Buying a new home: Tips for the 1st time homebuyer
The awesome truth! One of my friends wrote this and i think it is great even though i an a realtor sometimes it needs to be looked at from the other side!
The TAX CREDIT FOR FIRST TIME HOMEBUYERS has fueled many of us into a quest for home ownership. The American Recovery and Reinvestment Act of 2009 increased to up to $8,000 the tax credit for first time homebuyers. Penny by penny, this tax credit is given to tax payers who meet the IRS requirements for First-Time Homebuyers. Homebuyers who want to take advantage of this tax credit are hurrying to purchase their "first" home before December 1st, the tax credit deadline.
At this point everybody interested in buying their "First Home" is scrambling to get a realtor who is knowledgeable, a lender who is trustworthy, is gathering enough money for their down payment, and is looking for a house they can call home.
I am one of those thousands of people jumping through the hurdles of home ownership to get our dreams fulfilled. Most of us aspiring home-owners do not have the experience to face this rather DAUNTING task. I was not prepared for everything I had to go through. No matter how much you try to manage, purchasing a home is not an easy process. At least it was not for me.
My rather challenging experience with this particular subject has deemed me qualified to talk about this subject. My goal with this blog is to help those who are still trying to find the light in this dark tunnel called "home ownership." You are going to face a very stressful time for sure, so just get ready for the rollercoaster.
The recommendations I am about to make here are simple steps that may make your life less difficult when purchasing your new home. These recommendations may not be applicable to all situations, but should increase your understanding of this process:
LOOK FOR A GOOD LENDER: Having a good lender is the first step towards success in this process. A lender should be informative, answer all your questions, and be accessible when you need them. I talk to my lender almost on a daily basis, sometimes even up to five times a day. You are going to want someone who is reliable. The internet is nowadays the most accessible source of information. But it is also the gateway for many scams. Be careful and choose wisely. LendingTree.com and Ditech.com are just a couple of good places to start. LendingTree in particular is a site that quotes an array of mortgage companies (or brokers) for you. But do not stop there. Drive to your closest bank or credit unit, talk to people and ask for recommendations on lenders. Gather four or five GOOD FAITH ESTIMATES (GFE) and compare them. Different lenders have different fees, and they may not even match from GFE to GFE. But by comparing them, you will make sure you get the best deal possible. See blog on "Understanding GOOD FAITH ESTIMATES" for more information.
CHECK YOUR CREDIT SCORES PRIOR TO CONTACTING LENDERS: All lenders are going to ask what you think your credit score is. Getting financing should not be a concern to you. No matter how good or bad your credit score is you could find financial institutions that are willing to lend you money to buy a house. However, do not let lenders pull your credit unless you are sure you are going to go with them. Allowing a lender to check your credit could hurt your credit score and affect you in a negative way, if that lender is not the one you chose for your mortgage financing. I have had lenders tell me it does not matter if they pulled my credit. But in reality every time a lender pulls your credit, it is noted on your credit reports. When I was shopping for a lender, I allowed one bank to pull my credit because they had advised me it did not matter. Later in the process I decided to go with a different lender. To my surprise, I learned I had to justify to my lender why another lender had checked my credit history. My lender suspected I had obtained a small loan (maybe to make up for my down payment) and this concerned them a lot. I ended up clearing the situation, but it was a hassle trying to justify what had happened.
FIND A REALTOR THAT IS INTERESTED IN SELLING YOU THE HOME THAT IS RIGHT FOR YOU: During this process I have dealt with multiple realtors. They all want to sell you houses, but not all of them have you in mind. It is important for you to trust the realtor you choose. They should also dedicate time to you, be informative, and listen to your requests. Before you choose a realtor, make sure you understand your "wants" and "needs." You will learn during this process you will have to sacrifice some of your "wants" because not all houses are made to our tastes. We, first-time homebuyers, tend to idealize what we like, and get disappointed because we cannot find exactly what fits that mold. Your realtor should help you work through your "wants", and show you what is really worth considering. On the other hand, realtors may make suggestions, but if their suggestions do not reflect your desires, they are not a good fit for you. Ask other homeowners for recommendations on realtors. Most likely, if someone is willing to recommend a realtor, it is because they had good experiences with that person. Listen up.
DO NOT MESS WITH YOUR BANK ACCOUNTS: The worst mistake you could make when dealing with a mortgage lender or broker is to provide them with bank statements that had cash transactions in them, especially in large sums (over $200). Life could be complex sometimes, and we may have to make transactions in cash from time to time. It just happens (yes, I am Colombian, but I promise I have not done anything illegal). If you need to present your bank statements to your future lender, you got to prepare for it. Or said in a different way, prepare your bank account. How could you do that? First and foremost, do not transact large sums of money unless you must do it. If they are on your bank statement, your lender may ask what those were about. Second, always accept and write checks, and not cash. Cash transactions are a HUGE red flag for lenders, specially is you are applying for an FHA loan (mortgage backed by the federal government). Third, keep copies of your cashed checks and deposits. This could definitely save you time when the bank decides to inquire about your transactions.
INFORM YOURSELF: Seek to understand this process as much as you can. Although it is complicated to understand the lingo, fees, loan processing, quotes, etc, you will not fail if you educate yourself about what this process really represents for you and your future. Get multiple opinions from qualified people. This means asking lenders lots of questions, searching the internet for answers, talking to other homeowners, and even getting contractors to inspect the home you desire. Although this may be time consuming, you will see the benefits of this.
UNDERSTAND THE STRESS THAT COMES FROM THIS PROCESS: Buying a home is no easy task. Most of us with normal lives have a family and a job for which to be responsible. But there are going to be moments during this process in which you are going to feel burdened and those closest to you could be affected by the stress that come from buying a new home. There are going to be moments in which you feel there is no end to the amount of paperwork you need to get done, or that your bank is making your life miserable, or that they are digging too much into your private life. This process will become a stressor for you and those around you. You have to consciously make an effort to not let the stress take over you. I tell you it will consume you. Do things that have nothing to do with house purchasing. Get out of your house and take your mind off of it. Fighting with your loved ones will become too hard to manage if you do not make an effort to set aside the worries of a homebuyer. Thankfully this is a process that has an end date.
As I have explained, home buying is not easy, especially for those who do not have any experience with it. But with patience, education, and a bit of street-smarts you can succeed. Homeownership is a dream for many; it was certainly one for me. But it is a very important process that could demand a lot of you. Do not give up because at the end of the tunnel, you will have a brand new house in which to grow and feel accomplished.
If you have any questions please e-mail me at jamierroe@yahoo.com.
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