Seven Must-Dos for First-Time Homebuyers
(MCT)-Buying your first home in Long Island can be nerve-wracking. As a first-time homebuyer, you will navigate a process that might include uncertainty, excitement, confusion and frustration.
But preparation and knowledge can help you stay on the right track. Here are seven steps that can improve your chances of having a good homebuying experience.
Know Your Credit If you think you may want to buy a home in the near future, your first step – and perhaps the most important one – is to watch your credit. Familiarize yourself with your credit history and make sure all the information in your credit reports is accurate.
“The very first thing you need to do is to find out what your credit is and what’s being reported about your credit,” says Pava Leyrer, director of training for Northern Mortgage Services in Grandville, Mich.
This will give you enough time to deal with any reporting errors on your report or improve your credit before you are ready to buy, Leyrer explains.
If all looks good, keep it up and don’t max out your credit cards at the furniture store after you sign a contract for the home. Hire a Good Team Buying a home for the first time is supposed to be fun, but it’s actually hard work, and at some point during this process you will feel overwhelmed. You’ll need to be surrounded by professionals who know what they are doing so they can guide you and provide answers to your questions.
“Formulate a good team to help you,” says Rafael Castellanos, an attorney and managing director at Expert Title Insurance in New York. “You don’t want someone who is going to pressure you to buy the one or two exclusive listings that they have.”
Find an experienced real estate agent, a reputable mortgage professional and a real estate attorney if you can.
“You cannot have an inexperienced buyer and an inexperienced agent,” says Patty Da Silva, owner of Green Realty Properties in Davie, Fla. “Who you hire is truly one of the most important things.” Get Preapproved for a Mortgage Homebuying does not begin with home searching – unless you are sitting on a pile of cash and won’t need a mortgage. Otherwise, make sure you get a preapproval from a lender before you even begin hunting for a home.
And make sure it’s a true preapproval and not just a prequalification, Da Silva says. Some lenders will tell you that you prequalify for the loan based on the income and credit information you have provided. That’s not good enough for most sellers today.
With a real preapproval, the lender will verify your income documentation and not just check your credit.
“Have your finances really ready,” Da Silva says. Determine A Budget and Stick to ItDon’t wait until you are shopping for a house to find out how much home you can afford.
Determine your budget and the monthly payments you can afford and qualify for early in the process.
Most importantly, stick to the plan.
“When you fall in love with a house, all common sense goes out the window,” Leyrer says. “Make sure you know what’s going to fit your budget and stay in control.”
Remember that it’s not just about the mortgage payments. Also consider the costs of your property taxes and homeowners insurance.
Time the End of Your Lease How long will it take to find the home I love? When will I close? When will I move in? Until you actually sign a contract to buy your first home, these questions will remain unanswered.
Still, you have to do your best to time your closing and moving with the end of your lease.
As you begin your search for a home, revisit your lease agreement. See when the lease expires, learn about penalties for breaking the lease in case it comes to that and find out the options that are available, in case you need a lease extension.
“Moving is one of the most stressful things you are going to do in your life,” Da Silva says. “Be prepared. Talk to your landlord and ask, ‘Would you be willing to give me a two-month extension if I need it?'”
Consider Down Payment Assistance Many first-time homebuyers overlook down-payment assistance programs that may be available to them through state and local housing authorities.
They often assume that these programs are for low-income buyers only, says Rob Chrane, president of Down Payment Resource. But there are numerous programs available for mid-income buyers.
Some of the programs offer no-interest loans or grants as down-payment assistance and have few strings attached. Be sure to check with your local housing authority and ask for a list of lenders that participate in these programs when you begin shopping for a home. Inspect the Home Before and Right Before You’re making a huge investment. Have it inspected by a reputable home inspector while you are under contract.
“You want to know how’s the roof, the plumbing, the electrical – there are a lot of variables involved,” Castellanos says.
And don’t forget to do your final inspection on the day of closing. If you are tempted to get the walk-through inspection out of the way the day before closing, think twice. A lot can happen overnight.
“We had something happen where the buyer did the walk-through one day, then the closing was the next day and the air conditioning had flooded the first floor of the house,” Da Silva says. “Always do a walk-through the day of closing.”
Polyana da Costa is the senior mortgage reporter for Bankrate.com.
2014 Bankrate.com Distributed by MCT Information Services
