I've had a lot of questions about the process of buying a home especially with being self-employeed. I thought I would share our own personal process/experience in light that it might be helpful! Please note that I'm a complete newbie at this and don't know everything. We've been doing our best to learn as much as possible and ask lots of questions!
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Start the process - The first step we took was to find a realtor. I recommend asking a friend for a reference who had a good experience. Some friends of ours recently bought a house through a fantastic realtor and highly recommended her to us. She has been fantastic to work with, quick to respond, and super on top of things. After we connected with her, she put us in contact with her favorite mortgage lender. We didn't go through a big time bank and using her recommended lender was a great experience. They were personable, available for questions at any point, easy to work with, and very organized.
Get pre-approved - After we made our initial contacts we had to get pre-approved before moving forward. We set up a conference call with our lender and had to provide basic information about our income, current living situation, etc. We also talked to her about the budget we wanted to stick with for a house, and how much of a down payment we wanted to contribute. She was great about explaining the full process to us and getting all of our information. As a side note, my husband is employed full-time in Atlanta and I am self-employed. Being self-employed can be tricky. The lender wants to see at least two years of income records via your tax documents that show a consistent income. Since I quit my full-time job at the beginning of the year and only started working for Maiedae full-time this year, with part-time work going back two additional years, we opted to NOT have my income as part of the approval process. My name is still on the title, but the lender only looked at Jon's income for the loan. If you are single looking to buy a house or you and your significant other are looking to buy a house and are self-employeed I recommend having two years under your belt and keeping stellar income and tax records. One of the best things Jenny and I did for our business was hire an accountant. It's majorly helpful during times like this!
Start looking - After getting pre-approved we started the house-hunting process. Check out my last post on searching for a house here. One of my biggest tips is to make two lists before looking of your needs and wants. The more places you look at, the easier it is to really pinpoint exactly what you want. AND don't settle! You'll know when you walk in that it's the house for you. Just remember to stay in your budget, walk-in with some vision, and have fun!
Ok! You've found the house! - Here's where things really pick up! You start by making an offer, the sellers can counter your offer and you can go back and forth on an offer until you feel it's right or decide to decline and keep looking. For the house we are moving into, we initially made a low offer that was declined and later went back to the table with a new offer after looking at a handful of houses and knowing that was the one we wanted. We went up a little and the sellers went down a little and it was a perfect fit for us to accept.
Accepted! - Now that you're offer has been accepted you have lots of work to do! First of all you'll need to get busy with your lender for the mortgage loan. In order to finalize everything on their side they'll need a butt-load of information from you like your bank statements, pay stubs, tax documents for two years, a copy of your drivers license, W-2's etc. I spent almost a whole day scanning in documents, organizing them on a dropbox folder and sending everything over to our lender. Even after that we had lots of documents to sign and little things here and there to fill out and send over. You'll want to be on top of this and well organized. I recommend if you're interested in buying a house to go ahead and make sure you have all of these important documents and that they are at reach when needed. Aside from working with your lender you'll also need to get an inspection done on the house to see if it's no bueno. This is super important and will really give you an idea of what type of money you might have to throw down after moving in. Our inspector was insanely awesome. He spent four hours going through our house looking at everything and then proceeded to give us a grand tour of our house and its woes for 1.5 hours. He was thorough, honest and very helpful! Once we got a list of things that needed to be done on the house we approached the sellers about paying to take care of some of the major things before we moved in. Luckily, they were willing to take care of ALL of our requests and pay closing costs, so that was a major blessing!!
Before closing - Before signing the final documents and making it super official, expect lots of random little things to come up. Your lender might need various things, you might have to sign different documents through your realtor and get different tests or surveys done to the house. Most importantly, you'll want to make sure you have all the funds needed to pay your down payment and any additional costs at your closing date.
A quick financial tip - Aside from having the exact amount of money you'll be using for your down payment, you'll also want to set aside extra for things like an inspection or additional testing, those will come out of pocket. As well, if you have projects to take care of on the house before move-in or soon after, you'll want extra budgeted money for that. I would also recommend extra money for moving and food! Just to give you an idea, we calculated our down payment, doubled it, and set that amount aside so we wouldn't be in the hole at all during the moving process.
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I hope that was helpful information! I know it can be a lot to take in. It's a "part-time" job process and can be very stressful. Just take your time, find good people to work with, and be organized! If you have any additional questions or tips to offer, please feel free to leave a comment below. :)
Photo Credit: Illustration by Amyisla
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