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!)