First Time Home Buyer Tips And Buying And Mortgage Process

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First Time Home Buyer Tips And Buying And Mortgage Process

This Article On First Time Home Buyer Tips And Buying And Mortgage Process Was UPDATED On October 16th, 2018

It is highly NOT recommended to make large purchases or move money around from bank typically three to six months before buying a home for a couple of very important reasons:

  • First, you don’t want to take any unnecessary chances with credit profile
  • Lenders want to see that you’re reliable
  • They want a complete paper trail so that’s they can provide you with the best loan possible
  • If you open new credit, take on new debt or buy large ticketed items you’re going to have a difficult time getting a mortgage with high debt to income ratios

First Time Home Buyer Tips On Pre-Qualification Versus Pre-Approval

It’s always advised to get pre-approved in advance to know how much home you can afford.

  • There’s a big difference between a buyer being pre-qualified and one who has a pre-approved mortgage
  • Anybody can be pre-qualified for a home loan
  • Getting pre-approved typically means a lender has looked at all financial information
  • They’ve let you know how much you can afford and they will lend
  • Being pre-approved will save borrowers a lot of time and energy so you are not running around looking at houses you cannot afford
  • It also provides you the opportunity to shop around for the best possible deal and the interest rates
  • Do you research and learn about junk fees, processing fees and or points and make sure there aren’t any hidden costs in the loan

First Time Home Buyer Tips On Knowing Property

It is always recommended to get a survey done on the property so buyers know exactly what you’re buying.

  • Knowing precisely where property lines are save you from a potential dispute with neighbors
  • Also, property tax is likely based on how much property you have
  • So it is best to have an accurate map on hand
  • Trying to anticipate the housing market is impossible the best time to buy is when you find the perfect house and you can afford it
  • Real estate is cyclical
  • It goes up and it goes down and it goes back up again
  • So, if you try to wait for the perfect time, you’re probably going to miss out

First Time Home Buyer Tips On Buying The Biggest House On The Block

Everyone is usually drawn to the biggest, most beautiful house on the block but bigger is usually not always better when it comes to houses.

  • There’s an old adage in real estate that says “don’t always buy the biggest house but buy the best house on the block”
  • The largest house only appeals to a very small audience
  • You never want to limit potential buyers when you go to re-sell
  • Your home is only going to go up in value as much as the other houses around you
  • So if you $500.000 for a home and your neighbor pays $250.000 to $300.000, your appreciation is going to be limited
  • Sometimes (not always) but sometimes it’s best to buy the worst house on the block
  • This because the worst house per square foot always trades for more than the biggest house on the block

Buying Versus Renting

The difference between renting and home ownership is the sleeper costs:

  • Most people just focus on their mortgage payment
  • They also need to be aware of the other expenses such as property taxes, utilities, home-owner- association dues and home owners insurance
  • New homeowners also need to be prepared to pay for repairs, maintenance and potential property- tax increases
  • Make sure you budget for sleeper costs so you’ll be covered and won’t risk losing your house
  • Buying a house on emotions is short lived
  • Usually once hype is over and reality sets in it typically breaks your heart soon thereafter
  • Simply because you purchased via emotion as opposed to an investment approach and could end up making some pretty bad financial decisions
  • Going with your instincts usually means that you recognize that you’re getting a great house for a good value
  • Going with your emotions is being obsessed with the paint color or backyard
  • It’s an investment, so stay calm and be wise

Home Inspections

Let me ask you a question:

  • Would you by a used car without having it checked out by a certified technician?
  • Of course not
  • A home inspector doesn’t cost much more around ($200) but could end up saving you thousands
  • A home inspector’s sole responsibility is to provide you with information so that you can make a decision as to whether or not to buy a particular home
  • It’s really the only way to get an unbiased 3rd party opinion
  • If the inspector does find any issues with the home (depending what they are) it can provide you with leverage and a good bargaining tool for lowering the price of the home
  • It’s better to spend the money up front on an inspector than to find out later you have to spend a fortune which could have been avoided
  • Today, so many sellers are behind in their property taxes
  • If you have that valuable information it give you a great card to negotiate a good deal, all you have to do to find out is go the county clerk’s office

Area And Location Of The Property

Finally, before you buy, get the lay of the land, drop by morning, noon and night and check out the scene at different times of the day i.e for traffic or noise even neighbor’s activity.

  • Many home owners after purchasing find themselves distraught because they found the perfect home only to find out the neighborhood wasn’t for them
  • Drive by the house at all hours of the day to see what’s happening in the neighborhood
  • Do your typical commute from the house to make sure it is something you can deal with on a daily basis
  • Find out how far it is to the nearest grocery store and other services
  • Even if you don’t have kids, research the schools because it affects the value of your home in a very big way
  • If you buy a house in a good school district versus a bad school district even in the same town, the value can be affected as much as 20 percent

About The Author Of First Time Home Buyer Tips

This article, First Time Home Buyer Tips, is written by Alex Carlucci. Alex is a senior loan officer with Gustan Cho Associates. Alex is also a contributing associate editor and writer for Gustan Cho Associates Mortgage Resource Center. Alex is a producing licensed mortgage loan originator with The Gustan Cho Team @ Loan Cabin.  Alex is an expert in all areas of lending and real estate investments. Alex Carlucci is a real estate investor himself. We look forward to Alex’s upcoming articles on informational topics in lending and real estate in the coming days and weeks.

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