If you are about to embark on the purchase of your first home, you have an exciting journey ahead. While you will quickly discover that everyone had advice to offer, you may find it somewhat challenging to determine which advice is right for you.
At Sente Mortgage, we know a lot about home buying. Here’s our top-ten list for first-time home buyers:
- Meet your new best friend: your mortgage banker. If we had to reduce all of the other tips to just one, it would be this one. Your ability to purchase a home, your understanding of the process, and your short- and long-term satisfaction with the experience will be influenced enormously by your loan officer / mortgage banker. Before you start shopping for a house, you need to know what you can afford, so your mortgage banker goes to work for you even before your Realtor. Your mortgage banker is entrusted with your personal information and will make recommendations on loan programs that are most suitable for your personal and financial outlook. Like a doctor, your mortgage banker should be someone you trust absolutely.
- Find a Realtor. While it may be tempting to work with a friend or family member who has a real estate license, it’s even more important to find a reputable Realtor who has the skills and experience to serve your particular needs. Ask for referrals from people who have purchased homes recently, then interview several agents before you make a decision. During your first meeting, make sure that the person really listens to you: asks questions and pays attention to your answers. Has the agent sold properties in your target neighborhood and price range? What is the agent’s preferred method of communication and does it match yours? Will the agent serve exclusively as a buyer’s agent or might they also represent the seller? How will the agent approach the challenge of finding you the right home?
- Learn the lingo. Like every industry, real estate and mortgage lending are loaded with trade-specific terminology. Make sure you clarify any terms that are unfamiliar, both in conversation and in written materials.
- Be timely. Many times over the course of your home purchase, you will be asked to respond to calls, show up for meetings, and produce documents. The delay of a few minutes can mean another buyer gets the house. The failure to provide documents can delay your purchase by days or weeks. Your home purchase is your top priority, so give these requests your most prompt attention.
- Ask questions. There simply are no stupid questions when it comes to the purchase of a home. Often the largest investment a person or family will make, a home purchase is a binding legal commitment and every aspect of the transaction should be thoroughly understood. The last thing you want is to close escrow, get the keys, and find that owning your new home comes with surprises.
- Read the fine print. Most real estate and borrowing transactions are document-heavy: pages and pages of fine print. It may seem generic, but understanding the terms of your offer and your loan are critical to your long-term welfare. Read every word before you sign anything.
- Ask before you act. A variety of things can create red flags on your credit report and can have a negative impact on your ability to qualify for a loan. Ask your mortgage banker before you open or close bank accounts, apply for new credit cards, pay off loans, buy a car or other large investment, or withdraw or borrow funds for a down payment.
- Shop for insurance. You won’t be able to finalize your home purchase without homeowner’s insurance, so start early and, as mentioned above, ask questions and read the fine print. Make sure you understand what is and is not covered by the policy, what the deductibles are, and what, when, and how payments are to be made. If your home is in a flood or geologic hazard zone, you may need to purchase an additional policy to cover such losses.
- Be creative. If you’re prepared to think a little bit outside the box, you may find yourself with a better house than you ever expected. For example, outside the box could mean exploring a neighborhood you had not considered or looking for down payment assistance from family or even crowdfunding. It could mean considering a condo instead of a single-family home, or a duplex, where you live in one unit and rent out the other.
- Get your ducks in a row. In many parts of the country, real estate is currently experiencing a seller’s market – the number of properties on the market is low and the number of eager buyers is high. That means that you, as a buyer, need to be ready to act when you find the home of your dreams. You need to be pre-qualified and have a pre-approval letter from your lender. You need to know your financial limits and avoid exceeding them in competitive counteroffers. You need to know which features are critical and which ones you can live without in the home you choose.
Looking for more information on purchasing your first home? Our First-time Home Buyers Guide will give you even more guidance to navigate the process.
If you’re ready to talk about buying a home, Sente Mortgage is ready to help make it happen. Give us a call today.