First Steps for First-Time Homebuyers
Home ownership has long been held up as the cornerstone of the American Dream. But how do you know if you are ready make the dream a reality?
"Do your homework," says Larry Turner, REALTOR® with Century 21 Bessette Realty. "Looking and dreaming about what your first home is something many people do for years. But when you are really ready to get serious about buying a home, there are a number of things you need to consider to determine if you are actually ready, and to make sure the process is as hurdle-free as possible."
The first and most important step on the road to home ownership is to get your financial house in order. Turner says the good news it's an excellent time for first-time home buyers. "There is money available and interest rates are at an all time low. However, the mortgage lending crisis in recent years has resulted in most lenders tightening their guidelines. That means credit score standards and credit restrictions have increased, making it more important than ever for potential homeowners to be well-informed, prepared, and knowledgeable."
Turner recommends choosing your lender before you even start looking at homes, and get pre-qualified for a loan. "Ask your real estate agent, friends and co-workers for recommendations. Some lenders are easier to work with than others. You'll be spending a lot of time with your lender and counting on them to be with you through this entire process. You want someone who understands you and your situation and with whom you communicate well."
He adds that the time invested in the pre-qualifying process may seem tedious when you are anxious to start looking at potential homes, but it's time well spent. "Imagine how frustrating it would be to spend weeks searching for a home, only to learn that you don't qualify for the loan to buy it. It saves a lot of time and energy to know, up-front and with certainty, how much the bank is willing to loan you and how much you can afford."
After receiving a green light in the pre-qualification process, Turner says the single most important thing he can recommend for potential home buyers it to shop in the middle of the range you were given. "If you shop at the top of the range you've been given, you may find a home you can buy, but odds are you'll be stretching your budget to the limit. Remember, with a new home, come other new expenses besides a mortgage. You have to include insurance, taxes and all the things you are going to want and need to buy for your home in your calculations. I've seen buyers with a house under contract go out and buy things in anticipation of their new place using credit cards. When their lender reruns their credit just prior to closing, they've added new debt that changed their qualifications for the loan and the whole deal falls through. Don't put yourself in that situation."
Once you have an idea of what you can afford, you can focus on a last piece of homework. Turner says it's a good idea to think about your lifestyle and what type of home will best fit your life, before you start looking at homes. "You should look at buying a home as both a lifestyle and financial investment. Do you want a home with a large yard that will let you indulge your green thumb, or do you prefer a home that requires minimal maintenance? Do you want an old home steeped in character that might require more repairs, or something newly constructed and modern? Do you need room for a growing family? What type of neighborhood are you looking for? Do you want to live close to family or your job? The questions you should ask yourself are many, but the answers will help you focus your search on homes that meet your needs," says Turner.
After you have your search options narrowed down, it's finally time to for the fun part – looking at potential homes. Turner says this is where a real estate agent is key. "A good real estate agent can educate you about what to look for and avoid, provide reliable references for other experts you'll need along the line and represent you in negotiations and at closing. This should be a fun and exciting event in your life, but without expert help, it can quickly take over your life. A big part of my job is to take the hassle out of your home search by smoothing out all the details."
For more information about using a realtor, call CENTURY 21 Bessette at 474-2185.