As a real estate agent, assume that all first-time buyer’s know nothing about the process. Here’s a brief overview for your clients that can help them get a better understanding.
Buying your first house is such an exciting time, but since it’s your first time it can be easy to make mistakes. Meeting with lenders, finding buyer representation, and making an offer are essential points in the buying process. However, as a first-time buyer, there are some key tips to keep in mind during the buying process.
Get Your Money Right
Affordable houses are moving quickly in this market, so a first-time home buyer should be ready to act quickly. To be prepared you should have your down payment saved, your debt paid off, and a ripe emergency fund in your account. It’s also wise to not make a grand purchase on your credit cards during the home buying process. The cost of a home is only the beginning, It’s also important to not spend the entirety of your savings on the house.
Facing large debt during this process can put immense pressure on you financially. Consider paying 60-80% of your credit debt off as part of the saving process before seeking a lender. Having less debt will also get you a better mortgage rate, so pay off those balances. Alongside this, having a nest egg to invest back into the home is important. Once you purchase the property you’ll be responsible for any surprise costs you might be facing. For example, plumbing emergencies or major appliance upgrades. So, simply put, as a first-time buyer, get your money right before even searching for a mortgage lender.
Pre-Approval Before Shopping is Essential
A major part of being able to move quickly on a house once you’ve found the right one is pre-approval on a mortgage. Getting prequalified is as simple as getting your money and debt squared away. Then shopping around with a few transparent, quality lenders. If you don’t inquire with multiple lenders you could be spending thousands of extra dollars. It’s recommended that you shop around to at least three lenders. Be sure to take into account their customer service and responsiveness during this first process. These will be huge tells in how they will treat you during the lending process. After meeting with all of them compare loan terms, lender fees, and rates. This is just informed shopping, don’t take the first offer you get without multiple meetings.
Do Your Neighborhood Research
Buying your first house is a major investment in your future, so buy in the right neighborhood. Oftentimes you’re buying your starter home, perhaps you’ll sell and get something larger when you get that promotion or start a family. Then there is the other type of buyer who is looking for a first home that will turn into a longtime abode for them. Both of these buyers will want to do a lot of research on the neighborhood they want to shop in. What kind of schools, grocery stores, trail systems, bus lines, etc. are prominent in the area? Do you know any of the people who live around there? What are their interests? It’s important to buy property in an area where the neighborhood is fueling the resale value. Oftentimes that resale value reflects a positive quality of life in that area making it ideal for long term living. Doing your research is a necessary task before really shopping or seeking out buyer representation in the first time home buying process.
Getting financials in order and doing your research is essential before really moving on buying your first house. Before you shop as a first-time buyer, you should be ready to buy, so get your debt straightened out and save up a big down payment. Meet with multiple lenders before making a decision, and lastly be sure to do your research before settling on a neighborhood.
The more your first-time buyer client understands regarding the home-buying process, the easier it will be to close a real estate deal and get a commission advance.