11
May
By First Rate Financial Group
Mortgage

How to Become a Homeowner: First Time Home Buyer Guide

How to Become a Homeowner: First Time Home Buyer GuideBecoming a homeowner for the first time is exciting. However, for many potential buyers, the process can also be confusing. Below is an overview of the steps you need to complete in order to buy your first home. 

Work Out The Finances

The first step in buying a home is deciding on a price range. This price range will be determined by your income, as well as your own comfort level with home prices and monthly payments. Consider all of these factors to determine the maximum amount you are willing to spend on your new home. 

In most cases, you will be required to pay the downpayment and closing costs upfront, even if you are financing the rest of the home’s purchase price. In general, most lenders will expect a downpayment equal to 20 percent of the home’s purchase price. Otherwise, you may be required to pay mortgage insurance. Before buying a home, set enough money aside to cover these expenses. 

For most homeowners, the next step in the home buying process involves looking into different mortgage options. Unless you have enough money to purchase your home for cash, you will need a mortgage. Be sure to compare quotes from different lenders before making a choice to be sure you are getting the best deal. Once you have chosen a lender and a specific type of mortgage, ask for a preapproval letter that you can attach to any offers you make so that you will be a more reliable and attractive buyer. 

Hire An Agent 

When searching for the perfect first home, hiring a real estate agent to represent you throughout the process is highly recommended. Your real estate agent will act as a buyer’s agent, which means they will have your best interests at heart. When you don’t have a buyer’s agent, you will be dealing only with the seller’s real estate agent instead. Because this individual has been hired to represent the seller, they will always put the seller’s needs above yours. 

Find The Right Home

Once you have a qualified agent to represent you and a preapproval letter from your lender, it is time to start looking for your new home! Your real estate agent will help you comb through listings and choose the properties you want to see. Next, you will walk through each home until you find the one that is right for you. After you have chosen a home, your real estate agent will help you prepare and submit an offer to the seller. 

The process of buying your first home may seem overwhelming at first. However, by following these steps, you can simplify the process and become a homeowner with ease. 

 

10
May
By First Rate Financial Group
Home Buyer Tips

Don’t Miss Out On How To Handle Common Home Buying Pitfalls

Don't Miss Out On How To Handle Common Home Buying PitfallsThe process of buying a home can be riddled with obstacles. However, you can avoid many of the most common home buying pitfalls with some advanced preparation. Below are some of the most frequent problems home buyers face, as well as tips for avoiding them. 

You Can’t Qualify For A Mortgage 

Nothing is more frustrating than learning that, even though you make enough money to afford your dream home, you cannot qualify for the mortgage you need. This may happen because your credit score is low or because you cannot verify your income in a way that satisfies your lender. To avoid this pitfall, investigate lenders’ requirements before you begin the application process and make sure you meet them all. 

You Discovered Problems With The Home After You moved In

In some cases, a home may seem perfect at first glance, but problems may be hiding in plain sight. You may move into the home and find that it has a pest problem, leaks, or a broken furnace. The best way to guard against this pitfall is to ask for a home inspection before you buy the property. 

The Appraisal Amount Isn’t High Enough 

Some homebuyers make an offer on a property and hope to get a mortgage to cover the purchase price, only to learn that the property doesn’t appraise for the amount of the requested mortgage. This is more likely in cases where the homebuyer is rolling closing costs into the mortgage. When this occurs, you can either pay the difference, ask the seller to lower the purchase price, or cancel the sale altogether. You can avoid this pitfall by investigating home values before you make an offer, or by saving up a large downpayment that would allow you to pay the difference. 

You End Up With Bad Neighbors 

Chances are that sellers will not be upfront about any problems they may have with neighbors, since these problems could potentially cause you to pass on the home. For this reason, it is always wise to do your own research before you move into any neighborhood. Consider driving by at night to look for any activity that might make you unwilling to live next door. 

The Closing Takes Too Long

It can be incredibly frustrating when it takes weeks or even months to close on the property you love. In some cases, this pitfall may be unavoidable. However, you can reduce the risk of a long closing by having all of your loan documentation ready in advance and avoiding the purchase of homes that may have an extra-long closing process, such as real estate owned properties and short sales. 

06
May
By First Rate Financial Group
Mortgage

Buying in a Sellers Market

Buying in a Sellers MarketHome buying is often made possible or unreachable due to the local and national economy. Fortunately, what goes up, must come down. So, for buyers who can wait, economic changes in supply and demand can create opportunities. These shifts in real estate are known as buyer’s markets and seller’s markets. 

The seller’s market specifically tends to be the harder one for homebuyers. In short, sellers see a lot of demand, so they can command higher prices for a sale. Things are competitive, sell fast, and inventory is low. 

For buyers, it’s a headache, but there are ways of handling the challenge.

Understand Your Local Market Better

Many people might throw out the statement locally, “Oh good luck, it’s a seller’s market,” but that’s not necessarily the case until you can confirm it objectively. It may be that certain neighborhoods have high demand, but overall regional inventory is available. 

Understanding your local market as a whole and by neighborhood gives a buyer a far better idea of what’s really going on and how to compare homes in different locations.

When Making an Offer, Go With Your Best Offer First

The worst that can happen is someone responds “no.” You didn’t really lose anything with a rejected offer. However, if they accept your offer as-is, then you may have scored a better deal than trying to hedge and bargain down after the fact. Negotiation can be more difficult in a seller’s market, and sellers can be quite motivated to drop a negotiation the instant a second buyer becomes available.

Be Prepared to Move Quick and Bid Fast

Sellers’ markets go fast. Bids are taken in a day and a sale happens the next day or by that evening. If going out to buy, you need to be ready to make an offer on-site. That means also having your pre-approval for financing squared away and having enough liquid assets to cover the down payment along with enough cash to cover closing fees as well. If you’re not wired up already, you will lose sales waiting for your financing prep to get taken care of.

Have Cash, Will Talk

Buyers who are able to show they have the cash to purchase make the process go much more smoothly. Sellers are far more interested in parties who can show they are a firm sale versus those with financing approval still pending. 

Known as earnest money, a deposit placed on a home with larger than the minimum amount will get attention and commitment faster than someone with a nice bid but waiting for financing approval, thereby delaying the seller.

Anticipate Non-Cash Sweeteners

Sellers often have interests or desires to meet when letting go of a home. A buyer who can fathom what these are can improve a buying position considerably.

In some cases, it might be as simple as agreeing to additional time for a seller to move out. 

In other cases, the seller might have an attachment to the home that they want to keep protected versus seeing it destroyed by a new seller. 

Finding these things out can help a buyer make commitments in a sale that make it better for the seller and for the buyer versus other bids.

Sellers’ markets are hard, but there are ways around the challenge and getting into a home you want. By being flexible, creative, and ready you stand a better chance than bidders with half a heart in but one foot still hanging out.