OK, you are making the leap and buying your first home- so what is your strategy? Do you know the “do’s and don’ts” of the home buying process? Should you work with your local banker, or is there a better option? Are you thinking about buying a boat or a new car, or making some other major purchase around the same time? How do you find a Realtor? What are the “must-have” features that make a home desirable for you and your family? Many people don’t consider an array of questions that are critical to successfully getting to the closing table and buying their first home, and not knowing just one of them could make the difference in getting the home of your dreams. But I’ve got seven key tips that will help you through this process. Just watch this short video, and you will be better prepared than most people out there trying to buy their first home!
Hey, this is Debbie Wright with Charles Rutenberg Realty, coming to you from the Tampa Bay area, serving Saint Pete, Clearwater, and Tampa, and I’m here to talk to you today about buying your first home. I have some tips for you, so follow me!
Okay, so the first tip I have for you is to prepare. Obviously, buying a house is going to cost money, so you need to prepare now for down payment and closing costs, and you need to make sure to save some money for reserves, because once you do buy house, inevitably there’s always something you want to do to it, you want to get it in shape, spend a little money here, maybe some furniture, decorate, that sort of thing. So make sure that you start preparing now and you save some money. And it’s really important to have the money in the bank, because now on tip number two, you’re going have to make a decision.
Tip number two- mortgage broker versus banker. Okay, so my tip to you is get a broker and here’s why. Bankers work nine to five, Monday through Friday, real estate transactions occur evenings and weekends. Inevitably, what you want is going to be found on Saturday morning, and it’s in a competitive situation, you may need to adjust your preapproval letter, and a broker’s going to be able to do that for you. They’re very Johnny on the spot, whereas a bank isn’t. I mean they’re not there after hours. It’s really hard to communicate with them outside of nine to five and unfortunately, that’s just simply not how things go. So I recommend highly that you get a broker.
Now that brings us to how much home can you afford? That broker is going to be able to identify certain things to you, including what your credit is, your income to debt ratio, and what kind of loan you’re going to be able to qualify for. The other thing is that broker’s going to have access to are programs that may benefit you, like down payment assistance programs, programs that will help you with closing costs that are state-driven, they can be county-driven, municipalities have them, so there’s all kinds of programs, and typically they use specific lenders for those programs, so it’s important to shop all that around first, and go through the preapproval process. Submit all your documentation so that you can get a preapproval letter. Go as far as you can. You do want a preliminary examination by an underwriter because this is going give you a competitive edge later on. So my tip to you here is to take it as far as you can, and get a broker, okay?
I alright, on to number three- choose a Realtor wisely. There are a lot of different things you can do, you can go on the internet and find someone, you can use a recommendation from a friend or family member, but the main thing is have a connection with that person. Interview that person. Talk to them about what their experiences is, so that you can understand how they’re going to help you get to the closing table. And you’re also building a team here; you’re building a mortgage person and a Realtor are gonna be on the Team You, okay, and that team is got to get you to the finish line and you have to feel comfortable with them, and you have to trust them. So it’s super important for you to have a good connection with both of those people, specifically the Realtor, because they are going to definitely be an important factor in this process.
Alright, on to tip number four- know your market. Now, once you engage with a Realtor and a mortgage person, understanding your market is going to be a lot easier, because these folks can talk to you about the experiences that they have had in the market you’re in. So for the sake of example, we’re going to use that you’re a VA buyer and you’ve been preapproved for $300,000. Okay, so it’s time for you to establish how you’re going to be competitive. In this particular market of the Tampa Bay area, anything under $300,000 is considered competitive. We still are in a sellers market. We have moved to more of a balanced market, but under 300,000 is still quite competitive, so you want to make sure that you understand what contingencies are in the contract, and consider removing them if you are in a competitive situation. Two contingencies in the contract are inspection and finance. Finance- you could actually remove that contingency for financing if you have gone all the way through to the preapproval process. Your lender can let you know exactly how far you’ve gone. Remember, we talked about getting in front of that underwriter so that they can take you through a preliminary approval process? That’s why that’s important, because now you have an edge over your competitors. You can actually remove that contingency and it’ll put you on the top of the list if the seller has multiple offers.
The other contingency you could consider removing is the inspection contingency. Now, you don’t want to NOT inspect the property, I’m not saying that. I’m saying you can remove the contingency and that you will sail through to the closing table, no matter the condition, whatever is revealed during your inspection. That being said, if you’re a VA buyer or an FHA buyer for that matter, you are held to specific guidelines for that property. The property can’t have rust, peeling paint, the seller typically will remove flooring and say, “Hey I’ll give a credit…” That can’t apply to you. There are other instances- the electrical box needs to be up-to-date, can’t be a hole in the roof, there’s a whole list of things that have to be tidy and neat in order to qualify for these loans. The appraiser/inspector is going to preview that property once you get further along in the transaction, and they’re going to submit a report to the lender, based on the condition and the value of that property.
So it’s super important that your Realtor understands what type alone you’ve been preapproved for so that they can show you properties that are appropriate for that loan. A VA buyer and FHA buyer should not be looking at “fixer uppers”. Unfortunately, those guidelines are strict, and you’re going to need to have a finished product that you’re going to be looking at, in terms of inventory. So those are some things that you need to consider, but the tip here is to know your market
Tip number five- keeping an open mind. Okay, so now you’re starting to house hunt. You’re going to determine what your wants, your needs, and your have-to-haves are. What are your trade-offs, what are the things that you don’t necessarily have to have, but you thought you did? Those are all going to be refined as you go through this process. You’re going to walk into houses that don’t have things checked in your boxes, and you’re going to fall in love. I know I did. I bought a house and I had a whole list of things that it had to have, and it didn’t have but maybe a few of them. But I ended up loving the home that I chose, and so this process gets refined over the more properties that you see. So when you and your Realtor walk into the house that checks those boxes for you and you have come to fall in love with the house, you both are going to know it, and at that point, because you are preapproved and you’ve gone through and made good choices before you ever got to this point, you can make a competitive offer right then and there. And that is very good news, because it’s very likely that you’re going to get an accepted offer by doing that.
Okay, on to tip number six- be patient. It’s so important because this is a very emotional process. There are bumps in the road that are unavoidable, but having a strong, experienced team is going to help you navigate over those bumps and smooth them out. So make sure you’re surrounded by solutions-based people. I know that’s important for me. A pet peeve for me are people who don’t communicate or respond, especially when we really need an answer NOW. So I always say, we’ve got to take on an extra measure of patience during this process. The underwriter might ask you for some stuff that they need immediately- make sure you’re responsive and that you get it to them quickly. There are other issues that may come up, just make sure that you are going through this with some strong, experienced people, because they’re going to help you.
Okay, last but not least, tip number seven- guard your money. Okay, what do I mean by that? Well, I’m about to tell you. When you start moving through the process of the transaction- you’ve made an offer, it was accepted by the seller, you’re moving into now making an escrow deposit. You can do that a couple different ways. You can wire funds, or you can deliver a check. In times past, I would offer as a courtesy, I would take the escrow check to the title company on behalf of the buyer, or I would get account numbers for them to wire the funds to. Now we have regulation that is a little bit stricter than it used to be, and wire fraud has now escalated, so the brokerages and title companies have decided that it is just better for the buyer or the seller to have a direct relationship with whatever title company or lawyer is handling the transaction. You need to verbally communicate with people at that office and get whatever information about accounts that you need to get, or physically go to the office. It’s super important for you to do that to eliminate any way that fraud could be committed by someone hacking an email account and getting information about you or your accounts, or the title company’s information about their account. Title companies typically encrypt all of their messages, so your communication with them needs to strictly be in person or over the phone, not over the email. I say that in regards to the escrow deposit, and also when you wire your funds at the end of the transaction- super important to make sure that you are connecting with them either in person or on the phone.
My next word of caution is don’t spend any money during the transaction! It is so easy because there’s always something you want for your new house, but try to not do it, because it could actually end up blowing the deal, and you don’t want to do that. Nobody wants you to lose this house, especially the team that’s helped you get to this point. So make sure that you don’t open new credit cards, you don’t spend any on your credit card, and you don’t make any purchases with large amounts of cash that are going to come through your account. Your mortgage broker or your lender is going to go over this with you in detail, I’m just reiterating it because it’s super important, and time and time again I’ve seen people forget this, and go out and buy a big screen TV, open a new credit card, Black Friday came and they got some door-busters, and they lived to regret it because they didn’t get the house. They didn’t get to close on the property. The loan fell through because of it, so just a word of caution- watch your money. Guard your money! It’s super important.
Okay finally, I’ve said it about fourteen or fifteen times, make sure you surround yourself with people that you’re comfortable with, that you trust, that are going to get you to the finish line, and it’s important to have a strong team that’s working on Team You to get you to the table, okay? So that being said, make sure that your Realtor and your mortgage broker are working for you, that you have them representing you, and are advocating for things in your best interests.
Alright, let me know if you like the video, subscribe to my channel. Leave me a comment to let me know which tip you liked best, and if you’d like me to do a video or expand on any of the tips, I’d love to do that for you. Also, if you’d like to reach out to me with any questions, I’m always available for you. Make sure to email, text, you can call, you can Facebook Message me, however you choose to communicate, I will reach back out to you, and I will see you soon. Thanks.