Insider Tips For Making Your First Home Purchase A Successful Endeavor – Guest Post
Buying a home for the first time is often the biggest financial decision one makes in their lives. How’s that for pressure? Chances are that you may have heard in the media recently about 1 out of every 3 young adults aged 18 to 31 are still living at home with their parents. This is an extraordinarily high number that has kept the number of first time homebuyers at record low numbers for the past few years.
If you think you are ready to dive head first into home ownership, it is crucial to get yourself prepared for the journey. Getting financed to buy a home isn’t the same today as it used to be before the housing bubble burst back in 2008. The housing market in 2013 is super competitive due to the lack of inventory of homes for sale. You have your work cut out for you, but these steps will help you get started in the right direction and lead to a successful home purchase.
1. Have Conviction in Buying a Home
This first step is very easy to overlook. You need to be fully committed to buying your first home. If you are hesitant in any way, you have set yourself up for frustration down the road. Weigh the pros and cons to buying versus renting, and be sure you plan to live in the area for at least the next 5 years. Even if consider the home purchase as an investment, it will take a few years to offset the upfront costs before you start to gain some equity in the home.
2. Monitor and Fix Your Credit Report
You are entitled by law to have one annual, free access to your credit report from all three major credit bureaus. You absolutely need to be checking this regularly. Your credit score is a major factor on what interest rates are available to you and thus how much a home you can afford. Also, it is not uncommon to find mistakes on these reports, so actively monitoring your credit will help. Reach you to your local mortgage broker if you need assistance.
3. Get Pre-Approved with a Mortgage Lender
This has become an absolute must in today’s real estate market; you really can’t get an offer accepted without one. Talk to a mortgage broker before you start looking at homes as they will work with you to help you better understand how much home you can truly afford. Provide your lender with some basic financial documents and they will give you a pre-approval letter that states your specific qualifications. Handing this over with your offer shows the Seller you can afford to purchase the home and gives them confidence the deal with close. Read more about what information is needed to get pre-approved with a lender here.
4. Work with a Professional Realtor
Realtors have expert knowledge of your local area and can help you find the home that fits all your needs. They also have the negotiation skills that will come in handy when helping you place an offer with the best chance of getting accepted. One of the most important aspects of using a Realtor to buy your home is that they are free! All the Realtor’s fees are paid for by the seller so hire one you feel comfortable working with and start looking at houses.
5. Once an Offer is Accepted, Shop Mortgage Lenders Again
Keep in mind that you do not have to get your mortgage from the same company you got pre-approved with. According to a recent survey by Zillow, 24% of prospective homeowners believed their current bank will always be able to give them the best deal on a mortgage because they have an account there already. While sometimes your bank may be more comfortable, this is by no means a guarantee they have the best rates and service available to you. Be sure to check with a local, experienced mortgage broker as well to find a lender you trust to work with.
6. Stay Committed Throughout The Entire Process
Stay organized with saving all of your recent financial statements and have them ready to hand over to lender for the mortgage application. Finding the right home will take some time, and often you will have to put offers on 3 or 4 homes before you get one accepted. In the start of the 2013 home buying season, bidding wars occurred at a peak of 75.7% of homes sold according to Redfin. Stay dedicated and diligent and you will find yourself unpacking in your new home in no time.
Kirk Chivas is a licensed Loan Officer and co-owner of First Commerce Financial, a mortgage brokerage based in Wixom, Michigan. With over 16 years of experience, Kirk has committed to providing Michigan residents with accurate and honest mortgage advice.