Buying your first house can be EXTREMELY stressful! WelI… it certainly was for me!😩
Finding the house was the easy part. It was all the things after that – worrying about not being approved, having to scramble to find documents that the loan officer needed for the mortgage, being short 5K and almost not being able to buy the house.. 😕😟😣 And this is just a sliver of the random issues that came up!
The stress was so overwhelming that one day I literally screamed and burst into tears at work in front of my coworkers. What triggered this outburst, you ask… my coworker tapping me on the shoulder. 😂🤣ðŸ˜
One thing that would have reduced my stress is knowing what to expect so I could mentally prepare and get organized.
Well…I am demystifying the home buying process in this episode so YOU don’t have to cry in front of your co-workers like I did. 😂
Get your FREE home buyers checklist here!
One thing that would have reduced my stress A TON is knowing what to expect so I could mentally prepare and get organized.
Key Steps to Buying a House
- Get real with yourself about your money and your life goals
- Get documents ready and do your research on potential lenders
- Connect with a realtor and go find a house
- Confirm that the house you have an offer on is the right one for you
- Finalize your mortgage application and get your keys at the closing table!
If you are ready to buy your first house, but your credit is holding back check out creditcheatcode.site. Answer a few questions and in just a few minutes you will have a personalized plan of action on what to do first to increase your credit score and buy your first house.
Transcript: The Ultimate Guide to Buying Your First House
Speaker: Nobu Musekiwa
[00:00:00]
I really want this to be a nice and chill chat about buying your first house.
Listen
Buying my first house was really stressful.
It was more stressful than I thought it was going to be. A lot of people say that what’s stressful for them is actually finding their house, their first house. But for me, the thing that really Completely took over my life. Was everything after actually finding the house. Communicating with my loan officer every single day, getting questions about different documents that I needed.
Not knowing that I had to pay for insurance for the whole year ahead of time, and scrambling to find money, scrambling to find the documents they were asking for. There were so many things that came up and these three things that I just mentioned are just the tip of the iceberg about all the different things that seem to have been going wrong.
It got so bad. The stress got so bad that one day I was at work, I was facing my computer, my office door was that I shared, and my coworker came in and I didn’t realize that somebody was coming in because the door was open and my coworker tapped me on my shoulder from the back and I started screaming.
I screamed as I turned around and as I looked at him and he had. Like completely confused, look on his face. I started crying. I started bawling. I had gotten so stressed from the whole process that his just tapping my shoulder completely made me lose it.
And I think one thing that would’ve helped me [00:02:00] not be so stressed is knowing what to expect. I have gotten two mortgages after the first one, so I bought another house. I refinanced that first house. and those experiences were so much better. They were so smooth. And the difference was I knew exactly what was coming and I prepared so that I had a much better experience,
Why Understanding the Home Buying Process is Important
So today I want to walk you through how to buy your house. So the home buying process from beginning to end so that you, my friend. Don’t burst into tears in front of your coworkers, like I did. All right, I’ve broken down the four different stages of buying your house. So think of this. There, there are all these different steps that you have to do, but there are four big pieces.
And if you do all this in order and you focus on one step at a time, you are going to have a better chance of not running into unexpected occurrences or glitches that make this whole. Stressful. I advocate, I think every single woman should buy their first house on their own. So I am all for buying houses, even though I had this terrible experience in the beginning.
I’m all for buying houses, which is why I want to make this process easy for you. And so let’s go ahead and start with the very first step.
So there is an incentive for them for you to spend more money. And unfortunately, not every[00:04:00] professional has your best interest in mind. So before you even talk to any of your vendors, they’re going to help you to buy the house. You have to be clear on what it is that you want. So as you get presented with different options you don’t get distracted and veered off.
Get Clear About Your Goals
So the very first step is getting real with yourself and getting clear about what it is that’s, that you want for your money and your lifestyle. The reality is you want to make sure that you know exactly what it is that you. , every single person that is involved in the home-buying process. So your realtor, your mortgage lender, the title company, all these different people get paid based on commission
For example, when I got my first mortgage, I was making $48,000 a year. That was my salary. They were willing to give me a mortgage for $600,000. Now I could have taken that whole $600,000 and bought a house. I did not do that because I took the time to get clear on my money.
So you want to get clear on what is your budget exactly? What is it that you’re trying to spend, what is it that actually works for you? Don’t worry about what it’s, that the mortgage company is going to give you. You first have to be clear on how much you can actually afford to put towards this house payment every single month and to get clear and prioritize what your money is and stay focused.
You also have to think about what it is that you’re trying to do with this house. Are you buying this house because you want to make extra money every month? Are you buying this house because you want to sell it next year? Are you buying this house to build wealth? Are you buying this house cause you’re just tired of your landlord?
What is the actual main reason that you are buying this house? You want to be crystal clear on that question before you even go and talk to a realtor. because you are going to get presented with all these different options. And if you are not crystal clear on what it is that you want, it’s going to be easy for you to get completely thrown off track.
For example, for me, whenever I buy a house, my priority is to not pay for housing. I want to live for free. That’s what I want to do. So if I’m buying a multi-family property, I want to make sure that my tenants in the building are going to cover my housing expenses completely. If I’m buying a single-family property, I want to make sure that there is an extra room in that house and that extra room has its own bathroom [00:06:00] so I can get a roommate.
So if I’m looking at a house, I’m talking to a realtor and this realtor says, okay, there’s this beautiful house, but it’s a one bedroom, I can easily say Absolutely not because that doesn’t fit my main priority of making sure that I’m not paying for my housing. So what is it that you are trying to do with this house if you are just saying, I want to buy a house and that’s it?
It’s going to be really easy for somebody else to veer you towards what they want, and you’re going to have a harder time making decisions because you don’t have an I guess a measuring point of what it is. That’s going to make you sway this way or that way, right? So if I’m going to go to the store, I want to buy a dress that’s red, right?
Anytime you see a dress that’s not red, you can easily say no. So you want to have that same thought process. As you’re thinking about what you want as an outcome for this house, that’ll make all your decisions down the line a heck of a lot easier. So know what, your end goal is with this house in terms of why are you buying it.
Get clear on your budget before you talk to a lender, and then you want to understand what’s happening with the credit. Your credit score needs to be at least 580 to buy a house. So before you even go talk to anybody, make sure you check your credit score, make sure it is at least 580.
And if it’s not, then don’t even worry about talking to a realtor, talking to a lender, because that’s irrelevant cause you don’t meet that credit qualification. You gotta work on that first. That’s the very first thing I want to do is just get clear with myself, getting honest and get focused,
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Prepare to get Pre-Approved for a Mortgage
so step number one, get clear step number 2. [00:08:00] Confirm that you can get financing.
Don’t worry about doing this before you know what you want before you know what your budget is, and before you have checked your credit. Once all those are in line, then move forward to confirm that you can get financing. So a lot of people think that when you are getting a pre-approval for a mortgage, you are applying for a mortgage.
You are not. It’s like you know you are going on a date with somebody and they say, okay, you’re cool. I like you. We can keep talking. That’s what a pre-approval is. This is not the application yet, but that preapproval that getting the nod. Yes. You’re cool. We can keep hanging out. That’s enough for you to go ahead and start looking at houses.
So in this time when you are confirming your finances, you are going to get all the different documents that you are going to need to apply for this loan. So if
you check the show notes you
can actually get a copy of that checklist.
You’re going to need two years’ worth of taxes. You’re going to need some, your pay stubs, you’re going to need bank statements or a few documents that you want to have ready and.
If you don’t get those ready ahead of time, it’s going to stress you out when you’re getting asked for these things. And they need them asap. So you want to get those ready beforehand. You want to go talk to at least three different lenders. Whether you go to a bank or you go to a mortgage broker, or a credit union, it doesn’t really matter.
Talk to three different people that can do a mortgage for you. You want to just have a conversation with them first, because you gotta have a good vibe with this person. So depending on what your personality is, you want to make sure that this person that you’re working with is going to provide the service that you want.
So for me, I ask a lot of questions. I want the details. So if I’m talking to a lender and they seem like they’re disregarding my questions, I’m not going to work with that person. Cause remember you are not desperate. That person that you’re talking to, that lender, if you decide to work with them, you are going to, they’re going to get a huge commission off of you
So don’t be afraid to talk to different people, [00:10:00] get a feel for them, and once you feel that this is a good match for you, that you know you can date this person, you can get along, you like them, not date them technically, that you can, they’re going to meet your needs in terms of how you want to be treated, the questions you want to be answered, their response time how easily it is for you to understand them when they’re talking to you.
Once you feel good, you want to go ahead and get ask three different lenders for a pre-approval letter. What they’re going to do is look at those documents, look at how much you make, look at your credit score, look at your debt, and let you know, okay, based on what we’re looking at, we can give you up to this amount
of money for a mortgage. And it’s going to be printed out on a letter. That is what you are going to take to a realtor, and that’s when you start looking at houses. Don’t fall in love and start looking at houses before you have this preapproval letter because you might, be looking at houses that are worth it.
500,000. Meanwhile, you can only get pre-approved for 150. And this is why you also want to get pre-approvals from three different lenders, that way you can be sure that if one person says no, we can only give you 150. The second person says the same thing, the third person, the same thing, then you know that, okay, that really is the number.
Whereas if somebody says 150, somebody else says 400, somebody, says 300, then that doesn’t make sense. You want to get a sense of why there’s that discrepancy and then look at the numbers that they give you. Look at the estimate that they give you which is going to show you all their fees, and all the interest.
all that kind of stuff. I’m not going to go into too much detail about that, cause we could just talk about that for a whole hour.
Connect with a Realtor and Find Your Future House
So once you have your pre-approval letter, you are going to go ahead and now you’re going to talk to a realtor. Most realtors won’t even talk to you without a pre-approval letter.
Every now and then they will. , but they get paid after you get a house. So it doesn’t make sense for them to be working with you if they don’t have the proof that you can [00:12:00] actually go ahead and buy this house. So you’re going to bring your preapproval letter to that realtor and you’re going to find a house that is this next step is actually finding the house.
Because you took the time, in the beginning, to think about what it is that you want. You should be crystal clear as to what type of building you want, how many bedrooms, how many bathrooms, whether you want a garage or whatever. But this shouldn’t be based on emotion. This should be based on the fact, should be based on.
That outcome you want, it should be based on the amount that you’ve been pre-approved for. And it should be based on, that budget that you looked at initially. It is really easy to start looking at houses and get carried away with them, this house has a beautiful kitchen, so it’s an extra $10,000.
That’s what I want. Or, this house has this gigantic bad bedroom, so that’s what I want because I want this lush bedroom. , if you took the time, in the beginning, to get clear on what your end goal is and how you’re going to get there, then all this extra distraction of the beautiful things should not distract you
It should not deter you or confuse you because you should be clear as to what you’re trying to accomplish with this. Just a quick tip. Don’t be trying to go in and look in every single house. If you look at the criteria, it doesn’t meet your criteria. Don’t waste your time. Don’t waste the realtor’s time.
Just make sure that you’re looking at places that you actually really would. Move into. And once you find that house that works for you, don’t be dilly-dallying, move quickly. Right now in this market, there’s a lot of competition. Move quickly and put in your offer. That is when you tell the realtor, okay, I like this house.
They’re going to write up a letter to the, not a letter, a form to the other realtor that says, Hey, we are willing to give you X amount of house for this house. They send it over and you’re either going to get a yes or a no. If you get a [00:14:00] yes, that means your offer has been accepted. If you get a no, then your offer has not been accepted.
You’re going to go ahead and keep looking at more houses. You can make as many offers as you want, but of course, the more offers that you make, that you get a no, it’s going to get frustrating. But as you are working with your realtor, if you have a good realtor, they’re going to be able to give you feedback about what it is that you might be doing that is causing you to not win these, bids.
Confirm That You Want to Buy This House
All right, so your offer has been accepted. What happens now, is that for me, things started to get really stressful real quick.
So once your offer has been accepted you are next going to confirm that you really want to buy this house. So in that offer that you sent, there’s going to be terms where you have x amount of days to do your due diligence, so do some extra things to make sure this house is really for you.
One of those extra things is to go ahead and do an inspection. You’re going to find an inspector to look at this house to see, okay, what is in this house that is great or is not so great. So they’re going to look at everything from top to bottom, the roof, the sink, the heat, the water, everything.
And they’re going to give you this hefty report that says exactly what the state of the house is. They’re not going to tell you whether or not you should or should not buy the house. This document will just tell you. Here are the things that are a big concern or a small concern or hazardous. That inspection report is going to come to you.
It is going to go to your lender, and it’s also going to go to the seller. You and your realtor will look at this report and you’re going to decide whether or not you’re going to move forward with buying this house, whether or not you’re going to negotiate to get extra money. Or what you are going to do.
So this is where your realtor’s going to help you to figure out what to do next. But you definitely want to again, be clear on your end goal and what is important to you when you’re deciding whether or [00:16:00] not something, on the report is something that you’re willing to move forward with or not.
And then you want to just definitely double check your numbers at this point, cause if you see that for example this house is going to need a new water heater,? If you want to move forward and the seller’s not going to fix that item. Is that something you can make work with that original budget? And at this time where you are, Deciding whether or not you want to buy this house, you are also now actually applying for a mortgage.
The mortgage application doesn’t actually start until you have a contract in hand. So when you get your offer accepted, this is when you actually have a contract signed between you and the seller stating you’re buying a house when you needed to buy this house, by all those details.
Finalize Your Mortgage Application and Close On your House
Once you have that is what then goes to your lender that you have decided is your number one choice. And that lender is going to take that contract and start your mortgage application. During this mortgage application process, a lot happens. This could be a whole two-hour section just on this, but pretty much the bank is trying to decide two things, one, Is this house that they want to give you money for, is it worth the investment?
So when the bank is lending you money for a house, it’s a loan, but it’s a loan that’s backed up by the house. So if you want a hundred thousand dollars, cool we will give it to you. But that house that we’re giving you money for, if you don’t pay us back, we’re going to take that house.
So in order for them to decide whether or not this deal makes. , that house that you want to buy, needs to be at the loan amount that you want or lower. If it is higher, then that doesn’t make sense, right? If you want to give somebody a hundred dollars and you want to have some kind of backup to make sure you get a hundred dollars back, you’re not going to have that backup be less than a [00:18:00] hundred dollars.
So the same thing with the bank. So as part of that process of making sure that this house’s value makes sense based on how much you want, they’re going to do an appraisal that you’re going to pay for, of course, and that appraisal is going to let the bank know whether or not this deal makes sense.
So the bank wants to make sure that they’re not going to lose their money by lending you a house that isn’t worth a lot of money. And then second, they want to make sure that you are going to be able to pay them back If you don’t pay, they can take this house and sell it to get their money back, but that whole process is a big pain in the butt.
Like doing it. Foreclosure for a bank is a whole time suck. It wastes a lot of money and legal fees and it wastes a lot of time. The bank just wants you to pay your mortgage on time so they can make their interest and keep it moving. Those are the two things that they are looking at during this mortgage process.
The main person that you’re going to be talking to is going to be either the loan officer or the loan processor or both of them, but there are a whole bunch of people working in the background that, that are going to do a whole bunch of different things to make sure that house is worth the investment and that you, my friend, are going to pay that money back and they.
evaluate, whether or not you can pay this money back by looking at a few things. One, how much your income is, two, what your credit score is, and then three, what your debt is in relation to your income. So you don’t need to make a lot of money to buy your first house, but the relationship between your debt and your income needs to be at a certain level where it passes the bank’s qualification marks.
Like I said earlier, I bought my first house making $48,000 a year in New York City, by the way. So it’s definitely not about how much you make. If you think that how much you make, is stopping you from buying a house, let’s talk about it. It may not be a deterrent as you think it is. Once the bank has determined that you’re going to pay [00:20:00] them back and this house is going to cover their risk, then you are going to get a message from your lender telling you that you are cleared to close. Until you get that message that you are cleared to close,
this mortgage is not approved. , and this whole process of submitting your contracts to actually getting your closing usually takes about a month. It could be less, or it could be more depending on what type of loan you’re doing. But about a month and a half. That’s a normal timeframe to get this done.
And once you get this cleared, to close, a few days after that, you’re going to sit down at the closing table, and this is where you actually sign all this paperwork that officially transfers the house from the seller to you at this closing table. After you close. That’s when you actually get the keys to your house and you’re good to go, and you can go ahead and pop that champagne, every single time.
I close on a house. Every single time I leave that closing table, I buy a bottle of expensive champagne and I pop it with my friends. And that’s my celebration. And I actually keep those bottles, so I have a collection of three bottles downstairs. Maybe I’ll share that sometime with you guys.
So I know that Once you get to the closing table and you get these keys, people think that, okay, I’m done. I know when I moved into my house, I told my neighbor, okay, I’m finally done. And he said no. This is when actually things start to get interesting.
And I was like, what is he talking about? But, within a few months of me moving in, my water heater completely died on me. But there are costs that come up from buying a house, right? From your taxes going up, your insurance might go up, and things in the house will break.
Last winter whole boiler went out and that boiler literally cost me 10 grand to put in. . It may seem like it’s a good idea to put all your money into buying this house, but it’s really important to focus a lot [00:22:00] of time and energy into that first thing that I talked about, which is getting clear on what it is that you want and really getting clear on your money.
Because I’m sure people that have bought that first house and have ended up in financial ruin because they didn’t take the time to really get clear on their finances and how this is going to fit. Making their lives better. You don’t want ‘to be in a situation where you buy this house and now you’re just working constantly for this house.
You want to get into a house where this house is working for you, where this house literally changes, your financial outcome. When I buy a house, I buy a house, making sure that the house gets rid of my housing payment completely. Because when I look at how much I was spending on housing, That was the biggest expense that I had every single year.
And for most people, your housing cost is the biggest expense that you have every single year. So that’s why for me, my priority is to get rid of that expense. cause than now I can take that money and I can travel every quarter. I can take that money and I can buy stock. I can take that money and my mom says, I want a new tv I’m going to put on my credit card.
I can say no, I will pay for that because I’m not paying for my housing. Buying your first house has the ability to completely change your life for the better. And I want to help you make that process as easy as possible. So if you want to take some time really diving into that first part of getting ready to buy a house, which I talked about, which is understanding your money, understanding your credit, and understanding your why feel free to message me.
I want to help as many women as possible to buy their first house on their own. cause I think it’s an important asset to have. Because your job is not guaranteed, your partner’s not guaranteed your family is not necessarily going to help you with your housing.
So this is just an extra chunk of change that you can have an extra asset, that you can have that will help you in the future and give you more flexibility with your finances.
Make sure you share this with your friends and let’s go by houses.
Make sure you check out the show notes for all the [00:24:00] handles links and resources mentioned in this episode. I will catch you on the next one.
