Congratulations! Buying your first home is an exciting experience. If you’re a first-time home buyer in Oklahoma City Metro or Edmond, this guide is for you.
The process of buying a house is pretty straightforward, however your financial situation and the current housing market will dictate how smooth the process goes.
There are several steps involved with buying your first house. Read through the 10 steps below to understand how to buy a house, or click a link to jump ahead.
How to buy a house: What are the stages of buying a house for first time homebuyers?
- Get your finances in order and save for a downpayment
- Talk with a mortgage lender
- Get pre-approved for a loan
- Find a realtor
- Search for homes
- Make an offer
- Offer accepted
- Get a home inspection
- Close on the house
- Schedule move in date & celebrate!
How far in advance should I plan to buy a house?
First-time home buyers will probably begin thinking about buying a house at least 6 months to 1 year before speaking with a real estate agent.
The reason for this is you will want to give yourself enough runway to make sure your finances and downpayment are in order, and you aren’t in a position where you have to make any rushed decisions.
Throughout your home buying journey you will meet many new people and be required to answer a lot of questions about your money habits and income. We are here to help you get prepared and help make sure you feel confident as you go through this journey.
The very first thing you’ll need to do is get your money in order. Let’s start there.
“Understanding the steps is really important so I can make sure I have all my ducks in a row before starting the home buying process.” -Caleb Cole, future first-time homeowner
Step 1: Get your finances in order and save for a down payment
Getting your finances in order up front will help the entire home buying process go smoother. Make sure you have a good handle on your monthly budget, and are keeping track of where all of your money is going.
Make sure you have enough income coming in to put aside for savings, repairs for your new home, and also for a monthly house payment. You’ll want a reputable mortgage lender to check your credit score to verify everything is accurate, and help you dispute any errors.
In order for a lender to give you a mortgage, they’ll typically want a down payment. The lender looks at this down payment as your investment into your home. It can influence what your final interest rate will be and whether you’ll need to pay for private mortgage insurance.
PMI, or private mortgage insurance, can be avoided if you are able to put 20% down on your down payment. Different mortgage loan programs require different down payment amounts, so you’ll want to talk with a lender to understand what loan is best for you.
If you’re looking for a lender to work with, generally speaking we recommend working with a local lender, over an online lender such as Rocket Mortgage (and there are many others). In the event a red flag is raised during the buying process, it is usually easier to get fixed with a local mortgage lender that we can speak directly with.
Step 2: Talk with a reputable mortgage lender
“It is crucial that a home buyer knows exactly what their buying power is. There are several complex guidelines and obstacles that only a mortgage expert can navigate. This is where having an expert in your corner can make a huge difference in helping you achieve your home buying goals.” -Chris Miller, President of Champion Home Loans mortgage company in Oklahoma City.
The lender will look at these key factors when reviewing your application:
- Credit report
- Debt-to-income ratio
- Assets/Down payment
- Program eligibility
Chris explains what these four factors mean:
1. Credit report
A credit report is a summary of your financial history. Lenders will use your credit report to help them evaluate whether you are a good credit risk. The three major credit-reporting agencies are Experian, Equifax, and TransUnion.
The three agencies use an algorithm to generate a score that factors in your current and previous credit accounts from the last 7 years, their minimum payments, and their payment history. A credit report will also list any collections or bankruptcies from the last 7 years.
Each specific loan program will have a minimum credit score requirement. Typically first-time home buyers utilize a FHA loan as it has a lower credit score requirement (500 minimum with 10% down, 580 with 3.5% down).
2. Debt-to-income ratio
A debt-to-income ratio sounds like an easy thing to calculate; but depending on how you are paid it can be difficult to do accurately. Certain debts are calculated at different monthly figures than what you are actually paying monthly (student loans are a prime example).
If you have variable income (income that is from overtime, bonuses, commission, etc.) then it will need to be calculated according to the mortgage guidelines. A mortgage lender will be able to take the total of your monthly debts and divide them by your qualifiable income to establish this ratio. Each loan program has specific ratio guidelines to follow.
3. Asset/Down payment
A lender will need to see your assets to ensure that you have the proper funds to provide for your down payment, closing costs, and reserves (if necessary). Assets will need to come from a sourceable account. Although having cash at your house is great in some instances; it can’t always be used in the purchase of a home.
4. Program eligibility
There are many different types of loans, and your lender will help choose the right one for your situation. There are programs for first-time home buyers, Military Home loans (VA Loan), Federal Housing Administration loans (FHA), Conventional Loans, Section 184 loans for Native Americans, among others. Each program will have different down payment and credit score requirements.
A reputable lender will be able to evaluate your profile and determine which program is going to be the best for you and your family. Talk to your mortgage lender and create a plan.
In some situations, it may benefit you to hold off on buying a home until you can save up a larger down payment.
Step 3: Get pre-approved for a loan
Once you’ve decided on the loan type, work with your lender to go through the pre-approval process.
Pre-approval is typically a pretty quick process, lasting around 1-3 days. The lender will check credit history and will pull your banking history to help determine if you are a candidate for a home loan.
If pre-approved, you’ll be provided with a pre-approval letter. This is not the final step in the loan process, rather this is a ‘snapshot’ of your financial situation and ability to secure a loan for a home. Expect to discuss and agree with your lender on your down payment, the loan type, as well as your monthly mortgage payment.
Pre-approval is an important milestone in the home buying process. Although you may be feeling high with excitement, don’t go out and start making any large purchases.
What not to do during mortgage approval
Did you know there are things you should not do before & during buying a house? It’s important to maintain consistency during the mortgage approval period. You want to avoid making large purchases or establishing new lines of credit while still in the home loan pre-approval stage.
Another first-time home buyer mistake to avoid is changing jobs at this stage. Changing your source of income can cause your lender to doubt your ability to pay on time.
Steer clear of any activity that asks you to apply for a line of credit, borrow money or wants to run your credit score. This can trigger a red flag for the bank that you may have potential for home loan default.
You don’t want to derail all of your hard work at this point!
Step 4: Find a realtor
Buying a home is a huge life decision.
You’ll want a realtor that has your best interest at heart and wants to see you succeed and happy. It’s a good idea to interview several realtors, and make sure that you find one that you feel comfortable working with. You and your realtor will be spending a lot of time together, from now until the closing of your home. Before your realtor can begin showing you homes, they’ll ask you to sign a Buyer Broker Agreement.
What’s a Buyer Broker Agreement?
Beginning in 2024, home buyers and their agents are required to agree to and sign a Buyer Broker Agreement before showing any homes. In essence, this outlines the services to be provided as well as the mechanism for compensation.
Do you need a realtor to buy a house?
Technically, it is possible to buy a house without a realtor. However, we don’t see a reason to do this. Realtors can help remove a lot of the stress and uncertainty in the situation- especially for first time homebuyers.
With so many housing options to look through, different price points to consider, inspection reports and negotiations, a realtor is there to help guide you through the home buying process.
Realtors have insight in the housing industry that can help you make a more informed decision, as well as make sure you are not getting taken advantage of. Additionally, having a professional to guide you through the contract stage to make sure your needs are represented can help make sure you are getting a fair deal on your purchase.
A home purchase is likely the largest purchase you will make over your lifetime, and it makes sense to utilize a professional to represent you.
How do I find a buyers realtor?
During the home buyer search, you will be spending a lot of time with your realtor! It’s wise to work with a real estate agent that you feel comfortable with and that understands your needs and budget. You may see the term “Buyers Agent”, or “Real Estate Agent” or “Realtor”. Generally speaking, as long as they all work with Buyers, those terms are interchangeable.
When you’re looking to find a realtor to buy a house in OKC, there are a few general questions that you can ask to help you better understand their services.
- What services do you provide when helping me find a home?
- Are there areas or neighborhoods that you specialize in?
- What is your experience in the home industry?
It’s important to find a real estate agent near you that understands the local area. Oklahoma City metro has many districts and suburbs so finding a locally based buyers agent that is well familiar with the housing industry will help you make a more informed decision when it comes time to put down an offer.
Not all agents are the same. There is a subtle difference between a real estate agent and a Realtor®. The latter is a member of the National Association of Realtors® and vows to adhere to a code of ethics. This includes treating all parties honestly, and to not mislead anyone throughout the transaction process.
Working with a Realtor® can give you the additional assurance that you’re working with a professional with your best interest at heart. Your realtor’s expertise will help you make an offer on a home, and understand the inspection report.
Step 5: Search for homes with your realtor
Once you’ve signed a Buyer Broker Agreement with your agent of choice, the fun begins! You will see a lot of homes throughout the process, so it’s a good idea to go ahead and set your expectations early so you don’t get sidetracked. Make a list of needs and wants.
The needs column should contain a few non-negotiables that you definitely want to have in your home.
Discuss these with your realtor, who will begin hunting for homes that match your perimeters. Expect to look at a lot of houses, which could take anywhere from a couple of weeks to a couple of months depending on the market.
10 things to consider when house hunting:
- Do you want a home that is brand new or previously lived in?
- What kind of updates are you comfortable making to the house, if needed?
- Is a particular location most convenient?
- If you have children, what school district do you want to stay within?
- Is buying a home in a safe neighborhood a top priority?
- What type of neighborhood best suits you? One with an active HOA, pool and playgrounds or a neighborhood that is more hands off with limited or no formal HOA?
- How much land do you want or need with your home, and what do you want to do with that land? Garden, keep animals, need space for a shed or extra buildings, etc.
- Is there a minimum number of bedrooms or bathrooms needed?
- Do you need a home that can be converted to handicap accessible easily or without stairs?
- Do you need a guest room?
How to find house listings
Work with your realtor to setup a home search online, so both of you can work from the same list of homes you like, and ones they recommend. This will also allow you to receive a list of new homes placed on the market either daily or weekly, so you can stay on top of new options.
When you find homes that you’d like to tour, ask your realtor to schedule it.
Tip: If you find yourself in what’s called a ‘sellers market’, then expect for homes to sell very quickly; potentially within days of being placed on the market.
You’ll need to be prepared to make a decision and work with your realtor very quickly. Conversely, a ‘buyers market’ can tend to move more slowly. You will have more homes to choose from as well as more time to make your decision.
How to know if you are buying the right house
Buying a home is typically the largest purchase a person will make in their lifetime. It’s important that the home suits you and your family’s needs.
If the home checks off your list of needs and wants, how do you feel about the house and area in general?
- When you walk in the front door, can you envision yourself and your belongings there?
- Does this house align with your budget you created at step 1?
- Do you feel safe here?
It’s important to ask yourself these questions honestly, because you will want to love your home after you move in.
While it’s important that you feel good about your house, it’s equally important to have a sense about what the house will cost you long term. You can ask your realtor to find out what the average utility costs, insurance and taxes might be for this property.
At this stage you may start to get very attached to a home, but the home inspection likely hasn’t been completed yet. It’s a good idea to give yourself the possibility that the home inspection report may come back with more work than either side is willing to put in, and you may need to back out and move on.
Buying a house can tend to be an emotionally straining process. The key to remaining stress free during home buying is to expect up front to look at many options, but still understand that it could fall through in the end.
“Neighborhood safety has always been very important to us when looking for a place to live. And because we want to stay in our first house for a long while, it was even more important to make sure we were choosing the right location. We used Neighborhood Scout to get an overview of crime levels throughout the city to ensure we were buying a home in a safe neighborhood.” – Holly Kosec, recent first-time home buyer.
You’ll probably visit and tour a lot of homes. This will help you develop a better sense of your options, and how they align with your needs and wants.
Step 6: Make an offer
How to make an offer on a house
Once you’ve found a home that is within your purchase price range, and checks off your “needs” list, it’s time to make an offer! Your realtor will help provide you guidance with what kind of offer to make in order to have the best chance for securing the home.
The offer made can vary depending on the competitiveness of the overall market as well as what type of loan you are carrying.
Your realtor will formulate the official offer documentation and send it over to the selling realtor. At that point, the seller’s realtor will help the homeowner sort through all offers to understand which is the best offer for them.
Typically, sellers are more inclined to choose an offer that is “cash offer”, or a conventional loan. These typically close faster and with less paperwork.
How to buy a house tip: How to get my offer accepted on a house
Depending on the market, your initial offer may be accepted or you may find yourself placing offers on several homes before one is accepted. For first time homebuyers, this can be the portion that triggers anxious feelings. Your realtor should be keeping in close communication with you, and will help make recommendations on different options to try in the event your first offer is not accepted.
In a ‘sellers market’, it’s not uncommon for several potential home-buyers to place bids on the same home. This is one area that the expertise of a realtor will come into play. A realtor will have a sense of what kind of offers are most likely to be accepted, in order to help your offer stand out and get accepted.
This could include things like making concessions, paying cash, or being flexible. A home buyer that can pay cash for a home is typically the most likely to win a bid, as there is less paperwork for the seller and the house can close faster.
Of course, you’ll want to make sure it is in line with your home loan framework that you created with your lender. Your realtor will need to know this information so they can best serve you.
Expect some back-and-forth
Depending on the actual offer you make there could be some amount of back-and-forth with the home seller in order to negotiate into the best interest for both the seller and the buyer.
You also may be required to put down a deposit to hold the property. This is where the expertise of a trusted realtor comes into play, who has experience negotiating and understands the local market and what is needed to close the deal.
Why would the purchase of a house to fall through?
An accepted offer, while cause for celebration, doesn’t mean everything is final. There are still some things that could cause the deal to not go through at this point:
- Your loan doesn’t end up going through
- Something comes up on the inspection report that you’re not OK with
- The seller gets cold feet and decides to back out
What questions should I ask my realtor when buying a house?
- Is this home priced correctly or is it overpriced?
- Do you think the seller will give any concessions to repair needed items in the home?
- What school district is this house in?
- What are the disclosures on this home? (roof age, flood zone, will be listed in disclosures)
- What do we do if the offer is declined or countered?
Step 7: Offer is accepted! You’re getting closer!
Once the seller accepts the offer, that acceptance notification immediately goes to the lender and to the title company where you received your pre-approval letter. That will initiate the rest of the approval process.
They will verify your source of income, any automatic payments that come out of your checking account. Your lender will likely run an appraisal, to ensure they are not lending more than the home is worth.
The title company will pull the title on the home to verify the paperwork is in order before the home changes ownership. Occasionally a title company discovers messy paperwork or liens from prior ownership exchanges, so this is one area that could slow down the process. The title company wants to ensure that no one can approach you in the future and attempt to claim ownership over your home.
Step 8: Hire a home inspector to inspect the property
Once your offer is accepted, typically the buyer will have 10 days, called the ‘inspection period’ where you will have a professional inspect the home.
The inspector is looking for mold, termites, structural issues, and in general verifies that everything is in good working order.
On inspection reports there is no such thing as a ‘perfect’ house. Reports typically always find something, it’s just whether that ‘something’ is a deal breaker or not.
Your realtor with JMR Realty will be there during the inspection process and will review the report with you.
Can you get a home inspection before making an offer?
Yes, it is possible to get a home inspection before making an offer. However, in some markets this may not be the best tactic.
In a seller’s market, when home inventory is low, it’s possible that the home will sell before there is a chance to get a home inspector to the property.
Additionally, the homeowner will need to agree to a pre-offer inspection and make the property available.
A good sign to look for is if the seller has chosen to perform what’s called a ‘pre-inspection’ report. They will have a copy of this report and likely will share it with the buyer. You should still pay to have your own inspection performed (and with a different company than the pre-inspection) but this is a good-faith signal that the seller is motivated and wants to sell a property that is in good condition.
Should you attend a home inspection?
While it is possible for both the homeowner and the buyer to attend an inspection, keep in mind that it is typically not necessary. Home inspectors are hired to provide a service and while the buyer certainly can request to be present, keep in mind that in some cases it may be counterproductive.
Your realtor will attend on your behalf and relay pertinent information that you need to be aware of. Home inspectors are by trade very thorough professionals, and they provide a valuable service.
They provide a full report of their findings, which your realtor will discuss with you in detail. If there are any questions that arise from the report, your realtor will help find the answer or get clarity on.
Can a buyer back out after a home inspection?
Yes. There is a clause which allows the buyer a certain number of days to back out after receiving the inspection report. If something comes up on the inspection report that you are not comfortable with, you can back out at this stage.
There are a few potential red flags that could show on the inspection report:
- Mold throughout home
- Extensive termite damage that has remained untreated
- House foundation issues that will be costly to repair
- Other previously undisclosed damage
Is there anything else we should check before buying a home?
Homes built throughout the United States in the 80’s, 90’s and later may have used materials containing asbestos. While the materials may be harmless if they are found intact and undisturbed, a natural disaster such as an earthquake could cause the release of harmful fibers. If you want the home inspected for asbestos, you’ll need to hire an expert asbestos contractor to perform testing on the property.
Step 9: Finalize the deal at the closing office with your realtor and all parties
Closing day is where all involved parties gather and sign the final paperwork to finalize the transaction. The seller, buyer, mortgage representative and any other parties will attend. This is also the day you get your keys to your new home and when all parties receive their compensation for services rendered. This could include your initial loan payment, closing costs, and any additional fees.
Step 10: Schedule your move in date
Yay! You made it! Now you get to schedule your move-in dates and coordinate any final details with the seller. Depending on how many belongings you have to move, you may want to consider hiring a local moving company to assist. We have more information on hiring a moving company here.
How does JMR Realty help first-time home buyers?
JMR Realty focuses on helping first-time and repeat home buyers find a home that they love! Whether you are shopping for a home in Oklahoma City, Edmond, Guthrie, Yukon, Midwest City or any other OKC Metro location, we want to be your realtor! We are a proud member of the National Association of Realtors, and a licensed Realtor®. We have experience building, buying and selling homes for over 10 years. Here’s what you can count on from JMR Realty when buying a home:
- We’ll help you create your ‘Needs and Wants’ list
- We’ll stay on top of the newest listings and setup homes to tour
- We’ll be present for the home inspection in order to stay on top of any potential issues that need to be addressed
- We’ll help walk you through the offer stage, and be with you through closing
- We are here to make sure you feel comfortable and confident through the home buying journey
Congratulations on making it this far! Home buying is an exciting journey, and when you are ready to take the first step we are here to help you along the way.
Jimmy Hughes is the owner + broker of JMR Realty. He works directly with home buyers and sellers in the Oklahoma City Metro and Edmond areas. He loves saving sellers their equity by listing at 1% or $999 flat fee.
Call Jimmy at 405-888-3148 or email him at jhughes@jmrrealtyok.com