Deborah’s Hot Tips
For First Time Homebuyers
If you do a Google Search for the term, “First Time Homebuyer Tips,” you will find around 520,000 search results! If you are contemplating your first home purchase, you’ve probably already done quite a bit of research already. But, how much of the information you found was really useful and pertained to you personally? Don’t get me wrong; there is a lot of good well-meaning information out there but I want to present relevant, timely, and focused information to help you purchase in 2013!
Know you, your family members, and what you really need in a home can go a long way in making the process less stressful. Here are some basic questions to consider:
- What type of housing best suits your lifestyle needs?
- What specific property features will your home need to have? (Start with what you need, not with what you want. I will explain why.).
- What is a realistic budget or how much home can you realistically afford?
- Where should you get a mortgage?
Now let’s look at each question a little closer. Did you know that if you need a mortgage to finance your first home purchase, lenders recommend that you start preparing six months to a year before you start shopping? I get calls from “buyers” all the time wanting property information, wanting to know if the sellers are willing to come down in price $15,000 to $20,000… Then I start asking some of the questions above and I find out that they aren’t “buyers” at all. They are just “thinking about buying some day” or “just looking.” There is absolutely no harm whatsoever about dreaming and looking at what’s on the market. But don’t start asking about negotiations and wanting to set showing appointments when you aren’t ready yet to actually buy! Why? Because it’s premature.
Put yourself in the seller’s position. Would you want your Listing Agent setting appointments with “looky loos”? Sure, as a window shopper you want to take a look around, see what’s on the market, try to figure out what your potential monthly payment will buy you, but to put it bluntly, it’s rude. Not only that, it can be emotionally harmful… to YOU. You may find the absolute home of your dreams and because you aren’t financially or emotionally ready to buy it, it can set you back. I’ve even seen people on the verge of a divorce because one spouse has decided “we have to have that house right now!” Trust me… go through the proper process and buy when the time is right for you. You won’t regret it!
- What type of housing best suits your lifestyle needs? There are many choices today. You could purchase a traditional home, a condo, a townhouse, or a multifamily with up to 4 families in the building. There are pros and cons to each. You can buy retail or close to wholesale. Do you have tools and skills? You can save some money by purchasing a fixer-upper. Or, now that new construction is coming back, you can get some really fabulous deals and build! To determine which type of home fits you, do research online. There are many sites about the pros and cons of each type of housing. Be an informed buyer!
- What specific property features will your home need to have? I stated earlier that I would explain that you need to start with what features you home “needs” to have not features that you “want” to have. As a first-time homebuyer, one big mistake that is often made is that you look at the home your parents have or someone more established than you and you want your “dream home” today! Chances are, that is not realistic. You are just starting out or starting over. So, it pays to be practical! It’s easiest of you start with what your basic needs are, then build on that as your budget allows. Sure, it may be nice to have a fourth bedroom for guests that might stop by a couple of times a year, but if it strains your budget, don’t do it! You want to enjoy your home an your life. Don’t be house poor because your desires are bigger than your budget. So choose your home based on proper location, proper square footage, a home that will not need major repairs for 3 to 5 years down the road so you can adjust to being a homeowner.
- What is a realistic budget or how much home can you realistically afford? Before you can start shopping for a home to buy, it’s very important to have real numbers to work with. You need to know how much homeowner’s insurance will be, property taxes, and your monthly principal and interest. And, you can’t forget about closing costs! For the purposes of exploration, you can get a close estimation of how much home you can afford on your own. One site that is very helpful as you do your research is bankrate.com. Check out their debt-to-income calculators. I used to be a mortgage broker so I know this will be very helpful to you! If you want a simpler tool, you can also try their mortgage calculator. There are many free calculators online. Then you will see if your home that you are dreaming about will actually be affordable. You know how much you want to spend each month on a payment. If you are informed and educated before you see a lender, you will stay on budget and not just go with whatever the lender says you can afford. Sometimes the formulas come out where you can afford a very sizable monthly mortgage but that doesn’t mean that’s what you really want to spend each month!
- Where should you get a mortgage? One of the best ways is to make a list of referrals from friends, family members, co-workers, and other people you trust. Ask around! Mortgage lenders and banks spend tons of money on marketing so the ads play to your emotions and can’t be relied upon to be truthful. They’re manipulative. So, ask real people what their experience was with their mortgage lender. Of course, in my humble opinion, I work with about 3 of the very best people that deserve my trust. I can share that list with you. Do research online about good questions to ask your lender. Between the responses to your questions and by using your instincts, you should do just fine. Your lender should be aware of home-buying assistance programs that you may qualify for as well as government programs.
As stated in an article by Donna Fuscaldo January 24, 2013 for Fox Business, “It’s far less complicated if you take the right steps in advance,” says Andre Brooks, a regional manager for Wells Fargo Home Mortgage. “Before people start on this journey they should spend some time preparing. The lending requirements of 2012/2013 are different than [what was necessary in] 2005 and 2006.”
If you want to lessen the stress of house hunting, gather all of the necessary documents and prepare for purchasing a home. Get pre-approved with a lender that you trust prior to the actual activity of house hunting and setting showing appointments. Today’s lending standards are more stringent so you have to take some time to really prepare and not rush into it. This will be one of the most important and expensive purchases in your life.
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