First time homebuyers in town are told a lot of things —
“Save your money,” their parents advise.
“Location, location, location!” their friend’s friend cautions.
Reasonable advice, for certain. But there some important elements of the home buying process which a typical local first time homebuyer doesn’t usually hear. I’ve listed some of the most important ones, in no particular order:
1. Mortgage rates you see advertised aren’t usually what you get
The banner ads are everywhere online: “3.2% rates!” “No money down!” But the truth is, mortgage rates vary greatly. The only way you’ll know what rates you actually qualify for is to go through a complete mortgage application including credit pulls and income verification. One more point to consider: online mortgage calculators, while handy, can be deceptive if you do not factor in the real cost of tax, insurance and PMI when you’re looking at an FHA-loan.
2. Every Tiny Bit of Debt Counts
Think that $1400 left on your Visa isn’t going to matter? Think again. Every iota of debt weighs in when your credit is scored. What many local first time homebuyers aren’t told is that when you apply for a mortgage, nearly every element of your financial history is going to be analyzed with a fine-toothed comb. All debt will be factored in as the bank figures out how much it is willing to lend. Standards have stiffened, so the earlier you dispose of even small issues, the better.
3. Your Choice of Agent Makes All the Difference
Let me guess: your friend’s friend also has an agent to recommend (she carpools with his sister’s next door neighbor). There’s no reason you shouldn’t interview her: maybe that’s the right fit for you. But don’t just sign up with the first agent you find: this is a working relationship that can shape your family’s future. Your agent’s connections, experience, and market knowledge will be key — and can well make the difference between your writing an offer that gets accepted or not.
(Coming Next: Another 4!)
Of all the things first time homebuyers in our area are told, some that turn out to be pretty important are too often overlooked. Here are four items first time homebuyers will find useful to know:
4. Remodeling costs more than you think
You’ve found a fixer: your energy is to be applauded. But before you write that offer, if you are one of our local first-time homebuyers, be certain to have penciled out the bottom line cost of bringing the home up to the standard you require to be move-in ready. You may well be able to live with some items that you will fix over time, but in all areas, budget 20% more than your estimate.
5. What matters is what the bank’s appraiser thinks the house is worth
Getting a loan approved isn’t as simple as having great credit and a down payment. Your offer also has to pass the bank’s approval process before they will okay the loan.
6. Getting inspected doesn’t mean there won’t be problems
Should you skip the inspection process? Absolutely not. You need to know if the home is structurally sound. But owning a home involves continuing expenses — and problems can pop up even on Day One of ownership. Make sure you have funds set aside.
7. Buying your first house can be stressful…really stressful!
One of the absolute best pieces of advice I can give is to relax — expect the unexpected! Buying your first house is scary only if you allow it to be. Since it is all but certain that there will be ups and downs, allow the possibility that may not get any particular house. Veteran homebuyers come to understand the cost of overly emotional involvement — when you do, too, you will be better able to roll with the punches…and to make financially sound decisions.
If you missed the first three items in my list, check back to Part 1 – or just call me! I’ll fill you in on everything local first time homebuyers need to know.