Written by: Boyd Ruby
1. Meet with a Lender – Too often Buyers start looking for a home, or start looking at homes, before they know what they can afford or even if they can purchase. It’s important to know what you can afford and what you want your payment to look like so you are ‘not living for your home’, and more importantly, whether or not you can buy.
2. Shop the rates – If you plan on using your Bank or Credit Union, that is fine, but it is important to talk to Mortgage Brokers or Correspondent Lenders. Mortgage is very competitive and there are new programs for 2015 and not all created the same, nor do all of them offer the same mortgage products. Just because you do ‘all your business at Bank X’ doesn’t mean you will get the best rate. You will want work with a Lender that is willing to explain the process to you from beginning to end and as many times as you need to hear it. You must be educated as to how the mortgage process works and be committed to learning about it. This is the biggest purchase you will ever make so pick someone who knows what they’re talking about and will have patience to explain it to you so that you understand.
3. Do not be afraid to have your credit pulled – Unfortunately Buyers make the mistake of waiting until the last minute, only to find out that they need another 30, 60, 90 or more days to be ready to buy. OR, they wait until the last minute and miss out on the home of their dreams. You can shop for a lender and have your credit pulled in a 30 day window as many times as you want without your credit dropping. It’s a one time hit in that 30-day span. And it is MINOR. The fear of the unknown should not stop you from this important step. Even if you find out you cannot buy right away, at least you will have the information to make a plan to buy in the near future and a good Lender can help you get there, too!
4. Interview Agents – Not all Agents do all things. If you are a first time Home Buyer, you will want to work with an Agent that LOVES First Time Home Buyer’s. Whatever your need, find one that you can relate to and don’t pick someone just because they are related to you or because it’s your best friends’ sister’s aunt’s boyfriend. Some Agents only list homes, some only service Buyers, some do both. Some work full time, some part time. Because we are human first, find one you really connect with and that can educate you. Ask them how they like to work and how they like to communicate to make sure you’re a match.
5. Know “What You Get for the Money” – Do your homework. Ask you Agent to show you. You must be realistic about what you want vs. what you can afford. Home values have risen in Michigan and what you could buy for $100,000 two or more years ago is not indicative of what you buy for the same money today.
6. Drive around – Many Buyers make the mistake of just looking online for homes. You cannot gauge a neighborhood vibe by searching online. Drive through the places you think you want to live in the evenings and on the weekends in the afternoon and evenings. You will glean vital information about the neighbors and neighborhoods that you cannot learn anywhere else.
7. And once you think you’ve narrowed it down, think again – This is where your online detective work will come in handy. How many sex offenders live there? http://www.michigan.gov/msp/0,4643,7-123-1589_1878_24961—,00.html
How many crimes are committed there? http://www.crimemapping.com/ or try www.spotcrime.com and look for any other types of sites like this. Not all police departments are online and report, so go to the local Police Department and ask. Also, don’t be afraid to ask neighbors how they like living there as well. Neighbors are usually a wealth of information. If schools are important to you, then go here: http://www.greatschools.org/ and then go to the school that you are considering enrolling your children in and meet with the staff, see the building, etc.
8. Make a list of what REALLY matters in order of importance – Is it a basement? Garage? Number of bedrooms? Do you need 2 FULL bathrooms or just 2 toilets? More square footage? A neighborhood that allows fences? Sidewalks? Make your top 10 list and then narrow it back to 3. And communicate the list to your Agent.
9. If you are borrowing money for a down payment – Check with your lender about HOW you can borrow. Some will accept gift letters, others will need to have the funds seasoned (i.e. sitting in a bank account in your name for at least 60 days). If you stash your hidden cash in your house, don’t assume that you can just toss it into a bank account. This is a conversation that MUST be had with your Lender. If you fail to have it, it could be the difference between being able to buy now or 2 months from now.
10. Detach from your emotions – Before you decide to start looking, promise yourself (and stick to it!) that you will not get emotional about the process. If you have a “top of the market budget” that you cannot exceed, then stick with that. You will know, by the time you get to this last tip, what you can afford vs. what you want. Remember that if a home needs all the expensive stuff updated and you cannot afford the replacement, or get a loan that allows you to wrap the cost up into it, but it’s decorated just so perfect and it’s so adorable, stop, think, reconsider. Do not allow the cosmetic things to take your attention away from the big stuff. The worse thing you can do is buy a home that seems affordable and then needs expensive repairs as soon as you get the keys.
11. Lastly, yes, I know I said 10 tips but, HAVE FUN! – This is a big purchase, yes, but if you start out with a plan, a great lender and a great Agent, it should be a fun and educational experience! If you start to feel frustrated, communicate that. Remember that people generally need several hours to show a home to you, so make sure that you have it planned out with your Agent. If you need to make adjustments to your Agent, Lender or whatever in the process, that is okay as well. Be patient with the process and remember that your perfect home is out there just waiting for you! If you lose out on one or two, don’t worry! When you get the one you want, those will be a distant memory! Your home will find you and you will find it!