How Was Your First Time Home Buyer Experience?

How was your first time home buying experience? 

Did you qualify for down payment assistance or know that first time home buyer grants are available? 

It would be nice to get some free cash! 

Today, I’ll share my experience on how my first time home purchase went. There are some gems everyone should know!

First of all, the American Dream is home ownership. 

Home ownership is the best way to acquire wealth. 

From generation to generation, families that have owned or inherited real estate have been better positioned than those who haven’t.

Therefore, the government has programs that are serviced on the state and county level, to educate and provide access to these programs. 

Unless you seek this information out, you may not learn of it.

So let’s get to my experience…

Preparing For My First Home

As I worked full time, after college, I was eager to get ahold of my first property.

Not only did I view this as my gateway to freedom, but also something that would enable me to build the level of wealth I aspired to. 

I began to shop around once I knew that I had enough money saved and began shopping the multiple listing service (MLS).

The MLS services sites like Zillow, Realtor.com, Redfin.com and Homesnap.com, with available real estate that is for sale.

Like most aspiring home owners, once you get a taste of what you want, you start window shopping.

After looking online, the first thing I recognized was deciding where I should start my search according to cost.

I took a guess, and started looking at things I liked without enough understanding of the cost, and how the mortgage payment would align with cost and down payment.

I found myself prematurely looking in the $200,000 to $250,000 price range often. Yep, these were nice homes! “I wonder if I can get one of these…” I thought.

Finding a Realtor

I began to call realtors who had the listings I was interested in. Once I called, I was asked if I had a realtor. 

“…No, I don’t…” I said. “Okay, you’ll want to get a realtor. Did you need help with that?” The agent said.

“Yes, I will…Thanks” I said.

After knowing I needed to hire a realtor, I found a site that was useful in placing me with a realtor. After doing so, I received several calls from realtors offering their help. They all asked similar questions after understanding that I was shopping for my first home.

• What are you looking for? 
• When are you looking to purchase? 
• How much can you afford? 
• Are you pre-approved?
• Do you have savings for the transactional costs?

All the questions were the same. I learned that I had several more steps to complete before I could start shopping.

This was helpful in making me aware that I had more work to do.

Starting My Due Diligence

I knew not to sign anything with a realtor until I reviewed it with my attorney.

I also knew that I didn’t actually need a realtor unless I chose to, and that I could reduce their commission although all realtors disclose a 3.0% fee without mentioning the possibility of paying less.

I knew I would only work with a realtor that would help me for 2.5% interest versus 3%.

As I had read, the concept of not needing a realtor, was not applicable in my case as well.

Maybe if I were going direct to owners, but in this case I was going through the MLS and I could not go see a property without a realtor.

Now back to finding how much house I could afford. I searched and found a mortgage calculator online and began computing what I could afford. 

I knew approximately what I could spend each month so I used that as my reference point in the calculator. I also got a frame of reference to what my taxes and interest rate would be and used this information in the mortgage calculator as well.

 “Well, looks like I won’t be in the $200,000 range…” I thought. My target home was now $75,000 – $125,000. Rude awakening…

I knew the areas of the city that were nice and began to choose those areas and see what type of homes were available online. 

Right away, after recognizing my updated price range, I knew that a condo was going to be my first home purchase. 

Referrals

I spoke with my father about my findings and he gave me some advice. He actually knew a realtor and attorney that he referred me to. “Thanks pops, I’ll give them a call…” I said.

I called the realtor and attorney and set up a time to meet. Upon meeting, I asked the realtor several questions about strategies on gaining the most equity because I was very determined to get all my money could afford. 

I asked about foreclosures and if I could buy something I could fix up first. She showed me several properties that were on a foreclosure list and what type of repairs they needed. S

he also told me about a 203k loan (which is a renovation loan with the home purchase). In the same conversation, she mentioned to me that there are first time home buyer programs as well where I could receive help with the down payment. 

“Really? I had no idea. I have money saved, but I’d love to save that money if I can.” I said. 

“Yes, look for a class in the county you’d like to purchase in and follow up with me once you’ve completed the class.” She said.

“Wow, she was super helpful” I thought.

She not only showed me how the foreclosure process works, showed me some short sales, showed me all of the transactional costs I’d need to plan for and let me know about down payment assistance that was available (if I qualified)! 

So much for the 4-6 realtors that I had spoken with, (and knew if would be my first home), and they never mentioned anything about this!

In fact, some had actually set me up on a portal and began sending me listings that were WELL above my price range. 

“Now why is she sending me properties that cost $240,000 when I told her my max was $125,000?” I thought. Pretty insensitive.

My perception was that they were careless to me ending up in a situation of failure.

Several realtors had suggested properties well above my price range.

Finding A Home Buyer Class

Time for my next steps. I began to call several county clerks inquiring about first time home buyer assistance classes.

I was directed to a few and made the decision to attend one. It was an 8-hour class on a Saturday.

I was surprised it was so long, but once I arrived and saw the agenda, it was time well spent. I learned a lot.

There was a loan officer, an attorney, some realtors and a person who spoke directly to the grant system and gave references to what grants were available.

I had scoured the internet looking for grants thinking I had found them all and in fact, there were some national ones I was not aware of.

The county clerk had also informed me of a few that were specific and available for the county I was purchasing in. None of these were online (that I found at least…).

This was awesome. This class just added a $5,000 grant to the $10,000 grant that the county clerk had informed me about.

Upon attending the class, I found out that first time home buyer programs were geared for people with low credit scores and people who didn’t have down payment money. 

• This was awesome! I was now in line to possibly receive $15,000 in forgivable loans or grants.

I began to use the resources that the class had taught me. I had already located the programs I wanted to use, but now I had to align the lenders.

The class showed everyone how (and where), to find the lenders who supported any first time home buyers programs in the state. I found a few in my anticipated purchase area and took note of them.

After completing the class I was issued a certificate of completion which validated my eligibility for any grants I applied with through the lender.

Credit Evaluation

I had actually began preparing my credit before I actually attended the class.

• AnnualCreditReport.com was my source for verifying that all my credit information was accurate. AnnualCreditReport.com allows you a free yearly search to verify your information with all credit bureaus. 

I found a few mistakes, corrected them, and waited for the corrections to be reflected with the credit bureaus. 

Verifying credit report accuracy is a long process and you want to try to get all your corrections done the first time because any change with the bureaus usually takes a month to reflect the change depending on when the creditor reports.

Choosing a Lender

After repairing my credit, I called a few lenders who supported the two grants I was pursuing to see who had the lowest APR, how my debt to credit ratio is analyzed, and to see what loan officers had experience with filing the grants on behalf of the borrower. 

I made a choice and got pre approved with the bank of my choice.

I let the loan officer know which programs I wanted to pursue and they went to work.

I let them know my time span before purchasing a home and they were confident in obtaining the grants I specified.

My plan was to purchase my first home in about 90 days.

I checked with the loan officer every few weeks or so, just to see how things were going. I wanted to align my grants before I reunited with my realtor. 

The loan officer informed me that the $5,000 national grant had confirmed receipt and had issued my grant, but he had not heard back from the county grant for the $10,000.

This was disappointing, but he mentioned that he would stay on it. 

Reuniting with My Realtor

With reassurance, I went ahead and reunited with my realtor to update her on my progress.

She was impressed that I had aligned everything so well, with fixing my credit before applying, locating and applying for the grants, knowing my buying margins, my locations of interest, and getting pre-approved with the lender who was working on my grants.

We started shopping and closed on a condo within 45 days.

Closing with Down Payment Assistance

My loan was approved with the $5,000 forgivable loan across a 5 year term.

I was very disappointed that the lender did not perform, getting both forgivable loans, but I was happy with getting my first property.

In hind sight, I would have checked with the loan officer every week versus every few weeks to ensure he was diligent.

After-all, it was about 90 days that he had to complete this before closing. Unfortunately he failed even after expressing so much confidence. 

I learned a great bit through the process. I thought that it was very unfortunate that all home buyers were not informed about this eligible free money. I saved $5,000 in cash by having this down payment assistance support. 

Here is a great source for teaching the home buying process in conjunction with acquiring down payment assistance. Get the eBook here if you don’t prefer the paperback or the audiobook version.

• I also recommend using this Home Buying Investment Calculator. It combines all financial aspects of the home buying process. This investment calculator for home buying combines the debt to income analysis, the affordability analysis, the mortgage calculator, an exit strategy and the transactional and closing cost incorporated with the purchase! Great tool! 

Thanks for joining us today faithful readers-future leaders.

Hope this has been helpful and I wish you great success in your future. 

• Be sure to subscribe for weekly content here and get 15% off your first purchase!

Please leave a comment on your first home buying experience and if you qualified for down payment assistance.