A Financial Knight’s Guide to Home Buying
War…. That is the simplest way to describe it. For there is no greater action one can take to solidify their security, than buying their first home.
However, there are many enemies out there who do not want you to succeed, for they are the ones who profit most from your debt enslavement. Your landlord doesn’t want you to stop paying HIS bills. Your employer doesn’t want you to have stability. And the banks, don’t want you to have equity.
As a Financial Knight, you have already made the choice. You’ve chosen freedom over bondage, hard work over get-rich-quick schemes. You have chosen to live on less now, that you may secure a future for yourself and your future generations. But before we go in the trenches, it’s important to first know what you are up against as a first-time homebuyer.
Step 1: Pick the type of “Castle” you want
In order to wage this war effectively, you will need to do some strategic planning before charging into the home buying battle. And one of the first things to decide is what type of “castle” you’ll want for a home.
Watchtower
1–2 bedroom condo or home. A transitional home, or possible long-term asset. Buying a watchtower may be an excellent idea if you’re just starting out your career, or an uber-expensive housing market, where homes just aren’t financially feasible.
The Keep
A Fixer-Upper home will require work to make it livable. This is a good choice for couples, as restoration requires a dedicated partner to share in the burden.
The Castle
A home that doesn’t require work or requires minor work. This house type will meet all of your needs. Perfect for families or those who don’t have time, energy, or resources to fix up a house.
The Fortress
Full-on Dream Home consisting of a muti-bedroom home complete with any amenities you desire such as acreage, a hot tub, multi-car garage, marble countertops, etc.
Step 2: Gather your Allies
In order to purchase a home, you will need to ally with several different people. You will need a mortgage lender, a real estate agent, and a bank. Here is what each of these individuals does.
Mortgage Lender
A mortgage lender is a company, group, or program that will send the actual cash to the homeowner. While there are many type of mortgage lenders out there, you’ll be focusing on one that offers either “Conventional” or “FHA” mortages.
The difference being a Conventional Mortage can require as much as 20% of the purchase price of the home. Where as a FHA loan, will only require around 3% of the purchase price. While FHA Mortgages are easier to get, they aren’t as compeditive as a Conventional Mortgage.
The Real-estate Agent
This agent is an individual who will mortgage lender is a combe reponsible for researching homes, keeping track of paperwork, and putting in offers. This Individual will be paid a commission fee as part of closing costs.
The agent may require you to sign a document agreeing to finish the process with them. This ensures that you don’t make a side deal behind the agent’s back. But as an outstanding Knight, you would never think of such a thing.
A Bank
You will need an established bank account with a bank. The bank will serve as a means to verify income and financial statements. Your mortage lender will need to get full access to your bank records, in order to approve you for a mortage. Your mortgage lender will also need to see large ammounts of money being unused in savings. These are known as “verified funds.”
Step 3. Get your Pre-approval letter.
A pre-approval letter is an official legally binding document that states you have a party willing to lend you money for the home. In order to get a pre-approval, you will need to pick out a mortgage lender and file an application with them. A mortgage lender will typically ask for the following:
- ❏Two years worth of W2s
- ❏Two years worth of tax returns
- ❏month pay stubs
- ❏2 months bank statements(all pages)
- ❏Copies of driver’s licenses (for verification purposes only)
- ❏The most recent statement of any Stock or Bond assets such as a work-sponsored 401k, IRA, Stock trading account, etc.
(Sorry that hefty balance in your digital cryptocurrency wallet won’t count. At least not yet)
Once you submit these documents, your mortgage lender will look at the data provided and offer you establish the maximum amount of money they will lend you. This will be created as a document called a “Pre- Approval”.
It is absolutely CRITICAL that this step happens first. No real estate agent, online email inquiry, no bank, or homeowner will take you seriously without it. Think of your pre-approval as a royal decree from your king, and he’s given you permission to go to war.
The Knights Charge
You are calm, cool, and collected. You’re not frantically searching for homes anymore. Your mind has been made up, and you know exactly what type of castle you will be attempting to siege. You have allies are gathered around you, awaiting your command. You give the signal, your bannerman sounds the horn, and together you all charge head-on into combat.
Step 4: Scheduling a showing (Virtual or in Person)
In order to view a house, you will need the assistance of your real estate agent. They will be able to coordinate a time a date that works for both you and the homeowner. Here is a list of things that you should look for on a home visit.
10 things to watch out for the first time you view a home
- ❏ Check the floors. One way to tell that the plumbing might not be up to par? …
- ❏ Notice cracks in the wall.
- ❏ Pay attention to fresh paint.
- ❏ Look for water in the basement.
- ❏ Test the windows.
- ❏ Assess the roof.
- ❏ Note the trees outside.
- ❏ Eyeball electrical and plumbing.
Step 5: Closing on the Home
You return to your castle, nervously awaiting a raven. You are hoping that this Raven carries a message that can change your family’s destiny. That you can enter the next stage of your battle strategy, that you can finally get the victory that you’re so longingly desired. The message that says our offer has been accepted.
- ❏ Accept and review your closing documents
- ❏ Select a Home Owners Insurance Plan
- ❏ Schedule a final walkthrough
- ❏ Prep Your Finances For Closing Day
- ❏ Review Sellers Disclosure
- ❏ Accept and Review your closing documents
- ❏ Schedule your Closing Date
- ❏ Schedule Date to Take possession
Never Give Up
According to Redfin, the average home buyer puts in offers on at least 20 different homes. Ultimately your desired market will dictate conditions. So it’s important to not get discouraged.
As a Financial Knight, you represent the leader of this offensive. Your home buying team, (and spouse) are looking at YOU for the motivation to continue. They are looking to you to plan the next charge. As we said earlier, buying a house IS a WAR. So it’s important that we never give up, no matter how many houses we fail to win.
For this and other Financial Warrior guides, be sure to check out www.investlikeawarrior.com
