DOs & DON’Ts FOR BUYERS

There’s a golden rule to home buying and it’s this the perfect time to buy a home is when you’re ready. Before you say you are ready let’s explore what that means and it starts with working with a trusted experienced Realtor. An experienced real estate agent who knows the area you’re looking to buy in especially well and can advise you on market conditions and whether homes you want to make offers on are priced properly.

Your agent can also identify potential issues with a home or neighborhood you’re unaware of, and go to bat for you to negotiate pricing and terms. Don’t just pick [an agent] blindly — make sure it’s someone who works in the general area you’re looking in and whom you feel comfortable with. Our group has a proven track record of working really hard for our clients as our business is built 100% on referrals.

When you’re buying a home for the first time, or second, third, setting a realistic budget is key. Look at your monthly spending to see what you can afford for principal, interest, taxes and insurance. Factor in the cost of home maintenance and emergency savings for repairs, too. As a rule of thumb, prepare to spend 1 percent to 3 percent of the value of their homes each year on house expenses. You might need to set aside more if the home you end up buying is older, bigger or has maintenance-heavy amenities, like a pool. In addition to household expenses, consider other financial obligations that lenders won’t see on your credit report.

Costs like your cell phone, utility, daycare/tuition, grocery and car insurance bills also affect how much house you can afford. Consider your income, debt and savings, as well — these tie into how much mortgage you could potentially qualify for. Regardless of level of income, you should be able to document that you have a stable source of earnings.

Your income and how much you earn monthly will be scrutinized by lenders, who will look for a two-year employment history and want to see consistent income — whether you’re receiving a salary, hourly pay or are self-employed.

Finding the ideal location and address can take a lot more time than you expect, so begin scouting neighborhoods early in the process. Drive and walk around that area at different times of the day and night.

Along with pinpointing the neighborhood, now is a good time to narrow down your preferences for the home itself.

• What type of house are you looking for?

• What can you compromise on?

• What are the dealbreakers?

Think about what you like about where you currently live — that can help inform your list of needs and wants.

When assessing your application, mortgage lenders typically look at your bank statements from the last two months, in addition to other documents. If you plan to make any deposits into your checking or savings accounts from other assets — such as a down payment gift — do it before that 60-day window. This gives the funds time to “season.”

At three to four months out, you want to deposit your needed funds into your account so they can age appropriately. Ideally, you want these funds in place in your account for 90 days or longer.

Additionally, it’s best to avoid opening new credit accounts or loans, or racking up debt, from this point on.

Things are getting REALLY REAL. At this point, you should know what monthly payment you’re comfortable with, what areas you can afford and how much you can put down. Now it’s time to shop for a mortgage.

Compare mortgage rates from different types of lenders, as well as different types of mortgages, to help you decide whether this is a good time to lock in your rate. Consider your experience with the lender, as well. We have amazing lender partners who we can match you with specific to what your needs are. Our lender partners service our clients an an exceptionally high level.

In this arket, you can find competitive rates and service, but you want to pay close attention to lenders’ responsiveness and communication.

It’s also a good idea to focus not just on the rates you’re being quoted, but all the terms of the mortgage.

• What are the late fees?

• What are the estimated closing costs? Is there a prepayment penalty?

• If you’re able to get a mortgage with the bank where you already have accounts, will you get a better deal?

Sometimes it makes sense to choose a loan with a slightly higher rate if the other terms are more favorable overall.

Once you settle on a lender, get preapproved for a mortgage. Preapprovals usually expire after 90 days, ask your lender how long yours will be good for. If you’re a first-time homebuyer with significant debt or so-so credit, you might want to apply for a preapproval as soon as possible to zero in on issues to fix.

Once you have a preapproval in place, keep sticking to your budget and savings plan and continue to pay all debts on time. Try not to make any extraordinary purchases or take on extra debt either.

Don’t obsess with trying to time the market and figure out when is the best time to buy. Trying to anticipate the housing market is impossible. The best time to buy is when you find your 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.

Everyone’s drawn to the biggest, most beautiful house on the block. But bigger is usually not better when it comes to houses. There’s an old adage in real estate that says don’t buy the biggest, best house on the block. The largest house only appeals to a very small audience and 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.

If you pay $500,000 for a home and your neighbors pay $250,000 to $300,000, your appreciation is going to be limited. Sometimes it is best to is buy the worst house on the block, because the worst house per square foot always trades for more than the biggest house.

Pretty self explanatory… You have gone through all the agonizing prequalifying steps. Congrats. Now get out with your Realtor and Find Your Home!

The last and most important step is to trust your realtor. If you have given them your trust use it to your advantage. We are here to help you achieve your goals, not to make a dollar. Most people like to be their own experts when it come to home-buying.

A trusted realtor will listen, and give suggestions when necessary. Ultimately the decision lies with you but a good realtor will have the latest neighborhood trends, market conditions, and know how of negotiating. Trust us, this is not our first rodeo, and we’ll make sure you don’t get bucked off, and if you do we will be there to help you back on that horse!