You want your own home, don’t know where to start or who to trust. There is so much information online that it’s overwhelming. It seems daunting, even frightening. Here are 6 practical hacks to make to make you a smart buyer, and the journey a breeze.
- Get Educated
I’m not talking about college, it’s about knowing the process. Schools don’t teach it, but it’s important for you to understand financing, contracts, rights and responsibilities. The more you know, the better decisions you make. You’ll want an objective overview. Minnesota Homeownership Center (http://www.hocmn.org/buyingahome/homebuyer-education/) offers in person classes for which they give you a certificate. The online version is called Framework, which also comes with certificate. Another online buyer tutorial is Doorsteps. Time spent educating yourself gives you a compass and a license to drive.
- Get Pre approved
This is about your money. It’s scary, but until you understand that there is no one interest rate, how much you qualify for, and if down payment assistance is available, you are hoping that Rocket Mortgage will give you wings. It won’t, and you won’t know why. Banks will sell you the loans that they want to offer. Mortgage brokers will give you options. Not all lenders are created equal. Ask for referrals, interview before you commit. Don’t let everyone you talk to pull your credit, multiple checks will tank your credit.
Instead of naming a price, learn how much you can invest monthly in a home. That breaks down into Principle (how much home), Interest (rates), Taxes (a variable) and Insurance. PITI, monthly investment translates to a final price. Ask the lender, and have large double latte mocha before you meet because you’ll need to pay attention. Get your focus on.
- Check your lease
This seems like an easy one, but read the fine print or it could cost you. Know when it expires, usually it’s the 30th of some month. Is there an early out? How many days do you need to notify your landlord (IN WRITING) that you are leaving? 30? 60? Sometimes there is a sneaky winter move out clause; if you move out between November 1-March 30, you are responsible for the rent for those months. Ouch, ouch, ouch. Can you sublet? Is there a month to month option?
Let’s walk it backwards from your moving date. A loan takes about 30 days to process after you have an offer accepted, and results of the inspection negotiated. Translated, that means, if your lease is up the 30th of June, you want to have a contract by mid-May, and set a closing date a few days before June 30th. Think 45 days.
- Turn off HGTV.
Seriously, it is not a reality show. Did you notice that buyers see only 3 homes? The national average is seeing 12 homes before making a decision. After 5 minutes of deliberation the buyers decide to make an offer on one of the 3, and it is accepted immediately. (That would be because in reality, they’ve already negotiated a purchase for one of the homes.) There is a shortage of well-priced homes, multiple offers are the norm. You may not get the first home you love, it could take a few offers to land ‘the one.’ The most egregious part about HGTV is that there is never an inspection. Surprise is a bad word in real estate. It is usually attached to an expensive repair. Real Estate agents love inspectors, HGTV ignores them.
- Make a check list
All buyers think that they know what they want. You can’t really know your options without extensive online research, and seeing a handful of homes. Your dream home, and what you can actually buy, may be in conflict. Once you know how much you qualify for, and how much you are comfortable spending, research homes only in your price range. Looking at a higher price range always leave you disappointed. No matter what your price point is, we always want more. Write a priority list: 1. Price 2. Location 3. Number of bedrooms 4. Number of garage stalls, etc. What is flexible, what can you or can’t you live without? Your priorities will evolve as you see homes. What you thought you loved, you don’t, or your list will change.
- Interview agents
You have a right to hire an agent who you feel has your interests at heart and that you like working with. Not everyone is the right fit, some personalities might turn you off. You’ll want an agent who has experience, understands your communication style, and your world. This is your most important investment, you want to hire hands that guide and educate you in making good decisions. You’ll want an agent who listens to you, gives you honest feedback, and who you trust their advice.
That’s your starter kit, with these 6 Hacks you are ahead of the crowd. During the real estate boom, which seems an ancient memory, starting out meant hopping into the car to look at homes. We see how well that worked. We’re all smarter now, and know that prep time in the kitchen makes for less stress over the stove. A smart agent translates the overwhelming amount of info online into bite sized chunks that make sense, and give you a clear path.