How Not To Put The Cart Before The Horse When Buying A Home
When we think of first time home buyers we think of a budding young couple braving the world to start a new life. The truth is, we see first time home buyers from all generations. Buying a home for the first time can be daunting for a person of any age - especially when it comes to financing that home. That is why it is important to know the tips and tricks of obtaining the right mortgage for your particular situation. Thankfully this article is here to guide you through the steps!
Start With A Pre-Approval
First, let me say there is a distinct difference between a pre-qualification and a pre-approval. The latter insinuates the loan officer has done his or her job properly to obtain the detailed information and documents needed needed to properly approve a loan. Not doing so is a severe injustice for the buyer. It will certainly mean changes in terms, loan program, and possibly even prohibit the excited buyer from even obtaining financing. Too many times do I see an excited young buyer come in to get a home loan with the home of their dreams already picked out. Then, once we have obtained their income documents, they realize they cannot afford that house and their dreams come shattering down. I am not going to beat a dead horse here. So, bottom line: Get Pre-Approved before going out and looking for a home. Click here to get started with a pre-approval!
Search For Any Available Down Payment Assistance
Many state and local governments provide periodic incentives for buyers to locate there. For instance the State of Kansas provides a down payment assistance program for people looking for housing in certain areas. Most of these programs have certain restrictions and are truly intended for those who need the assistance.
Pick The Loan Program That's Right For You
Each home buyer is different. Things such as different income levels, different financial assets, and different credit profiles make each borrower unique. Don't go into buying a home without knowing what type of loan is right for your specific situation. For instance, a borrower who has mediocre credit and sufficient assets to put 5% down on a home may assume they are going to obtain a conventional home loan. However, upon looking closer, they may realize that the PMI (private mortgage insurance) is way high - thus making their payment much higher than they may be able to obtain using a federally insured FHA home loan. It is important to talk to a licensed loan officer that is qualified and able to review the individual's unique situation and advise them on the loan program that is going to provide them the best benefits.
Work With A Realtor That is Knowledgeable In Your Market
It is a common misconception that you can save money by not using a licensed real estate professional. Nothing could be further from the truth - especially for first time home buyers. First off, the seller is typically the person who pays an agent's commission. If you don't use an agent as a buyer, the seller's agent keeps the whole commission. You, the buyer, then have nobody in your corner when it comes to negotiating and ensuring you are getting a fair shake. As your exclusive agent there is a fiduciary responsibility. This means your agent puts your interests before theirs. Something that is invaluable as a buyer. Also, a quality agent will know the good neighborhoods that are more likely to increase in price and be able to point you in the right direction throughout the entire process. Not only is a buyer's agent helpful, in my opinion, they are necessary. This article from US New & World Report titled, 9 Common Myths That Plague Buyers & Sellers outlines several other common misconceptions.
Regardless of where you buy a home, make sure you are prepared with the right financing prior to going out to search for homes. This makes you a more attractive buyer which means you are more likely to land a home if a bidding war starts. Not being pre-approved and knowing exactly what type of loan, payment terms, and such will likely result in a very bad experience. Remember there is no such thing as planning to fail, only failing to plan!
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