So you’re looking to buy a house. We’re excited for you – but also recognize you might have a lot of mixed feelings right now. Confusing terms, rates and steps can definitely make this feel like a tall order. It is a bit daunting — this will (probably) be the biggest financial purchase you’ll make, after all. But nbkc has plenty of lending expertise to help you stand out. Let’s get you on our way to your first home.

What do I need to prepare?

Before you even begin looking: prepare, prepare and prepare. What does that entail? The short answer: have strong financial stability. Don’t freak out — you likely already have that going for you. Here’s what we recommend you have prepped:

• Money for a down payment and closing costs
  • Not all mortgages require a down payment, but it’s often the exception and not the rule. Typically, you want to have enough liquid assets for a 5% down payment. You can do less but that means a higher monthly mortgage payment or longer loan length. Keep that in mind as you consider financing options.
    
    Having money on hand shows you mean business. It also removes any potential headaches that might come from moving money around throughout the loan process.
• Good credit
  • Lenders will lean on your credit report to make a decision. Poor pay history with creditors could disqualify you when applying for a mortgage. Also, your credit score can influence interest rates offered to you.
    
    Increase your score by making sure your loan and credit card payments are on time, keep long-lasting credit lines open and don’t open any new ones while applying for a mortgage. While nbkc is flexible when it comes to credit, not every place is the same.
• Income and job history
  • Lenders look at income and recent job history, too. Like other factors, stability reigns supreme. Inconsistent streams of income or a recent job change could potentially disqualify you — even if you get a new promotion (crazy, right?).
    
    Make sure you’re in a stable place before beginning the application process. Consistency will make you more appealing to lenders and sellers — while also helping you stay on top of your finances.
• Put yourself out there
  • Now is not the time to be shy. We recommend getting in contact with different lenders for mortgages. Look around and keep your options open...
    
    Mortgage types, rates and fees look different at every financial institution. At the end of the day, do what’s best for you. These people are supposed to help with this (rather big) financial decision. Make sure they always have your best interest in mind.
    
    We recommend doing this before you start house hunting. This will help as you build out your budget. It doesn’t hurt to have an expert along for that ride.

Get pre-approval

Now that you have a mortgage lender in mind – it’s time to apply for pre-approval. You may be asking yourself what that even means.

Essentially, a pre-approval letter is a document from a lender stating that they are tentatively willing to loan you a specific amount. It isn’t a guaranteed loan offer but it helps you stand out and shows sellers you have the funds for an offer ready to go. Simple enough, but keep these considerations in mind:

• How do lenders decide if I’m pre-approved?
  • We told you this would come in handy. Whew, gotta love that foreshadowing. Each lender is a little different. They typically look at your credit, income and assets to determine whether or not you’re pre-approved. These factors also determine how much lenders will agree to lending in principle — meaning how much you are pre-approved for.
• Can I lose my pre-approval?
  • Technically, yes. Pre-approval letters usually have expiration dates. Again, each lender is different but you can expect anywhere from 30 to 120 days. While waiting,steer clear from any big changes in life — like changing jobs, making a big purchase like a car or furniture or opening a new line of credit. Play it safe and keep your eyes on the prize.
• Pre-approval vs pre-qualification
  • We know, we know — more “pre” words Both pre-approval and pre-qualification are letters from lenders that specify how much they are willing to loan you.
    
    While there isn’t much difference between the two, pre-qualification is more of an estimate than a solid offer.
    
    Pre-approval is a stronger indication of readiness because an actual licensed underwriter has reviewed your file. This lets home sellers know you mean business.

Beginning the house hunt

You’re ready to pick a realtor, start looking seriously and make offers. Here are some tips to keep you on the right track while also making you stand out as a buyer.

• Choosing a realtor
  • Realtor, real estate agent, broker, you name it. These are the people that will find houses based on your budget and needs, guide you through the negotiation process and everything in between.
    
    You can purchase a home without one, but we wouldn’t recommend it — especially for first time buyers. There’s a lot of things that will come up along the way. Choose someone who knows the market well, has plenty of experience and will always keep your considerations in mind. Their advice will be crucial when it comes to making offers and closing.
• Know what you’re looking for
  • We all have our dream homes. Whether it’s big or small, it’s important to know what you want, where you want it and what your budget is. Our advice: don’t go into the hunt blind. It’s a big decision and requires a lot of planning. Be realistic with yourself and talk to your real estate agent if you need any advice.

Making your offer more appealing

It’s a hot market out there. People are selling and people are most definitely buying. While it is competitive out there, you’re in the right place to make your offer stand out. Follow these tips and you’ll have sellers doing double takes.

• Pre-approval and earnest money deposit
  • Hey, we recognize one of those words. We’ve already talked about how having pre-approval makes your offer stand out, but there are other ways to make an offer more appealing without waiving an appraisal or inspection. An earnest money deposit is a small deposit, usually 1-2% of the purchase price, on your offer that will go towards closing costs. It isn’t necessary when putting in an offer but it shows you’re serious about the purchase — especially in a hot market.
• Submitting a higher offer than the asking price
  • We aren’t saying go out and ALWAYS submit an offer over the asking price. It can definitely help in a hot market like now, but isn’t something to live by. Your real estate agent will advise you through the negotiation process and will give a suggestion based on a variety of factors. Don’t submit an offer over the asking price on that house with zero offers and 90 days on the market. Do your due diligence and judge each situation carefully.
• Other negotiating tools
  • There’s a lot of risk involved in negotiating that could result in a lot of trouble for you. Talk to your real estate agent about the tools at hand — like waiving an inspection or appraisal. They're the experts and will strongly advise you based on the situation.

Now breathe

Feeling better? We hope so. This isn’t a comprehensive guide, but rather a start. We have plenty of knowledge at nbkc to continue answering any questions that come up.

Buying your home is a big deal — to you and to us. Contact a lending officer or visit our home loans page for more. Let’s make your dream home a reality.