Steps for newbies buying an investment or primary residences

[Preston Dean]

Posting this to potentially help those new investors or first time home buyers. 

HELP! I WANT TO BUY MY FIRST INVESTMENT PROPERTY BUT I DONT KNOW THE STEPS OR WHERE TO START!

Read below...

1. You speak to a mortgage lender (mortgage broker) and you tell them you want to buy a house and what you think your credit score is, what you believe your debt to income is, and what your monthly income is. Based off that info, they will give you a Pre Qualification that says you are Pre Qualified to purchase a property around $____ amount. NOTE: credit most likely has not been pulled yet to verify what you told them.

2. You get with a realtor, someone that a trusted friend recommended to you or from bigger pockets, and tell them that you are looking to purchase a house or duplex or whatever you want to buy and you have been Pre Qualified for $___ amount. That realtor should begin the home search for you and set you with with some homes that you like in the area you want and whatever criteria you tell them.. IE. 4 bed 2 bath more than 2,000 SQFT with a pool.

3. Based on the search that the agent sent you, you begin to see some homes you like and let your agent know that you would like to potentially see some homes. At this step is when you should reach back out to your lender and ask to formally be Pre Approved. This is when they will actually pull your credit and the lender will truly verify that you do have a ____ credit score & you do have ____ debt to income and you do make $____ per month. After a day or two you should receive a Pre Approval letter stating you are good to go and can purchase a house up to $_____ amount.

4. You and your agent go shopping and begin to submit offers on homes.

5. Your contract gets accepted and now you are officially under contract. In Texas you have 72 hours to submit Earnest money (about 1% of the house value) + option/inspection fee (about $50/day). During option/inspection period (how ever many days you want) is when you do all your inspections. If for whatever reason you don't like anything about the property you can back out of the deal and you will receive you earnest money back but you will forfeit the option/inspection fee only if you back out during the inspection period. If you back out afterwards you lose both earnest and option/inspection fee.

6. Right before option/inspection period end you and your agent decide what to negotiate, based on seeing the inspection report. IE. Asking for repairs to be fixed before closing? asking for $$$ off the purchase price? Ect...

7. After negotiations are finalized you then have the appraisal hurdle to clear. If you purchased the property for $400K but it only appraises for $390K then the bank will only loan on the $390K and you have to come up with the difference of $10K or ask the seller to help chip in (they pay $5,000 & you pay $5,000).  NOTE this is only with conventional offers. FHA & VA - the purchase price has to be the new appraised value in Texas. Obviously with cash appraisal value doesn't matter since there is not a bank lending money.

8. Once you are over the appraisal period you should be days away from closing. Don't make any large $500+ purchases or open any new lines of credit for anything at this time. You will jeopardize losing the deal because your debt to income will increase.

9. You close and move in!

I truly hope this helps some of you who are new to the business. These are things that I was not aware of when I purchased my house years ago. 
ps. don't forget about closing costs - they come at the very end of the deal and are about 2-4% of the purchase price

*disclosure I am not a lender but this is what I know from being a realtor for 3 years*