Interest rates are low, home prices are low, I am about to get my tax refund..........I am buying my first home. No more throwing my money away on renting. I want to use my "windfall" to become a home owner. GREAT!!!!!!!!!!
So I get in my car and start driving around the neigborhoods I want to live in and I find my dream home. It's everything I dreamed of; granite countertops, hardwood floors, jacuzzi in master bathroom, a pool; all the bells and whistles. I meet with the listing agent, share my enthusiasm and desire to purchase this house. We write up an offer, I give a deposit. Then I sit down with a lender and I find out that I can not purchase this home...or better yet, I loved the house who cares that is smells funny.
Haven't we all at some point heard this above-mentioned story a time or two? What I find to be interesting people purchase cars and homes the same way. They find the car (maybe even test drive the car), they find the house (mentally start placing their furniture in the house). They find the car or the house and try to purchase them by any means necessary. (the good news, with the tightening of the lending regulations, this might save some home buyers unfortunately not all)
Purchasing a home requires planning, preparation, and persistence.
- The Plan - In planning to purchase a home you need to first do a needs assessment.
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How much home do I need?
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How long do I plan on living in this home?
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How much can I afford to spend on a monthly basis?
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How much is this purchase going to cost me initially out of pocket?
Your planning process may require you to seek the assistance of some professionals: Financial Planner (budget counselor); Loan Officer; REALTOR; and maybe a Real Estate Attorney. These professionals can not tell you how much home you need, however, they can assist with some of the other questions.
2. The Preparation -
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Research to find the service providers needed to assist with your purchase. Get referrals from people you know and trust, or look to well known and established companies.
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Prepare all your questions. (there is no such thing as a stupid question)
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Get qualified by a Licensed Mortgage Broker, or bank or lender. You have to know how much home you can afford? (If you have any credit issues you may want to consult with a Budget or Credit Counselor that does not charge for their service or does not tell you "For $495, I can fix your credit") Remember your credit is not broken....you may have credit issues that need to be resolved.
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Consult a REALTOR....Preferrably a full-time agent with a strong knowledge of the communities in which you plan to purchase. (ask for credentials and referrals)
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Find out if there are any issues in the communities you are interested in. (ex: chinese drywall; home owner association fees, restrictions, and/or anything that is impacting or may impact the home or community.
3. Persistence
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The media is portraying that the housing market is doing terrible. However, many people who could not afford homes in times past can now afford to purchase. So you may be competing with other buyers (some being cash investors). So you may place several offers on properties before you find your new home. If you are submitting offers on foreclosed or short sale properties, you will need patience for getting a response to your offer.
The other "P' word is perserverance. We will address this on tomorrow's blog.
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