A lot of first time buyers, who are also called the "Millennial Generation" start the process on the internet. As a matter of fact 90% of all home searches begin online. Its a place to start, a bit overwhelming in my opinion. Don't rely to much on the internet. Talk to a lender, a real estate agent.
Are you prepared? Owning a home is a lot of responsibility. Do you have a financial plan? (can you still save with your new mortgage?) Talk to a lender, get preapproved. What can you afford? Most buyers underestimate the cost of actually purchasing a home. They think they have the down payment they are ready to buy. Your typical closing costs run between 2-4% of purchase price. Add that to 3.5% down payment (FHA Loan). Once preapproved consider shopping in a lower price bracket, what would happen if someone lost a job or you decide to start a family?
Once you find a home and negotiate a contract, Lets talk about the cost of inspections: General building, water, sewer, pest, radon etc.. some financing requires certain inspections. They are not cheap.
What's your plan? If you plan on staying for 30 years than a fixed rate is your best option. What if you have a 5, 7 or 10 year plan? You might be better with an adjustable rate (locked for 5, 7 or 10 years).. If you think you might go longer than 10 years, stick to your fixed rate option.
You don't need a real estate agent! You have the internet. You can only go so far alone, we know what you don't and we want to help you. Your purchase should be as enjoyable and smooth as possible, not stressed and frustrating. That is where we come in, we will be working behind the scene's to make it happen.
Questions for your potential agent: 1. Do you specialize in the area I'm interested in? 2. Do you really want to work for me?
EDUCATE YOURSELF: "ITS A HUGE PURCHASE"
Lets talk appraisal: Your lender will be doing an appraisal to find out the value of the home. You will be paying for it. How much will a lender lend? Its based on appraisal.
What happens when the appraisal comes in low, yes it is a problem. You have four options: 1. renegotiate with seller. 2. bring extra funds to closing (we all have that laying around). 3. find a different loan structure. 4. find a new home (it happens).
What are the three types of lending: 1.fixed, 2 adjustable, 3. interest only.
Here are the 4 biggest error I see. 1. spending the maximum, 2. not knowing the importance of a high credit score (680-720 good rates) (620 lowest possible, higher rates) 3. wrong mortgage product (30 yr fixed with a 7 year plan) 4. not getting preapproved early enough.
For all the first time buyers going FHA you should keep in mind we run into three problems. 1. condition of the property, FHA requires property to be livable from day one (not livable with chipped paint, broken window) Solution: 203k streamline loan. 2. Appraisal comes in too low, only resolution is to renegotiate the price. 3. Debt to income ratio is too high (above 31%) Solution, ask your lender to run your loan through FHA's total automated underwriting system...
These are just a few of the things you will be dealing with, the list is long and can be tedious. Buying a home should be listed with the happy events like getting married, having a baby. Lets talk.
Most agents today have the " Brokerage relationship disclosure form" attached to any and all emails. Do you open it and read it? You should. It explains all the different types of relationships in real estate. All of which could profoundly affect you when purchasing or selling a home. Are you a customer or a client? Which do you want or need to be? What is the difference?
This form should be given to you at first physical contact, gone over and signed by both you and the agent presenting it to you. You should ask questions if you don't understand. Its important!
Client: Confidentiality, loyalty, disclosure, lawful obedience, promotion of the clients best interest. Client-level services also include advice, counsel and assistance with negotiations.
Customer: disclose all material defects, to treat both buyer/seller honestly, account for all monies received from or on behalf of buyer/seller, comply with all state and federal laws relating to real estate brokerage, to perform ministerial acts (showing property, preparing offer etc).
Times have changed greatly in the real estate market, when I bought my first house the agent told me point blank " I represent the seller, no one represents buyers so "caveat emptor" BUYER BEWARE!"
Thankfully we don't operate like that anymore. So please read the attached disclosure and if you are thinking of buying or selling give me a call, I will make sure you are represented.
Knowing your credit score is important. There is a place that you can go and get your actual score (yes a real number) and it is truely FREE! No credit card needed to take a look. You should check your credit at least once a year to know your score but also to make sure it is accurate. Checking to make sure what's listed is yours, mistakes happen and you don't want to find out after you apply for a mortgage that you have $2500 in collections that belongs to someone else. If you find an error, they show you how to dispute it and get it off your credit if its not yours.
So go today, check it for free. And when your ready to start looking for a home, call me and I will handle the rest!
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