by guest blogger Sara Cummings, licensed real estate salesperson
Buying a home can be an exciting time, which can make it very easy to jump the gun, let your emotions get the better of you, and as in anything you are doing for the first time, fumble through and make “first time mistakes”. Do not Ready-Aim-Fire because you are excited, nervous or overzealous. Make sure that you are Ready, Aiming with the proper tools of the marketplace, then Firing accurately to give yourself the best opportunity of hitting your intended mark of a secure first time investment.
What type of home best suits your needs?
You have several options when purchasing a residential property: a traditional single-family home, a townhouse, a condo, or a multi-family building with two to four units. Each option has its pros and cons, depending on your home-ownership goals, so you need to decide which type of property will help you reach those goals. You can also save on the purchase price in any category by choosing a fixer-upper, although the amount of time, sweat, equity and money involved to turn a fixer-upper into your dream home might be much more than you bargained for, and can leave you wishing you purchased new construction or a move in ready home that you will be satisfied with immediately & enjoy for years to come.
Think long-term and think re-sale!
Are you planning to expand your current family? Will you be taking care of elderly relatives? You might be planning to live in your first home for only a few years. If that is the case, do you know your target audience & market equity trends for the resale?
The school district will affect your home & resale value
Even if you do not have children, it is very important to know the projected elementary neighborhood’s & school district before buying a home, as living in an area with a sought-after school system raises your property value.
Secure financing before falling in love with a house
The absolute worst thing you can do is run around the city looking at homes you think or assume you can afford based on your own calculations. Unless you broker or administer loans on an everyday basis, there is no possible way to know what type or loan amount you will qualify for. The loan amount does not always dictate what house you may buy either. For instance, qualifying for the same exact loan amount on an FDA apposed to a CONVENTIONAL will greatly affect what house you qualify to purchase as well. With all of this being said, it is just smart practice and much more efficient to get an actual pre-qualification letter from your lender before your searching begins.
This will ultimately avoid you falling in love with a home that you will not be able to purchase, then holding every other home that you are in fact able to obtain to the same unrealistic standards of the dream home that is financially out of reach.
Organize your documents
Once an offer has been accepted on a home of your choosing, you will have mortgage contingency dates. This means that you will be held to dates stated and accepted in the purchase contract as part of the terms to apply and secure your mortgage (financing). When you reach this point, you want to be ready and move quickly during this part of the process.
When applying for mortgages, homebuyers must document income and taxes. Typically, mortgage lenders will request 2 recent pay stubs, the previous 2 years' W-2s, tax returns and the past 2 months of bank statements -- every page, even the blank ones. Buying a home can take a long time, but knowing what you need and where to find it can save time when you're ready.
Give yourself an edge up on your offer
Get creative! My business partner and best friend, Patrick Fitch, will ALWAYS encourage our clients to submit a well thought out and heartfelt LOI (letter of intent). This will let the seller know what your intent is for their home after the purchase. Often, the first time home that you are purchasing may very well have been their first home as well. The seller could have brought their babies home from the hospital to this house and started their growing family there and this home holds cherished memories for them. A letter to let them know that you plan to use the home as a starting point for life is a great play, and do not be shy about including a picture for them to identify with you. This will especially help you in a sellers’ market and can put you above other offers in a multiple offer situation.
Another edge you may show over more well-heeled buyers is your flexibility in terms other than price. Have your agent get in touch with the sellers’ agent to find out exactly what they need to make the offer the most attractive then take full advantage of meeting those expressed needs.
Do not DYI
Though it seems easy in this DYI world that we live in of Pinterest & Zillow, please obtain representation! Again, for the largest single investment of your life so far, why would you not? We live in New York State, therefore it does cost the buyer to be properly represented, yet this is something that is paid to the buyer’s agent directly from a pre-negotiated commission with the seller.
The self-education that you are getting from the hundreds of various spider sites, (Zillow, realtor.com & Trulia), just to name a few are just that, spider sites. This means that they are sending out web spiders to obtain electronic information from other sites, often other spider sites. There can be up to 14 day delays and inaccuracies in the information obtained from these web spiders. This results in you having outdated or all together inaccurate information on a home that you are spending your time and energy researching. The accurate information can only be found on the MLS in which you need to be state licensed and held with a state licensed broker to obtain. Your realtor is able to get you information in a matter of minutes as they have access to the real & accurate reports & records.
As fun and exciting as HLN makes the real estate world look on carefully crafted and well scripted television programs, there are a lot of moving parts and for the first time home buyer, very difficult to navigate. That is why real estate is a profession and well educated agents and brokers are need not a want when purchasing your first home.