation is different um and so speaking with the professional rather than trying to self-diagnose your own situation um is helpful and it’s free right we don’t we don’t charge anything for it
so yep exactly so what kind of documents uh need to be provided to a lender to kind of get that
pre-qualification letter for when we do go out and look at properties
sure so a lot of it depends on the type of income that you receive so like kathy for example you’re a realtor so you’re self-employed right so um a lot a lot of times with that it’s based off of tax returns how you file your taxes you know net versus gross all these things like that when you’re self-employed it’s very important to speak with a lender to see what you qualify for because it’s different right you’re not going into not going to work from eight to five every day or nine to five and log it you know punching your time clock every day so that’s important now if you are working for a company you’re a w-2 employee um it’s it’s pretty basic it’s basically you know have 30 days of pay stubs on the ready have your w-2s ready as well because that lets the that lets the lender say it’s me no okay here’s how much you make gross here’s how much income we can use
for you you know because there’s certain guidelines that that are related to bonuses or overtime or commissions or stuff like that and you want to make sure to have that stuff reviewed up front because the last thing you want to say happen is oh i’m planning on using my bonus or my overtime to qualify and then it’s not usable and then you’re kind of high and dry and so those are the main things along with bank statements um to prove that you have the money available um for the down payment so a lot of times that’s that’s the gist of it and then obviously from there kind of branches off into different things based on um scenarios or stuff like that yeah that makes sense and then the process for a loan generally is about 30 days right from when we execute a contract to when we can close yep 30 days is is generally what we say so we can um get it done faster sometimes you know there’s there’s a lot of other variables that come into it you know there’s the appraisal you know appraisers right now are just crazy busy just with everybody refinancing and you know people are trying to take advantage of the crazy low interest rates when they’re buying you know and so there’s just not always enough appraisers to get it done in five days you know so sometimes that can be a delay but even with that you know 30 days is typically plenty of time from like you said the day the contract is executed to the day that you’re you know sitting at the title company you know masked up and and signing all the documents so yeah that’s that’s about what i say is 30 days and i think some people forget too uh
the importance of keeping your credit stable once you go into contract 100 that’s uh that’s and issue that i’ve seen a couple times come up where you know you get pre-approved based on where your credit is right now because when you we when we review your credit it’s not just your credit score right it’s always important to have a good credit score but it’s also the
liabilities that you have you know if you have a car payment student loans credit cards things like that if we pre-approve you for a certain price and you say oh great i’m going to go out
and get a new car because i know i’m pre-approved for a house well there’s a very good possibility that that new car payment that you’re going to incur is going to affect what you then qualify for um you know for the mortgage and so what i always tell people is hey are you planning on getting are you planning on getting anything please say no if you are you need to
tell me first you might be able to but you need to tell me first because this is a huge investment that you’re making you don’t want to just you know be like oh i’ll be fine and then you’re not fine so um yeah i would always try to keep your credit as consistent from when we first talk about it as possible and if something’s going to change just say so and we can kind of figure it out from there yeah yeah it’s always a good plan yeah so what other advice would you give to folks that are um maybe nervous about diving into the to the home search yeah it’s it’s it’s a big search right it’s always a big first step when you’re purchasing
your first home we did it about 17 months ago now at this point so i’ve kind of seen it from helping people purchase most of my clients are first-time buyers to me purchasing my first house right and really honestly thank you um really honestly the first step is speaking to a lender right you don’t like i said you don’t want to pre-qualify yourself because if you do you’re going to go into it with this mindset of okay i make this i should qualify for that yeah well
maybe there’s this maybe there’s a payment that you make that you’re not taking into account something like that and it’s not something that should take you know three four five six days if
it’s something complicated then yeah there’s a chance that it could take that long right if there’s a lot of a lot of jobs or a lot of this a lot of that for the most part it’s a pretty straightforward conversation it’s basically a math problem and that’s that’s the first step is just having that conversation with somebody that’s trustworthy and somebody that you can you know feel like you can kind of give the information to because really in the end we don’t we don’t want to start you know gathering your blood type and your all these other things right we just want to be able to follow the guidelines and kind of help you help you buy a house right so we’re anything that we ask for for example is just because we have to if it was up
to me and up to the company we would probably just be like oh cool you know you’ve been at the job for six years what do you make all right great here you go here’s your keys right but um fortunately it’s not the case so you know the best thing you can do um is just have a chat with the reputable lender you know whether it’s me or anybody else and you know just just get that ball rolling because once you get that ball rolling you know basically how i see it is you figure out what you’re approved for uh one misconception that i see a lot is that with mortgages you’re trying to get approved for a certain house right a 250 000 house a 313 000 house
it’s not the case you’re getting approved for a certain monthly payment right so you’re approved for a eighteen hundred dollar monthly payment a twenty two hundred dollar monthly payment okay so with the down payment that you’re planning on putting down let’s see what that looks like so then you know what to expect um you know then you’re not worried about being outside of your means you know what you’re looking for so you have that then you have your price point then you can go to your realtor and say okay here is my price point and here is the area i’m looking for and all that kind of stuff that helps you kathy the realtor because now your your search has been narrowed down significantly because you’re not just looking all over kingdom come
yeah you know where that max point is and that just makes the whole process a lot more efficient it sure does yeah nobody wants to just waste their time looking at houses or falling in love with a house that then they can’t qualify for that’s the worst yeah i’ve seen that a ton where people whether they’re inquiring online or whatever they’re like i love this house i want to qualify for it and then if they if they can’t dip if it just can’t happen without a co-signer and paying off debt and all these other things then they may just be turned off to the whole process altogether right so sometimes it’s just that one right and there’s always going to be a better one but that’s that’s hard to believe unless you’re like us and we’ve been in this long enough to see that come to fruition yeah yeah it can be a tough process
um well great i think i think we’ve got some really great information for for folks who are a little nervous about dipping their toes in the water so thanks for spending some time with me austin
yeah always happy too and you know if y’all ever have questions and i’d love to be able to just answer those it’s not even as much of a number thing as just an advisory role it is kind of my goal kathy you know what’s your goal as well is to just be able to advise more than anything else
so yeah and we’ll put austin’s info in this video so that everybody can reach out to him just for any questions you might have uh both of us are always here for for resources any sort of questions you might have so don’t ever reach out i concur yeah well thanks so much austin
thanks kathy take care
yeah you too have a great day yeah you
hey friends it’s Kathy Sokilic here again but right now i’ve got a friend of mine J. Haley with me today and we’re going to talk a little bitabout what it was like when he bought a house so hey jay how’s it going
good good how are you doing today
well thank you excellent yeah so so you moved um you’re no longer in
austin near me which is sad you took your wife with you that’s okay um i know you get to be around other family but that’s cool um so so you guys didn’t think you could buy a house when you moved up there]
no um you know we’re artists and you know day job artists and as time hagone on you know you just don’t really feel that you know you’re kind of stuck in a rental world you may not have rental credit just past credit you might not have any history of credit or like myself i made some mistakes back when i was in college which was a long time ago and uh yeah yeah ii feel as if we were house searching for about six years just kind of pretending we could but never really believed we could and ultimately it came down to kind of a stroke of luck that my um you know hr department at work brought in a lender to talk to all of us and it just really kind of made me understand kind of how important a lender was to help begin the process i always was thinking relative relative reality but then every house has a realtor and then you have your own realtor and then you know then they’re not really the money people so you know it seemed like a an odd you know the place that we needed to start but didn’t feel comfortable as the place to start um which i don’t think that that’s totally wrong it’s just more we didn’t you know run into realtor and i’m assuming in the same way that my boss introduced us to a lender a realtor can introduce somebody to a lender and um so but it was a long time after that even that that talk and finally i just one day was you know let’s reach out and we reached out and she came over and chatted with us and we realized that even just with one of our credit line and not both of us together we were able to you know afford within a certain area and we did have to move out a little bitfurther but ultimately even moving in and i think we could have afforded more you know closer to town when i say in yeah closer to the more expensive area versus less expensive area um even in there it’s like the cost would have been more than we’d want to want to afford a month and so you know so we wanted to look down a little bit and wanted a little bit more space anyway and it it it it was interesting because we wouldn’t have necessarily chosen where we where we landed but it’s perfect you know the how the i really feel that’s where a realtor came in and she really read us
and really helped us figure out you know which house fit fit with us and kind of without really edging us on on this one was like you know she’s like this looks like a forever house you know some little line like that and um i’m here yeah i love it yeah there’s definitely a
partnership with um with buying a house between a lender and a realtor that it’s kind of a two a team that helps you can’t do one without the other really it came really handy the lender um introduced us to a realtor and and we ran with her and and she she was great and and really that first introduction with the the lender you know it’s interesting because i felt like she was she was a big corporation but it really was just a person who not only wants us to buy a house
but wants us to be successful in owning a house so you know isn’t about just you know
like just trying to you know so isn’t it’s not like buying a used car you know or a new car or anything you know it’s not like it’s like it’s gone you know it’s like they’re putting a big
investment and they’re they’re a part of them they want you to be able to stick they’ll stick with it so they’re gonna they’re gonna kind of help you find the right money sources for it and then once you felt like you had those money sources and had a range in it then it was walking around with a realtor and shopping was was suddenly just a no-brainer so yeah it’s so interesting that people forget like people just forget or don’t don’t know that a lender is really one of the first steps you have to have to take um but any any realtor can hook you up with with their favorite lenders and people that they’ve worked with that they’re they know are solid so like austin in the first part of this segment so he’s a good dude too he would have taken care of really good care of you guys had you been in austin well the the great thing about one of us only using one of our credit is that the next time around we could go the other way because the other one you know it’s taught time and investment and everything is you know coming together and you know it’s it’s wonderful in a home i tell you the first night that i
hung out here just to strip walls of wallpaper being a long time renter i didn’t realize there was a feeling that i had been missing it was like when that sound gets turned off that you didn’t realize the sound was onand it was bugging you the whole time and then it turns off and you’re like oh the sense of relief what was like that there was this sense of home
that i had not had since i lived with my parents that i didn’t realize was this like kind of like sense of place that was missing it was almost like this this negative sound and then i’m just sat there and i was in the space and i was it was like quiet it was peaceful again it was really nice
yeah yeah taking that step was was awesome for us it’s such a great story and anybody who thinks that they can’t do it you’d almost always be surprised it’s such a great story jay i really
want to thank you for sharing it with us today oh thank you for giving me an opportunity i like sharing things
we like hearing from you alright have a