From the very first, "First Time Homebuyer Seminar" till now, I have always opened up the Seminar by asking a few simple, but very important basic questions. By asking these questions I can also quickly get an idea of why those in attendance are there. A mistake that is made by some that conduct these First Time Homebuyer Seminars, is to assume that they are there because they are looking to purchase a home, which is not always the case. They could be there:
- Simply because they are curious about what is involved in purchasing a home
- Others know they have issues, and want to get information on how to go about clearing up those issues.
- While others are ready to start looking for their first home, and just want a little more information before they start doing so.
Buy asking these initial basic questions I quickly know why they are there, and what I should be eemphasizing throughout the Seminar.
The first question is simply to ask, do they really want to own their own home? They might not have decided that they are ready or really want to purchase a house at this time. It is a big step in their lives, and one that should not be made lightly. They might have already made this decision, and now want to learn about the process that they will need to go through. Also by asking this question it helps to break the ice, and gets them to start openning up.
The next question that I ask is, can they afford to purchase a home? In other words, have they considered the costs of purchasing a home? Do they realize that they will need money for the following thing:
- Downpayment: How much money do they have to put down on a house, or will they be looking for downpayment assistance.
Most "First Time Homebuyers"seem to think that they only need to have a downpayment in order to purchase a home. Many are very surprised to find out that there are other costs involved.
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Up-Front Costs: Represent many of the costs that "First Time Homebuyers" have not considered, and are very surprised when they are told that they are going to need money for:
- An Application Fee
- Appraisal Fee
- Homeowners Insurance
- Earnest Money (deposit on sales contract)
- Home Inspection.
- Well & Septic Inspections (if applicable)
These are all cost that the Buyer will have to pay before they get to the closing table.
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Closing Costs: These are other cost that they will need money for when they show up at the Closing besides the balance of their. Some of those costs will be:
- Attorney Fees (CT is an Attorney State)
- Title Insurance
- Taxes & Insurance that will be put into an Escrow account
- Prepaid Interest
- Maybe points
- Recording Fees.
The third question is, have they considered how much money they can afford for a monthly mortgage payment? This is very different from what they can qualify for a mortgage. Qualifying for a mortgage, and being comfortable with the monthly payment, are two very different things. In qualifying them for a mortgage I will look at all their revolving debt, which I will get from their Credit Report. But there are other expenses that are not on the Credit Report which they need to take into consideration in deciding the amount of a montly mortgage payment that they can really afford. Some of these expenses that are not on the Credit Report are:
- Food
- Clothing
- Gas
- Entertainment
- Child Care
- Cell phones
- General House Maintenance
- Church Contributions
A "First Time Homebuyers" can quickly get in over their head, so the more that I can bring to their attention at these Seminars, the better equipped they will be to determine how much they really can afford to pay for a mortgage.
Once they have answered these initial questions, I then go on to "The advantages of owning a home". After all I don't want to talk them out of purchasing a home. Therefore, I take time at the beginning of the Seminar to talk about some of the advantages to owning their own home. After all owning your own home is suppose to be the American Dream. A few of the advantages to owning their own home:
- A place of their own: It is their own house and they can do what ever they want to it, and what they put into it is theirs.
- Stable housing costs: The mortgage payment will always stay the same (if it is a fixed rate loan), unlike renting which can change every year.
- Increase in value: As property values go up so does their equity in the property, and this can far exceed any money that they put in the bank over a period of time.
- Tax benefit: This quite often is the first response, because everyone knows that the interest payment on your mortgage is tax deductible, and that this can substantially reduce your tax liability each year.
I could point out more advantages to owning a home but I try to keep it simple, I am not there to overwhelm them, and provide them with information overload.
This concludes the initial part of the Seminar. From here I then go onto explain the Pre-Approval processes that they will need to through to determine the amount of a mortgage that they will be able to qualify for, before they begin to look for a house. I will cover this in my next blog.
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Who To Call For Your Mortgage Needs In Connecticut:
George Souto NMLS# 65149 is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 gsouto@mccuemortgage.com, or visit my McCue Mortgage Homepage.
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