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I want to buy a home,how do I start the process?

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Answers (1)

Congratulations on taking the first steps to buying a home! 

 

With all the excitement and stress of buying a house, I'm glad you are reaching out for guidance and help.   "How to get started buying a home" is a pretty big question, so I've also linked a couple of articles from USAA's Home Learning Circle to help as well.

 

1. Before buying, determine what you can afford.  Review your finances to determine your budget for monthly payment and how much money you have for upfront costs like down payments, closing costs, and other fees. 

 

For most people, housing expenses make up the biggest item on their budget, so you want to make sure you have a monthly payment that is both comfortable and allows you to do other things with your finances.  While everyone is different, USAA recommends you keep your housing expenses at 25-36% of your take home pay.  So if you bring home $4,000 per month after taxes, $1,000-$1,440 per month is a good guideline to start.  Lenders will look at your pre-tax income when calculating your ability to borrow (among other things), but you want to determine affordability based on the money you actually take home and can use. 

 

Also, make sure you are calculating ALL the costs monthly, including principal, interest, property taxes, homeowners insurance, and HOA fees.  When looking at online calculators, some of them include more or fewer of these costs, just make sure you pay attention.  Also keep in mind if you may be taking on higher utility costs, trash, water, electric and the like.  Once you've determined this monthly number and the amount you want to use as a down payment, you can work your way backwards to determine a purchase price.  Then, don't torture yourself by looking at homes outside your price range...you may like the more expensive ones! 

 

 Planning for a Future Home Purchase - For More on preparing to purchase

 

2.  Get yourself a fantastic real estate agent.  A great agent will help guide you through the home search and buying process, and can be an invaluable source of information.  Not all agents are created equal, and you want to get a professional that you can trust.  While you may be tempted to use a family or friend as your agent, ask yourself if you'd be ok "firing" your family member or friend if things don't work out.  It may be best to use a professional referral service or at least interviewing a couple of agents yourself.  USAA's Real Estate Rewards Network may be helpful, as USAA has done the work of gathering and vetting agents to work with USAA members, and if you close on a home you will get a rebate on some of the costs.

 

The Importance of Finding the Best Real Estate Agent - Article and 2 minute video

 

3. Get pre-approved with a lender.  There is a wide industry of lenders, from bigger banks, online only services, and even local lenders.  If using USAA, this can be done either on the website by clicking "get approved" or by giving us a call at (800)-531-0341. It can be a challenge to compare costs and features with different lenders, and there are more factors than interest rate that you need to take into account.  It It can be helpful to get pre-approved with one you trust to give any offers you make on homes more credibility, and as you get closer to making an offer on a home to shop a couple of different lenders.  One of my favorite articles that can help in comparing things beyond just rate is The Lowest Mortgage Rate May Not Be Your Best Deal.

 

Once you get your pre-approval, your lender should walk you through the steps you need, including providing information and documentation on your income, assets, credit score, and other needs.

 

Thanks again for your question, and good luck on your home buying journey!

 

-Matthew