Home Buying Made Simple(er)
There are a vast number of potential home buyers in this country, many of which are very capable of buying a home, but remain on the fence for a wide variety of reasons. Some are good reasons, and others are that they simply are not ready to buy a home.
The purpose of this article is to highlight issues of home buying and hopefully give some insight that will help you determine if it is the right time to buy a home.
Make no mistake, owning a home is a lot of work. If the kitchen sink plugs up – you fix it or pay for someone to fix it. If the grass needs to be cut –you cut it or pay for someone to cut it. But in addition to the satisfaction of owning your own place, it is nationally 38% cheaper to own your home versus renting. The truth be known, if you rent and something goes wrong, you still pay for the convenience of someone else fixing it.
Here are some things to think about if you are even remotely thinking of one day buying a home – these apply whether it is your first home or your tenth home.
First of all, if you are thinking of buying a home, don’t wait until you are ready to move and think you are going to find the home of your dreams. It takes time and effort and work to make this happen. I suggest that the earlier you start the better – a year in advance is not too early.
When you buy a home there are a lot of people that work on your behalf to make this happen, many of which are behind the scenes. These include the obvious and not so obvious: REALTOR, mortgage officer, home inspector, appraiser, closing office, underwriters, contractors for repairs if necessary, movers, termite inspectors and many I am sure I am overlooking.
There are two people that are the focal point of your home buying – the REALTOR and the mortgage officer. If you ask the mortgage person they will undoubtedly say they are the first person you should contact. If you ask the REALTOR – you guessed it, they will say they are the first person you should contact. As a REALTOR I suggest you call me first, but in reality either one is OK. The important thing is that both positions be brought into the process early on. If you do contact me first, the first thing I will ask you is whether you have been in touch with a mortgage officer. If not, I will guide you to do so.
The reason I suggest the REALTOR first is because this position will be the focal point of the entire process and can be a great resource for all the other people you need to have involved including the mortgage officer.
Early on in the process I like to start sending properties on line and asking the clients what they like and don’t like about certain properties. It is amazing how many times people will say that they want something specific about a house but after a while I learn that is not what they wanted. For example: I had some clients that insisted on having a ranch home. We looked at every ranch home this side of the Rockies, but none were what they were looking for. When I got them to focus on what they liked about each home, I learned that what they wanted was a home with the master bedroom on the first floor. That is a very different situation and one that we could easily focus on once we identified what they truly wanted.
About the same time it is important that buyers have a discussion with the mortgage person about their credit. If you do this early enough and there are issues, there may be enough time to correct them before the closing date. Also, and this is very important – do not make any major purchases or change anything financially without discussing it with the mortgage person first. I cannot tell you how many times we have had buyers sign a contract to buy a house and then buy all new furniture or a new car right before the closing. It will most likely be enough to disqualify the buyer from the loan.
During this time it is also important to save money for your down payment if you haven’t already done so. Buyers should expect to put at least 3.5% down for an FHA loan and 10% – 20% down for a conventional loan. It is important to understand that there are a wide range of options out there and a good mortgage officer will be able to find one that suits you best. I will also mention that there are some programs out there with zero down, but that doesn’t mean it’s the best option.
As you get closer to the date you would like to make your purchase it is important to decide what you would like to spend on your home. All too often buyers’ think that they need to spend the full amount that the mortgage company will approve, but in reality, you may want to spend less if you have other things that are important such as traveling, or saving for college for their children.
Once you are at the point of making an offer on a house, the mortgage officer can provide a pre-approval letter. This is a very important step that the REALTOR will want to provide to the sellers to show that you are a good prospect for purchasing their home.
Do not be discouraged during the process of negotiating. I have never had a transaction that there were not offers and counter offers. A good REALTOR will walk you through that process and act on your behalf. My advice is that if you want this particular home, negotiate in good faith. Remember, this should be a win-win for sellers and buyers.
If you are thinking of buying or selling, talk to a REALTOR who can give you the information you need to make an informed decision.
As always, if I can help with any of your real estate needs, please feel free to text or call me at 615 417-8182 or email me at RolandLow1@gmail.com.