How To Buy A Home In 2024 (THE STEP BY STEP TUTORIAL)

What's up you guys? It's Graham here. So this video is meant to be a step-by-step beginner tutorial for anyone looking to buy a home for themselves to live in in 2019. Now, I made a few of these videos in the past when it came to focusing on buying investment properties, although I felt a new video needs to be made to address the ever-changing real estate markets and also focus on the people who want to buy a home for themselves to live in, not necessarily just to go and rent out and make a ton of profit.

Although making a lot of profit is always nice, and arguably, when it comes to buying a house for yourself to live in personally, there are so many other factors to take into consideration and watch out for than when you're just doing it as an investment. The cool thing is that I'm making this video from three different perspectives.

The first perspective is as a real estate agent, which has been my full-time job over the last ten years. Over those last ten years, I've sold about one hundred and thirty million dollars worth of residential real estate, so I think it's pretty safe to say that over the last decade, I had pretty much seen it all. Secondly, I say this as also a real estate investor who's been buying property over the last seven years, and the last one I bought was just really a few months ago. I now own six properties, so I see exactly what's going on in the market and I see exactly how you can get the most value possible.

Third, I bought homes for myself to live in personally, so I totally understand the emotional aspect of doing that and also exactly what to look out for and what to avoid. This video is probably gonna be way longer than just about any of my other videos out there, and the only reason for that is I want this video to be as comprehensive as possible. So that means you'll have no other choice other than to smash that like button if you haven't already, because it helps out the almighty YouTube algorithm, and the more engagement these videos get, the better they tend to do. So if you wouldn't mind just smashing that like button, it would be greatly appreciated.

We're commenting anything down below, so let's go ahead and start here. How much money do you need as a down payment on a primary residence? Now, this largely depends on the type of loan you get, and the type of loan you get will affect how much you need as a down payment.

When it comes to getting a loan in real estate, most people have two options. The first one is what's called a conventional loan, and the second is what's called an FHA loan. Now, a conventional loan is by far the most common out there; it makes up 72 percent of all home purchases, according to a government. A conventional loan is just a loan that's not backed by the government; instead, it's issued by banks or private lenders. This means that with a conventional loan, you'll typically need to come up with 10 to 15% as a down payment if you intend to live in the property as a primary residence.

However, an FHA loan, on the other hand, is a government-sponsored loan. This means that they typically have lower credit qualifications, lower down payment qualifications, and usually it's a little bit cheaper to close. With an FHA loan, you can typically put down as little as three and a half percent, which means that on a $400,000 home, you can put down as little as $14,000. However, because that type of loan is way riskier for the bank, they end up charging you a higher interest rate and also what's called private mortgage insurance, which is called PMI. This is an extra charge on top of your mortgage because you are statistically more likely to default on the loan if you're an FHA borrower. Also, there are limits to how high of a loan that you can get with an FHA; this is to prevent people from going and buying a three million dollar home just because they have $105,000 available to them.

But at the end of the day, it's really going to be up to you to do the math and determine which is going to be the right option for you and if it's worth it to put less money down with a higher interest rate and also paying PMI. If it's up to my recommendation, personally, I would just recommend saving up the extra money and just going with the conventional loan. If you do that, you're gonna end up paying less in interest, you're not gonna have PMI, and you're gonna have a little bit more equity in the property at the time that you purchase it. Also, sellers tend to take someone with a conventional loan a little bit more seriously because that person typically has better credit, stronger income, and is more likely to close on their home.

Now that you figured out how much money you need to put down, it's really important now that you figure out how to build your credit. Now, this is absolutely essential when it comes to getting a loan and buying your home because just like you'll need a down payment, you're also going to need a decent credit score. Your credit score is able to show banks how likely you are to repay back any money that's lent to you, and this is typically through credit card loans or auto loans or student loans or any time you've had money loaned to you. This is basically your repayment history.

Think of this as basically your loan prepayment scorecard or report card or whatever you want to call it; it's your grade. Now ideally, you're gonna want a credit score above 740. This is the range where banks typically give you the lowest interest rate possible, and also this means that you get the most money back in your pocket. Then, if you have above a 760, this is where banks will start to bend over backwards to start giving you loans because you're less likely to default on that, so they start giving you lender credits and other rebates and other things that really just save you a lot of money in the long run.

Now, in terms of how to build your credit, I've probably done way too many videos on this already and probably one too many credit card videos by now. So, I'll just link all of those in the description that detail exactly how you can build your credit score above 780 as quickly as possible.

With this, I got to mention this because it's extremely important, and that is to make sure you pay off all high-interest rate debt prior to buying a house. This means that you need to pay off any credit card debt, any high-interest rate personal loans, or anything that might hold you back because this will severely limit the type of loans that you can get if you have any sort of high-interest rate debt outstanding.

Now, with this, I usually get the question of whether or not you should pay off a student loan or not or whether or not that's bad debt or if that could be good debt. My personal recommendation is to always make sure that student loans are ideally paid off prior to buying a home. When it comes to me personally, I just don't see student loan debt as being good debt. Although, I will say that I would be less inclined to pay it off if you have long-term student loan debt below like a four and a half percent interest rate. At that level, I would be less inclined to pay it off, but probably anything above a five percent interest rate, I would probably just dump all the money into paying off student loans if you're paying more than a five percent interest rate.

Before I get to the next step, I definitely need some energy for this. Now, I don't endorse drinking Red Bull; I think this stuff is awful, but what I do, I drink sugar-free Red Bull. It's not sponsored by Red Bull; I just ran out of coffee today. Yeah, nasty stuff.

Okay, so now the next step is going to get pre-qualified, and this means you talk to a lender before doing anything else. By speaking with the lender, you'll know exactly what you can go and purchase, so you don't waste anyone's time, including yourself. The last thing you want to happen is that you go out and start looking at property, and then you find the perfect place. It's absolutely amazing; you can see yourself growing old in this home and raising a family in this home. Then you talk to a lender, and it turns out you can't afford it. Trust me, as a real estate agent, I've made this mistake with many buyers, and it happens way more than you think. Don't do it; it's absolutely heartbreaking.

Do not start looking at property until you've at least talked to a lender and figured out roughly what you're able to afford. Secondly, the good thing about getting pre-qualified first before going and looking at property is that when you do eventually find the right place, you already have everything waiting with the lender so that you can hit the ground running.

Also, I've found that anytime you find a great property, chances are you're not the only one that's looking at it, and you're gonna be competing with other people who feel the exact same way as you do about it. But at least having everything with the lender gives you a small advantage towards everyone else who maybe hasn't done that yet. Anytime you find a good deal, timeliness really matters because the quicker you can move on it, generally speaking, the better deal you're going to get.

Because I'm making this video to be the most comprehensive, complete guide of 2019 and not one of these generic BS videos that many people seem to make without going into a lot of detail, these are a few of the things to keep in mind when speaking with a lender and a few things to prepare for. A lender is going to be wanting these following things from you.

The first one is that they're going to want to see one to two years of your previous tax returns so you can show your proof of income. The next one they're gonna want to look at is your full credit report and score, and in addition to that, they're gonna want to see the last two to six months of your bank statements, again showing proof of income and also proof of your expenses. If you work for any sort of employer, they're also going to want to see your pay stubs as well.

Then, in addition to that, they're gonna want two to six months of expenses saved up in addition to your down payment, as well as you providing any other documentation for other properties you own, any other liabilities, any other assets that you have, or anything else that's part of your portfolio. They're gonna want to see proof and documentation of everything. Also, keep in mind, if you're self-employed, they look at you way more closely; they look at a single account, every single expense line by line by line, so just keep that in mind.

So now we've covered how much money you need to put down, how to work on your credit, paying off high-interest debt, and then getting pre-qualified. So pretty much for the most part, you're now ready to begin looking at properties. But then we get into some of the most common misconceptions that I hear buyers say that I've experienced as both myself a real estate agent and everything else I've read online.

The first question that I get probably the most often ever by far is when is it a good time to buy? The first thing that we should cover is seasonality and that many buyers believe that the best time to buy is between spring and summer, and the worst time to buy would be winter. This one is partially true. If you're looking to buy a home in spring or summer, typically you will find a little bit more inventory on the market as many sellers wait for these times to put their homes for sale.

This means that if you're a really picky buyer looking for a very specific property, you're trying to find something that's perfect, chances are this is going to happen when there's the most inventory possible on the market, and that usually happens to be spring and summer. However, the thing with that is that many other people have the exact same mentality as that and wait until spring and summer to start looking to buy, and that means that you typically end up competing with more people during those months.

As we all know from a buyer's perspective, more competition typically means that you end up paying a slightly higher price. Now, on the flip side of that, winter could actually be a better time to go and buy a property, contrary to a lot of popular belief. Now, in the winter, I've found that fewer people are looking for homes, and because of that, fewer sellers tend to list their homes for sale.

This means that the sellers that do list their homes for sale are typically way more motivated than anyone else, and this means that as a buyer, you can typically find a slightly better price. Secondly, fewer people tend to look for homes in the winter, and this means less competition. With less competition, this means that you can usually get a lower price. So really what I found is that there is no best or worst time; it really comes down to when you find the right place as a buyer.

However, if I were to totally generalize here, if you're looking for the best value and the best deal, typically those are found in winter months. If you're looking to find the perfect place that is very niche, maybe there aren't a lot of homes that fit that criteria, typically you're going to find that in spring or summer when more sellers tend to list their homes for sale. But on the flip side of doing that, you typically pay a slightly higher price. Again, just generalizing here, this isn't always the case.

The second point of topic that we should talk about in terms of market timing is should you wait for the market to crash? Now, we could debate this topic for hours, days, or weeks about what the market may or may not do in the future. There are economists out there that dedicate their entire lifetime to trying to figure this out, and my personal answer is that none of us know what is going to happen with the real estate market in the short term.

If you're planning to buy a property and then just sell it between the next one and four years, my recommendation is that most likely you're gonna be better off just renting. On the other hand, if you're buying a home for yourself to live in personally and you plan to live in the home for longer than seven years, then trying to time the market and wait for the lowest price possible doesn't really make much sense when it comes to buying something for yourself.

It's very hard to put a price tag on your own personal enjoyment, and buying something that is actually owned by you means you're not gonna have to worry about dealing with landlords, dealing with rent increases, or worrying about painting walls or anything else that comes along with that. Owning something that's yours is absolutely priceless.

So in terms of waiting or not for the market to crash, my advice is this: first of all, no one knows when the market is going to crash. It can very well stay flat over the next few years; it could very well go up 5% a year for the next few years, or it could very well go down over the next few years. My recommendation here instead is just to wait until you find the right deal on a property you can afford that you intend to keep long term.

This way, if the market ends up going down, it doesn't really matter that much because you weren't planning on selling anyway, and you got a property that you can afford, that you really like, that fits your criteria. And if the market does end up going up after you buy, then that's great too; you've just made a little bit of money on paper. It's more important that you find the right place that you can afford than to go and wait for a crash—and who knows how long a crash could take? It could take potentially years.

I know people that have been waiting for a real estate crash since 2012; meanwhile, they've lost out on gaining like 200% returns on their money because they just waited for the crash that never happened. So don't go and try to time the markets; instead, just plan to buy and hold, or HODL, as they say in the crypto market.

Okay, so now that you figured out about market timing, it's now time to write a list of exactly what you want in a home and really put some serious thought into this. Figure out exactly what is going to be a deal-breaker for you. These are not things that you could eventually live with; these are not things that you would just like to have. These are not things that you can change; these are things that you cannot change that must be an absolute deal-breaker for you.

For instance, what location do you need to be in? How many bedrooms minimum do you need to have? Do you need to have a yard? Do you need to have a very large kitchen? You need to think these things through very thoroughly. Now from there, it's really important that you start to think about the things that you would really like to have. Would you like to have a pool? Would you like to have a view? Would you like to have an open floor plan? Would you like to have avocado toast included?

Doing all of this is really going to clarify your home search when it comes to beginning to look at property because it's very easy to otherwise get overwhelmed. This also helps that you won't go into all of this blindly without any idea of kind of what you're looking for, and it's really going to help set you on the path to finding the place that's really the best fit for you.

Now, the next question I probably get asked the most, and this is mostly from real estate investors and people in the comments, is should you get a real estate agent or not? Now, this is a tough one for me to answer because I am a real estate agent, so my answer is going to be skewed slightly towards the "yes, use a real estate agent" side. Although I'm going to do my best to be as unbiased as possible and give my honest take on whether or not it's worth it, here's how this works.

With pretty much any home that's listed, the seller is obligated to be paying a 5% commission. The way that split is that two and a half percent of that goes towards the listing agent, which is the agent representing the seller; the other half of that goes towards the selling agent, which is the agent representing the buyer. Now, that 5% commission is generally paid whether or not you use your own real estate agent when it comes to buying that property. So from that perspective, you may as well use a real estate agent because the seller is paying 5% regardless of whether or not you use one.

So in these situations, you really only have two options. One is to use the listing agent to represent you and hope that they knock down some of their commission and pass the savings on to you. The second is to use your own real estate agent because the seller is going to be paying 5% anyway. Now, I would say from my own personal experience, that probably 90% of the buyers out there would be better off using their own real estate agent to represent them exclusively in the deal than either not to use a real estate agent or relying on the listing agent to hopefully cut back some of that commission and get them the lowest price possible on the home, especially if you're brand new to real estate and you're buying your first or even second property.

There are so many intricacies to be able to navigate, and I really recommend having someone who's experienced helping you navigate that as best as possible. I say all of that as someone who's been doing this full-time for ten years. It really took me about three years of doing this full-time for me to really feel comfortable with the home buying process and really understand what I was doing, and that's three years of doing that full-time. So just imagine as a buyer doing this with no experience for the first time ever; it's extremely daunting.

But here's my honest reality of the entire situation: a good real estate agent can easily pay for themselves time and time again when it comes to getting the lowest price possible on the property, and a bad real estate agent can easily cost the buyer many, many times over in terms of overpaying for a property or not getting the best deal. So I absolutely recommend for probably 90% of the people out there to get a real estate agent to be able to represent you exclusively in the deal.

The thing is you really have to choose that person wisely. Use someone who has a good track record of success. Use someone who has plenty of experience and a good reputation in the business. Don't go and use a friend just because they have their real estate license but they dabble in it part-time. Don't go and use Auntie Sally because Auntie Sally's your aunt and you don't want to tell her no because Auntie Sally could end up costing you tens of thousands of dollars.

Most people probably want to know how long does this entire process take, and this one really depends on how picky you are and the type of home you're looking for. I've shown buyers around where they literally pick the first home I show them; they closed 21 days later. I've also shown buyers for four years, and they still haven't gotten anything yet.

Now realistically, for most buyers, I would probably expect this entire process to take anywhere between 45 days and maybe 120 days. I found this to be typical of most people. Typically, I see this as being a 30 to 90-day house hunt, and then another 30 to 45 days to do all the inspections, get the loan, and close on the property.

Okay, so by now, you've probably got your agent, or you're using Auntie Sally, you've been pre-qualified, you know what you want, now is the time to start looking at real estate. When it comes to this, I recommend seeing everything on the market. I recommend taking a Saturday or Sunday and going to every single open house for every home that meets your needs list. The more properties you see, the more you're gonna recognize the good properties when they come up and the best property that's gonna be the right fit for you.

It also tends to be hard to commit to something when you don't know everything else on the market. I've shown some buyers the perfect home, but it happens to be the first one they see, and they don't want to make an offer on it because they have no idea what else is out there despite that being the perfect home at the best price.

So because of that, you can't have the best at something if you have nothing else to compare it to; that makes it the best. So see as many homes as you can, and this might also help change your criteria of what you think you need. Maybe you go and see a home and you realize you don't need this specific location you thought you did, or maybe you realize you don't need an open floor plan, or you don't need a pool, or maybe you find out something else that you need instead once you see it.

So the more you see, the clearer you're going to get with exactly what you want. Now, from there, once you've found the right house, it is time to make an offer. When it comes to this, I can easily make an entire hour-long video when it comes to negotiation styles. There are just so many different ways to go about this and so many intricacies of negotiating a deal.

First of all, from a buyer's perspective, it's very important that you offer a price that you don't regret offering if the seller does not take your offer. When doing this, it's very important that you think long term. This means that if you lose the deal, you don't think to yourself, "Oh damn, I should have just come up an extra $5,000, and then I would have gotten it." I can't tell you how many buyers that have said this to me and regret not paying a little bit more.

My advice to them is just, "Why didn't you offer more? Just offer a little bit more and get the property than risk losing it." So that is my recommendation from a buyer's perspective, especially if you're planning for this to be a very long-term hold or something that you're gonna live in for a very long time. Just think to yourself, "Ten years from now, are you gonna care if you paid an extra few grand for the property or whatever it might be?" Chances are, ten years from now, it's not really going to matter.

So it's just important at the end of the day you don't have any regrets with what you offer. If you offer the highest price and someone else outbids you on that, at least go into it thinking, "I paid as high as I was willing to go, and if someone is willing to pay more than they deserve it over me, and it wasn't meant to be, and this wasn't my perfect home because it was over my budget."

Just to put this all in context, as a buyer, coming up in price $10,000 is really only a difference of about $55 per month in your mortgage. So just think to yourself, is getting the perfect property worth an extra $55 a month? If the answer is yes, then go for it. If the answer is no, then don't. But also, it's very important not to get overly emotional and overpay for the property as well.

This is why it can dramatically help to have a real estate agent assisting you who's not going to get overly emotional about the property, who maybe can talk you down from doing something stupid. So it's really important that at least you have someone that you can consult with throughout the entire process. So, by now, we'll assume that Auntie Sally got your offer accepted, and now it is time to do your due diligence on the property and do your inspections.

When it comes to doing this, I recommend doing as many inspections as you possibly can. If you can inspect it, I recommend getting it inspected, and that could be from a general inspection, roof inspection, plumbing inspection, electrical inspection, foundation inspection, termite inspection, sewer line inspection—whatever, basically, if whatever inspections there are, I just recommend you do them all.

Now, a little shady trick here that I've used as a buyer and that I typically recommend for any buyers that I recommend and I warn sellers about doing this too and warning them exactly what to expect, but many buyers like this will use the inspections as a way to renegotiate the deal. They know that they will do all these inspections; they might spend $1,500 doing every inspection possible, and they're going to find almost guaranteed more than $1,500 worth of repairs.

So they use the inspections as a way to renegotiate the purchase price once they're in escrow, and once they kind of have the sellers by the nuts. You know, the sellers already accepted an offer; they want the sale, they're tired of showing the property, they don't want to keep it more on the market, and the buyer kind of has the leverage right now. Because the buyer did all the inspections, knows what's wrong with the property, and asks for a credit, many times the sellers by then are so worn down that they're just like, "Here's the credit; close the deal, go away, I just want to be done with it."

So from my perspective, this is your way to get a slightly lower price on the deal if you want to save money here—do your inspections, and then ask for a reasonable credit for anything that is wrong with the property. But now I want to mention this because this is one of these little gems that has taken me eight years to learn as a real estate agent and has saved me and my clients usually tens of thousands of dollars from this one little change.

This is also one of many little gems that I have in my program, the Real Estate Agent Academy (link in the description). But for real, though, when it comes to asking for repairs on a property, it's always beneficial to be as generic as possible when asking for these credits. Now, what I was taught to do as a real estate agent, and what many other agents are taught to do, is that when you get an inspection report, you itemize everything that's wrong with this and you associate a price with that.

So for instance, I see many agents will do a home inspection and then line by line itemize everything that's wrong with that with a total at the bottom. There will be like, "Repairing sink: $100, repairing a leaky roof: $1000, repairing water heater: $1500," and they itemize every little thing with a total at the bottom. What ends up happening every single time is that the seller gets this list and they see the large number at the bottom; then they look through and say, "Well, repairing this thing: $150, no, it's worth $110; repairing the water heater: $1500, no, I can get that done for $900; repairing that doorknob: it's $50, well I can do that for $10."

The seller ends up getting caught up on all these little minor things that they disagree with on price, and because of that, they don't focus on the larger number, and they're more likely to renegotiate the entire thing when they see item by item by item. On the other hand, if you just give the entire report, give all the reports, and you're just very generic, and you just say these are all the reports for everything, it's going to be $20,000 where all this stuff is gonna be $20 grand. We're just asking for $15,000 of all of this—if you just give us $15,000, we'll close the deal.

Sellers will not go item by item disagreeing with like a leaky water faucet and this when they just see a large number. I've always found that when you have no comparison between the two, you almost always end up getting more money back from the seller than when you itemized it line by line by line.

So as a buyer, make sure to follow this; it has saved me tens of thousands of dollars just by this one little trick. I had done it both ways as a real estate agent; I was taught the first way to itemize it, and I realized after like seven years that that doesn't work as well as when you're just very generic, and now I'm just very generic when it comes to that.

It works tremendously well; again, that's one of my little tricks when it comes to doing this as a real estate agent and buyer myself. So now I'm gonna hope that you followed that, that you did all your inspections, you got a credit back, now we're going to talk about closing costs.

Now, this includes charges like your escrow charges, title charges, insurance charges, and everything else that comes in the escrow process. For the most part, this is about one percent of your home's purchase price. So on a four hundred thousand dollar home, your closing costs are gonna be about four thousand dollars, so one percent of the purchase price is a rough estimate.

Because I have like a 15-minute video detailing all of the closing costs, again, I'm just gonna link to that in the description. I mean, hopefully by now you've closed on your home, and now it's time for you to fully enjoy it. The biggest takeaway here is that when it comes to buying a home for yourself, it's more important to buy a home that you're happy with long-term—not necessarily the home with the most upside or the most rental potential or anything like that.

It's more important for you to be happy in this long term for yourself, especially if you're gonna be keeping the property long-term. It's more important that you find a home that you absolutely are in love with than a home that you're just so-so about.

With that said, you guys, thank you so much for watching. Now for everyone that has been asking me to make a program on real estate investing, well, I have something for you. I call it the real estate investing blueprint. I was in Las Vegas; I did a three-hour conference when it comes to real estate investing, and in this conference, I broke down exactly what I do, exactly what my strategies are, some of these negotiation tactics that I've mentioned here, and everything else.

For the next, I think it's 48 or 72 hours, we're gonna be running a discount, like 70% off, and we have the recordings of the entire day's event. It is with myself and Jeremy from Financial Education; my portion of this is about three hours where I cover the real estate investing blueprint, and then Jeremy's is about stock market investing, that's another three hours.

So again, 70% off; I am just going to include a link in the description for that, so definitely check that out. I really hope you enjoy it; I spent like a full-on 15 hours putting that presentation together on PowerPoints, so I really feel like it's gonna be a lot of value as compacted as possible. With that said, thank you again for watching. I know this video is extremely long; thank you so much for giving it an entire chance.

If you watch to the very end, like, subscribe, add me on Snapchat, Instagram. I don't want this video to be too long, thank you again for watching it, and until next time. Oh, also, cop some merch in the description link below!