Obviously, you’re smart.
Most financial geniuses would say you’re smart to buy a home. Home ownership increases your yearly net worth, accords specific tax advantages, and supports the way you live. It’s at this point that The Big Disclaimer is probably needed. I love attorneys.
Should you buy a home?
Is it the right time to buy a home? Always! Just kidding. There are a lot of people who shouldn’t buy a home. In this market, I counsel clients to reconsider buying if they’re going to be there for less than 5 years – especially now in 2017 with prices near the ceiling. There are ways to buy correctly in a seller’s market. Those who are financially irresponsible may want to reconsider as a home does present unexpected expenses from time to time. That, and non-payment of a mortgage has serious financial consequences.
Still here? Good. The first step in buying a home is getting pre-approved. Your approval will not affect your credit and is good for around 6 months. Don’t skip this step. I don’t care if you’re currently buying a latte with an Amex Centurion Card in Dubai right now. The rules of financing are not common sense. Underwriters are from the 4th or 5th circle of Hades. Get your pre-approval so you know where you stand. Not all houses work with all financing types. Understanding the terms of your pre-approval means you can start shopping for the right home immediately.
Lender advice: there’s very little difference between lenders. It’s a shell game. Some have higher rates with lower fees. Some have lower rates with higher fees. Pay attention to the annual percentage rate (APR) which takes all costs into account and allows you to compare lenders fairly. Use a mortgage broker – preferably local. Having trouble with your Quicken or USAA loan on the day of closing? Call the 800 number, sit in the queue, and pray. Go local.
Finding the right home
Once you have a pre-approval it’s time to DISCUSS a home. The agent/client relationship is critically important, and is predicated on understanding and communication. If you jump into looking at homes your agent has become a professional door opener and not a guide or resource. To be fair, most agents are simply professional door openers. Our practice is different. I want to understand how you live – how you USE your home. Where do you do your living? Where do you shop and seek recreation? What are your long term goals and how can a great home support that? Based on that discussion, I’ll present a range of options. On average, my buyers see between 5-8 homes before they purchase. A great understanding up front makes the entire process enjoyable.
I hope this advice helps. This gets you to the point where you’ll be writing an offer on a home. We’ll cover that and subsequent steps in future blog posts. Enjoy!