How We Help First Buyers

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Quick note before we get started, if you're thinking about buying your first home and you want help figuring out your numbers, your options, or what the next step should be, my team and I would love to help. This podcast is completely free and the way you can support the show is simply by giving us the opportunity to help you when you're ready to buy. You can reach out to us anytime and we'll help you figure out what makes the most sense for your situation. All right, let's get into the episode.

Zillow Payments Versus Reality

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You're on Zillow, you find a house you love, and by the time you've clicked through the pictures, you already know where your couch is going. Then you look at the little payment under the listing and think, wait, is that actually what I'll pay? And how much money would I need to get the keys? I'm Dat Nguyen, a mortgage loan officer and a certified mortgage advisor, and this is the first time homebuyer pros podcast. For our first episode, let's take one buyer through the whole thing. We'll use a $700,000 home as an example, and by the end, you'll know what to ask before you tour it and what happens after the seller says yes, and why the amount you bring at closing can be different from what you need to buy the house.

Pre-Approval Basics That Matter

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If you already have an agent you trust, call them. If you don't, you can start with the lender. Either way, the conversation I would have before you get serious about a house is what can I comfortably spend every month and how much cash do I want to have left after I buy? On the lending side, I look at what I personally call myself CIA, credit, income, and assets. Basically, we're looking at how you've handled debt like student loans, car payments, and credit cards, what income we can use to qualify you, and what money you have available for the purchase. Two buyers can both make $100,000 a year, give one of them an $800 monthly car payment and $5,000 in savings, and give the other no car payment and $25,000 saved. They can end up with very different options. When you talk to a lender, you want to ask what they've actually reviewed for your pre-approval. Depending on how you earn your income, they might ask for pay stubs, W-2s, bank statements, or tax returns. If you're self-employed, bring that up early because the income you see coming into the business and the income we can use for the loan is going to be different. If you're comparing lenders, ask them to show you the payment and the cash you need for the same loan scenario. A rate by itself leaves out what it costs to get that rate. Here's the part I care about most. Say the lender tells you that you qualify for a $4,500 monthly housing payment, but you've gone through your budget and $3,500 feels right. I'll tell your agent you want to shop around the $3,500 number. You already know what daycare costs, what you've put into savings, and how much breathing room you want when something breaks. Those are actually real numbers too, and honestly, most people don't consider that. And if you're six months out, you can still have this conversation now. You may have options with less than 20% down, or you might find one thing you want to work on before you start touring, like your credit. Either way, you'll know what to do next.

True Monthly Cost For Any Address

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Let's say your agent shows you two homes, both listed at $700,000. One has a no HOA dues and the other has a $400 monthly HOA. That's $4,800 a year before you've even compared taxes and insurance. When you find a home you're serious about, send the actual address to your lender and ask for the full monthly housing costs, which includes the taxes, insurance, any HOA, mortgage insurance, and the estimated cash to close, which is your down payment plus your estimated closing costs. Ask what's included so you can budget separately for things like utilities and repairs. If your pre-approval is a few months old, ask for fresh numbers while you're at it. Your agent can tell you what similar homes have sold for and what terms might matter to the seller. Say the seller has already moved out and want a quick closing. An offer at $700,000 with financing your lender has reviewed and a timeline you can actually meet might get a serious look alongside an offer for $10,000 more that needs extra time. I would have your agent and lender talk before the offer goes out, especially if you're asking for a short closing or a seller credit. You want to know that the numbers and the dates work together. This is also when I'll ask your agent to walk you through your contingencies. That's the part of the contract that can give you options. If, for example, the inspection turns up something major or the appraisal comes in low. Ask what deadlines you'll be working with and what happens to your deposit if you need to back out. Have that conversation while you can still decide what goes into the offer. So in our example

Winning Offers Contingencies And Deposits

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here, the seller accepts $700,000 and you agreed to a $21,000 earnest money deposit. That's 3% in this example. The contract sets the amount and when it's due. Hang on to that $21,000 number because we'll use it when we figure out what you still owe at closing. Here in California, this is where you'll usually hear people say, We're in escrow, or you see like a sign in the front and says, in escrow. Your agent is keeping track of contract dates. The escrow team is handling the deposit and coordinating the closing, and your lender is working on the loan for the specific house. If you're sending a wire, call your closing company at a number you verified separately and confirmed the instructions before you send anything. If an email comes in saying the account changed, call that same number before you act on it. Your loan estimate shows the terms the lender is quoting, the projected payment, and the estimated cash to close. I would recommend pulling it up with your lender if something looks different from what you discussed. While that's going on, you'll also be finding out more about the house itself. Say the inspection report comes back at 40 pages. I would ask the inspector, if you were sorting this for me, what's a routine maintenance and what would you want me to look into? Maybe there's a loose cabinet handle on page 3 and an air conditioner on its last legs on page 20. I would get a better idea of what the air conditioner would cost to replace, then talk to your agent about whether it makes sense to ask for a repair or a credit for closing cost. Now, the appraisal answers a different question. It helps the lender establish the home's value for the loan. In our example, the appraisal supports the $700,000 price. But what if it had come in at $680,000? Before you assume you need another $20,000, ask your lender to rerun the loan. Your cash requirement could change and your agent can help you figure out what the seller might be willing to negotiate and what options you have under the contract. While all that's going on, the underwriter is reviewing the loan. This is usually the point when someone asks us, didn't I already give you my bank statements?

Escrow Process Underwriting And Safety

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You probably did. If a new statement shows a $15,000 deposit, we might need to know whether that money came from your own savings account. A gift or a new loan you have to repay, right? Same dollar amount, different answers for the loan. If you're about to change jobs, finance a car, or put a whole living room on a store credit card, please call your lender first. You might hear that you're conditionally approved. That usually means the underwriter has reviewed the file and has a list of items they still need. It might be a fresh paste of or paperwork from the title company. Just ask what's outstanding and what you can take care of and when the lender needs it. Once the lender finishes that review and clears the loan for closing, you're close enough to start talking about signing. So let's do the money one more time because this is where buyers sometimes think they're paying for the same thing twice. At $700,000 with 5% down, the down payment is $35,000. Say closing costs and prepaid expenses add another $15,000. That's $50,000 total in this example, right? Now, you already put $21,000 into escrow. So after that deposit is credited, you have $29,000 left to bring. Assuming no other credits or adjustments, if you negotiated a seller credit that can be applied to eligible closing costs, the number could come down from there. As you get close to signing, pull out your loan estimate and compare it with your closing disclosure. For most purchase mortgages, you're supposed to receive that disclosure at least three business days before you become legally obligated on that loan. I always recommend speaking with your lender, and that way you can

Closing Day Math And Final Checks

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compare it side by side. Use that time to check the rate, the monthly payment, and how much money you're expected to bring. If a number changed and you don't know why, ask your lender while there's time to walk you through it together. You also typically do a final walkthrough with your agent to check the condition of the home and any agreed repairs. Then you'll sign your loan documents and get your remaining money to the closing company using verified instructions. Here in California, signing and getting your keys can happen on different days. The lender funds the loan, the deed gets recorded with the county, and your agent can tell you when the contract allows you to take possession. I would get that timing from your agent before you book the movers, trust me. So if you're listening to this because you think you might buy this year, start with two numbers. What would you feel good paying every month? And how much money do you want left in the bank after you get the keys?

Keys Timing And Your Two Numbers

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Once you have those, you and your lender can look at the same house and have a much more useful conversation about whether it works for you. But if you want help figuring out those numbers, you can find me and my team at fthhbprost.com or my Instagram at datloans. Follow the show if you want to keep going through the process with me here. I'm Dat Nguyen and I'll see you in the next episode.