5 Tips For First Time Home Buyers- What Do I Need to Qualify?
Good morning, I am K.B. the broker and today we're going to talk about the five things you need to know before you purchase your first home. I am a licensed realtor and I work in Chicago and surrounding suburbs. So If you live in Chicago and surrounding suburbs, definitely give me a call and walk you through the process and I would love to help you get you into your first home, but if you live outside of Chicago or if you live somewhere like Texas or anywhere outside of Illinois I'm not going to be able to help with the purchase of your home, but if you live in Illinois give me a call. I'll give you all my information after this Blog.
Step 1 Getting Pre Approved
The things that you're going to learn today is how much you're going to need to bring to closing, how long the process takes, what you need to get preapproved. And a few other things as well that are very important when it comes to getting a mortgage. So the very first thing that I want to talk to about today is how you will know how much your mortgage is going to cost you & how much you can afford to pay every month. So once you get your preapproval letter that's going to be step two, But I'm going to touch on it now, once you get preapproved, let's say for instance, you get preapproved for $150,000. That's what we're going to use today because when I got my first building years and years and years ago, that's how much I was preapproved for. So I'm going to give you an example. I'm not just going to make up a story, I'm going to give you an example of what I went through and the process I went through.
So let's just say if you get preapproved for $150,000 What does that mean? Okay, this is what that means. You can get a house only up to $150,000. You can't get a house for $170,000 or $180,000 or $200,000. So if you're looking at a huge mansion that is listed for $500,000, you can't get that house but a place that's $150,000 or less, you can definitely get that property. So say for instance, you're looking at a single family home in Tinley Park or you're looking at a single family home in let's just say in Orland Park and it's $125,000 to $130,000. You can get that house or you can get a two flat or a three flat or a four unit building. We'll talk about that in another vide, but you can get that property. Okay? So that's how that works.
Step 2: How Much Will Your Mortgage Cost You?
How much will your mortgage cost you on $150,000 loan? Because that's the price point we're using today, your mortgage is going to probably be between $1100 to $1,300. How did, how did I come up with that number? Okay, so you say $150,000, 1 percent of $150,000 is about $1,500. Knock off a few more hundred dollars and that's is how much your mortgage will be. So $150,000 and $1,500 knock off like maybe $200 or $300 more dollars and that's your mortgage amount in a nutshell. That's including insurance and taxes. So that's how that works. So if you're paying in rent at the moment say for instance, you got a three bedroom apartment somewhere and you pay at about $1,300 to $1,400 in rent, you could definitely afford a mortgage, and you can definitely get a home loan for about $150,000 or more. If you can afford to pay $1,300 in rent, you could pay the $1300 or $1,400 on a mortgage!!! And the difference is you'll own your own home!! No longer will you be just pay your money to a landlord and then after two or three years he becomes a Slum Lord, and then you have to move and now you don't have anything to show for it.
That's what happened to me, but we'll talk about that story on the next blog. Well what am I going to need to get preapproved? Okay, here's the thing that you're going to need to get pre approved. You're going to need to be on your job for at least two years. You're going to need two of your most recent check stubs. You'll need to have the last two year's of tax returns. You're going to need to have the last two year's of W-2's and you're going to need two months of your last bank statements and your ID. Those are the basic things you're going to need. Sometimes you may need a few extra other things, but those are basically the things that you're going to need to get pre approved for a loan, As long as you have those things, you should be fine, but you definitely have to be on your job for two years. A lot of the times banks are not going to give you a loan if you haven't been on your job for at least two years.
Step 3 Closing Cost
The next thing, step number 3, we're going to talk about closing costs. How much is closing costs going to be? Sometimes it varies, but with the people that I work with, I work with really, really good people that own loan companies. One guy's name is Glenn Crowner, he owns the Loan Depot and another guy I worked with, his Glen Marino he owns First Centennial Mortgage, both guys are named Glen go figure lol. I worked with those guys because they're really on their business and very assertive when it comes to getting loans done. They are going to get you preapproved really, really fast, and they don't play games when you're calling and you're trying to find out what's going on with my loan and how long does it take for me to close? Or where at pertaining to the deal? Those are the people that you're going to be talking to. So I deal with those guys because they are on top of their business. They worked like me. They're just like me. I'm really, really on top of my business and I want to get you closed as fast as possible and get everything done and get everything processed as fast as possible.
I don't like to wait and a lot of these companies, when you deal with them, they'll get you preapproved and you can't get them on a phone after that, I have a guy that I'm dealing with right now, he's trying to get preapproved and he's taken forever for somebody to just call him back. I don't work with people like that. Everyone that I work with, everybody that I'm affiliated with, everyone that's on my team, we all take care of business very, very efficiently because I feel like if you're not working that way you won't be in business long.
Ok so now you're preapproved and you need to know how much money you need to bring to your closing. It's about $3,500. So that's how much you need to have saved between 3,500 to $4,500 so just have like $4,500 saved up before you even start the process to be on the safe side, I've seen deals fall apart because the buyer couldn't come up with the closing cost. What are closing cost? Attorney's fees, fees to pay the loan originators like the guys that do all the paperwork for your loan they need to get paid so them, the attorneys, other little taxes and fees and stuff like that.
So when you renting and you pay the first month rent + security It's basically the same thing. So look at it like that, it's like a down payment for your home, So that wraps up the closing cost.
Step 4: Choosing Your Home
Step number 4 is picking your house. So once you get preapproved and you got your $3,500 already saved up, now it's time to find your house.
That's where I come into the picture. That's when you're going to call me. The guy that is typing this Blog so you understand these steps K.B. the Broker. You're going to call me and you're going to say, okay, Ken I get preapproved and now I'm ready to find my house. So this is how this process works. The first thing you need to do is figure out where you want to live. We're in Chicago, I only work in Chicago and surrounding suburbs. So this is what we're gonna do. Let's just say, you call and say I want to live in Beverly IL, and I also want to look at some houses and Evergreen IL, and I also want to look at some houses in Country Club Hills. I'm preapproved for $150,000. I'm paying $1200 right now in rent and I want to stay in that ballpark when I get a mortgage.
You'll probably want to look at homes that are $140,000 so that way I you'll know that my payments will still be $1,200 a month. So I want a three bedroom home with a two car garage. My son has problems walking so I don't want anything with any stairs. I want everything to be on the first floor. I want everything to be brand new. I just want a home that I can move right into and it has to be basically close to my job. So those are the things that you're probably going to tell me when you call me. I want my home to be brick I don't want anything that's old and outdated. I want something that's fairly new that I could just move my family right into, the bedrooms have to be big enough to fit my queen size bed. The closets are big enough to fit all of my clothes and I would like two or three bathrooms.
So when we talked on the phone, those are the things that you're going to tell me, when I find that out. I'm going to create a search. I'm going to send you houses just like the one you told me about in Beverly and Evergreen IL and the Country Club Hills. Now don't get confused you can live anywhere that you want to live, but I'm just using this as an example, as a person that's just saying, okay, this is the area that I want to live. Okay, so I'm going to send you probably about 20 to 30 homes. Once you look at those homes and you say, okay Ken I like this one? I liked this one. Matter of fact, I liked six of these houses.
When can we go see them? I'm probably gonna set up a day at a time for us to go see all those houses on the same day, so we just knock it all out, so we'll block out probably about two or three hours in our day. We'll go out, we'll go see all those houses. You won't be rushed. You'll walk around all the houses, you can ask questions, you can look in the cabinets, you can look at the outside of the house, you can look on the inside of the garage. Look at the closet space. Look at the bedroom space, look at the neighborhood, look at the block you'll be living on. Once you make your decision on what home that you want to live in then we'll put it in the offer. We'll write a offer for less than what the home is worth because we want to negotiate a little bit, let's say the asking price is for the house is $140,000 will probably offer around $129,000 because you're my client and I want to get you a deal.
Nobody really pays the normal price that a home is listed for, there is always room to negotiate. Years ago when I bought my first house, my Realtor didn't tell me this, the first building that I bought, I paid full price!! Let's say the asking price was $150,000. I paid $150,000. I was about 21 years old. It was a four unit building. It was on 88th & Escanaba.
The person that I had helping me was just there to collect a check and to show me a few buildings, and that is what I want to protect my buyers & sellers from.
I'm going to make sure that you know everything. If this is your first time, it's probably a whole lot that you don't know. You're going to be nervous. I'm going to probably know a lot more than you, but don't be worried about it because I'm going to treat you like you're my cousin or one of my brothers or my little sister or my aunt or uncle and I'm going to make sure that you get the right deal. You're not going to get to the closing table and have all these things pop up or you're not going to pay regular price for your property. Y We're going to try to negotiate it down and get you the best price. So that wraps up step number 4.
Step 5. How long does it take to close?
The next thing that I want to talk about is closing and how long that takes, how long close it takes? It can really vary from who you're dealing with from what loan company that you're dealing with. The guys that I deal with, it takes about 30 to 45 days Max. Once you've found your house and you get preapproved and everything and you picked out the house and we submit the offer at that point it is really out of our hands. I'm not really dealing with that part anymore. The attorneys are dealing with that. The loan company is dealing with that. They're asking for paperwork from the attorneys & paperwork from this guy, they might need to see your bank statements.
So it's really processing paperwork, paperwork, paperwork. So you can call and call and ask, well how much longer is it going to be before we go to closing. But before you go to closing, you're going to already know how much money you're going to have to bring to the closing table. You already know what your interest rate is, so you don't have to worry about that.
You don't have to worry about getting to the closing table and they tell you that you have a 21% interest rate. You're already going to know what the deal is before you make it to a closing table. Right now interest rates are pretty low and very compatible so you don't have to worry about having a high interest rate. It's not like going to buy a car and they're trying to stick you with a high interest rate.
It's not going to be like that. Especially with the people that I work with.
So how long will it take to get to the closing table? So it's going to take about 30 to 45 days. The reason why I think that you definitely should work with me and my company when you decided to purchase your first home is because I really have everything already set up for you. I got a whole team set in place to make your buying experience a easy and simple one. I have two wonderful loan companies ready to rock and roll, It's not some girl that I know that works at the loan company or some friend that I know that works there, my guys own the companies!! I am really, really efficient and I am a very good Broker that cares about my clients. I actually answer the phone when someone calls and I respond to text messages, if I miss your call for some reason simply shoot me a text and I will be in contact with you in a timely manner.
Here's a few ways you can contact me
My cell773 808 4321
My website http://shbainfo.com
Facebook Business Page https://www.facebook.com/Shballc/
Facebook Group https://www.facebook.com/groups/shbasales/?source_id=1404403013020381
New Speaker: My name is K.B. the Broker and I look forward to introducing you to your dream home, and I look forward to hearing from you.