Tips for First Time Home Buyers

    First Time Homebuyerss

    1. Know the costs – Plugging in random numbers on a mortgage calculator online is reassuring until you find out what it actually will cost you per month with taxes, insurance and possibly PMI. And since you’re doing this for the first time, you will probably have PMI. What’s PMI? Private Mortgage Insurance or as you may come to understand, “Higher payment thingie”. But…
    2. Wait there’s more – You have been saving and have enough to put down. But do you have enough for closing costs and prepaid items? What about pro-rated expenses? Money allotted for a building inspection and a survey. These are all common costs involved and most first timers do not account for these things unless they…
    3. Talk to a lending institution first – Your REALTOR® will probably know a reputable mortgage lender. They can give you a pre qualification, which is a simple credit and income check to see if you would be able to purchase a home up to a certain price. First time buyers often miscalculate their purchasing power, often with the expectations that they can afford more than mathematically allowed. Your lender of choice can also help with calculating payment, interest rate and closing costs involved. When you do get pre-qualified?
    4. Meet with your REALTOR® – Assuming you have picked a reputable REALTOR® as well, you need to listen to each other. This is an investment and the most money you have ever spent. The market is currently a volatile place with prices and interest rates fluctuating on a daily basis. In order to truly seize the investment opportunity, consult with a professional who is protecting YOUR best interests throughout the transaction because you need to also…
    5. Be aware of competition – Is your market rife with competition? What is the inventory like in comparison to number of buyers? What direction are the prices going in your area of interest? What is your plan if there are multiple offers or if there is a “can’t miss” property that hits the market tomorrow? First-time buyers sometimes apply the yesteryear logic to today’s conditions and unbeknownst to them, set themselves up for major failure when they find themselves outbid on property after property. You’re not only competing against the seller to find the right price, but competing against other buyers and the current state of the market.

    Frustration is the result of unmet expectations. Don’t be that first time buyer that realizes you can’t lowball everyone on the 5th offer you write. Get smart from the onset and that will put you in the best position to get what you want at fair market value. (Hint: use your REALTOR® early and often)

    1. Other tips – Here’s a list of “Things That Will Massively Screw Up Your Home Loan” if you behave this way:
    • Throwing away or not having immediate access to income/asset documentation. Expect added fees from your lender if they have to request these things because you can’t find them
    • Financing stuff before you close like cars, furniture, electronics or jewelry
    • Adding drastic amounts of revolving debt balances (don’t put everything on your Home Depot Credit card in anticipation of the projects you will do once you close)
    • Changing jobs…especially if there is a change in income structure (salary to commission)
    • Overdrafting on your bank account

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