Buying a home is one of the biggest purchases you will ever make, so it stands to reason there can be a little stress involved. However, with the proper tools and professional support, it can be an enjoyable experience!
Your First Steps
You’ve decided it’s time to purchase your first home. Congratulations! You’re probably feeling anxious, excited, and raring to go. Before you set off on this exciting adventure, however, there are a few details you should iron out.
1. Ask yourself – am I ready for this?
Do I have a stable job, and am I in a position in my life that I want to put down roots? Home ownership is one of the best ways to build wealth, but along with that comes added responsibilities that differ tremendously from renting. Repairs, maintenance, and additional utilities are all on you now – are you ready? There is no landlord to call if something goes wrong and the possibility of being house-poor is a very real thing, if you are not prepared.
Keep in mind, a 30-year mortgage is a big deal. Interest builds and monthly payments will always be there. Ask someone you trust about their experience or talk to a financial advisor, trusted and professional opinions are never a bad idea. As I said, one of the best ways to build wealth is property ownership, just make sure you treat it as the big deal it is, try to move forward with eyes wide open and with a support system around you.
2. Find an agent
After a bit of soul searching, your first step should be to find an agent. Communication and trust are the two biggest factors to consider. Your agent will be the center point for the entire transaction. They will communicate with all other parties involved and, in most cases, should have quality recommendations when it comes to picking a lender, inspector, and other members of your home buying team. As the hub of your entire process your agent should be a person that communicates well and often, and someone you feel you can trust. But how can I find someone to trust?
First things first, don’t ever feel like you can’t interview, and even push a little, to find out what you can about an agent before you commit. This is a big deal and you deserve to have the best possible team helping you. A few common questions to ask your agent: When are you available, what’s your track record (recently and for these types of sales), are you part of a team, and do you have references I can speak with? These are all okay to ask, in fact, you should ask these.
In my opinion, the 2 most important questions are their
- recent track record
- and, their team.
Have they done a lot of similar business recently and do they do everything themselves or do they have a team supporting them.
If they have successfully worked with many home buyers over the last year or so, this should tell you a few things:
- They are a full-time agent, not one that dabbles,
- They are experienced in THIS market, meaning they know the current conditions and can better guide you – which is key since things change quickly – and
- They know the current housing inventory, so they can actively guide you through the process, not just hope a home you like pops up on an online search.
The traditional agent does everything from touring homes, to paperwork, to marketing, to negotiating, and closing. A team functions as a group of specialists working together in their particular area of expertise towards a common goal. Most agents have a basic understanding of all of these areas, but to truly give you the help you need and walk you through the process as seamlessly as possible, you need a group of experts in your corner. Ask your agent about their team.
3. Find a lender
Once you’ve found an agent you trust, finding a lender is easy. Your agent should be able to refer you to one or two qualified local lenders. Then sit down face-to-face, if you can, and ask them those same “common questions” you asked your agent. This will give you time to interact and make sure you are comfortable.
After you’ve established a relationship with a lender, they will need to learn a little about you and your financial standing. The purpose here is to be as accurate as possible when quoting you monthly payment estimates and interest rates. These things vary, depending on your financial history, the property, and the type of loan. A few helpful questions to ask are:
- what different loans types do I qualify for and what are the differences in interest rate and down payment amounts?
- What is private mortgage insurance and is there any way for me to avoid it?
- And after closing on a property, when is my first mortgage payment due?
One big thing to consider: Most of us don’t think too much about our credit until we try to buy something significant…like a home. You can check your score on any of the free sites, but your lender will do this as well. A few things to keep in mind are:
- You can improve your credit, it just takes time, so plan accordingly.
- Don’t make any large purchases or purchase anything on credit during the home buying process, without speaking to your lender first.
- If you’re making payments on anything else, keep making those and keep making them on time.
Your lender should be able to give you one or two things you can do to improve or maintain your good credit. In general, the idea is this, get anything negative off, put positive things on, and give it time to build.
4. Get pre-approved
Don’t worry your lender will walk you through this, but here are a few pointers. You will need to provide things like your tax returns, pay stubs, and bank statements, so be ready. The pre-approval serves two purposes: First, the lender is trying to make sure you’re a safe lending-risk, that you appear to be stable and able to pay them back. Second, it tells the seller of the home you purchase, that you’re worth considering as a buyer. In our market, when financing your purchase, the only way to get your offer seriously considered is to have a current pre-approval letter.
Two commonly overlooked things to do: The quicker and more detailed you are, the smoother the process will go. First, provide every page of a particular document. For example: if your tax return is 9 pages, make sure you include all 9 pages, even if you think a page or 2 is not important. Lenders need to see everything. Second, gather and submit any paperwork requested as soon as you can, because delays early can cause delays at the end. For example: an extra day or 2 spent slowly gathering or forgetting to email your lender, can push the process back and cause a delay at closing. And although it might not seem like a big deal, a short delay at the end can cause a whole lot of unnecessary stress.
Real Estate can be bumpy, we are talking homes, family, and big money – so emotions are always running high. These simple first steps will go a long way in smoothing out the bumps and keeping your first-time home buying experience as positive and exciting as possible.