first time home buyers

Buying a home is a monumental purchase. It might seem intimidating to take the first step, but these easy DO’s and DON’Ts will make sure you’re headed in the right direction.

If you’re a real estate agent, be sure to add this list (or one like it) to the list of buyer resources on your agent website. Online prospects will appreciate the free advice!

DO’s

Know your credit score.

Check your credit score before beginning the home buying process so you know where you stand. The better your credit, the better the terms of your loan. If your score is looking a little low, you might want to spend some time trying to raise your number before meeting with a mortgage specialist.

Investigate programs for buyers in your area.

Many cities and workplaces offer programs to build their communities by helping first-time buyers. Check with your employer or local real estate association. They can point you in the right direction!

Get preapproved for a loan.

Make an appointment with a mortgage specialist to get preapproved for a home loan. Preapproval is a written guarantee by a lender or mortgage broker to grant you a loan up to a specified amount. Being preapproved also means that you will have more pull than a competing buyer who is only prequalified.

Learn more about local neighbourhoods.

Explore the neighbourhoods in your city in person and online. A lot of online real estate search websites, like Point2 Homes, will have information about the demographics and walkability about different communities in your area.

Interview real estate agents to find the right fit.

Ask your friends and family and search online to find your real estate agent. You may end up interviewing several before you find one with the expertise and communication style you’re looking for. A good agent will also be interviewing you, so keep your ears out for questions like these.

Identify your wants vs your needs.

Knowing the difference between what you really need and what you actually just want will help you compromise and stay on budget. You may need a certain number of bedrooms, but you want an open plan kitchen.

DON’Ts

Change jobs. 

If you’re hoping to secure a mortgage in the next 6-12 months, job stability is key! Stay in your present position until your purchase is closed, if possible. If you do get offered a job that pays more, you can probably still get your loan approved, but be warned that you will have to jump through more hoops!

Make large purchases.

Large purchases – like buying a new car or lots of furniture – can affect your credit and set off red flags for lenders who worry you won’t have money left when you need it. We advise you to wait to make substantial buys until after you move into your new home.

Get attached to the first house you see.

It’s easy to do. You fall in love with the first house you place an offer on, and then are heartbroken when someone else gets it. So many factors are involved in a successful real estate contract. Talk to your agent about your local market so you have realistic expectations from the get go.

Miss an opportunity to negotiate. 

First-time buyers don’t usually know the many different kinds of negotiation that can take place before escrow closes. In addition to price, you may be able to negotiate for repairs, a new paint job or an extended move-in/out window. The agent you choose will go to bat for you, so be sure to pick a good one!

Skip a home inspection.

Never skip a home inspection on your first home. You want to know exactly what your hard-earned cash is buying before you buy it, after all! Learn more about home inspections and read about 14 common home problems to be on the lookout for.

Give up. 

Buying a home can be a long process, but it is rewarding in the end! Don’t give up if you don’t find what you’re looking for right away. New houses come on the market all the time.

 

Thanks Point2.com!

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Here is a great infographic from The Appraisal Foundation outlining common myths about the appraisal process among lenders, borrowers, real estate brokers, and homebuilders.

 

Click to see larger image

Barry Thomas ~ Living Bowen

Bowen Island Realtor

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Cynics may scoff, but getting under contract on the right home can turn even the most stoic shopper into a bit of a dreamer. From paint colors to planting a garden, picturing yourself in that property is critical for many buyers.

But leave a little room for pragmatism. Remember that getting pre-approved for a mortgage and even under contract isn’t a guarantee. That prefix is there for a reason. Loan pre-approval is not loan approval.

You’ll have more hurdles to clear before a lender legally commits to funding your home loan. Buyers who don’t know any better can inadvertently add obstacles to that path — or even kill the entire deal —between contract and closing day.

Some missteps can be costlier than others. Here’s a look at five of the worst things you can do before buying a home.

1. Go Credit-Crazy

It’s almost become cliché in the mortgage industry, but the warning still bears repeating: Don’t buy a truckload of furniture until after your loan closes. The prohibition goes beyond sofas and settees — avoid obtaining credit for any major expense, such as a car, a boat or, yes, a new bedroom set.

Be careful with even minor expenses. If you absolutely need to obtain new credit or accrue debt before closing, talk with your loan officer as soon as possible.

New payments are going to affect your monthly debt-to-income ratio (and residual income on a VA loan), and not in a good way. Hard inquiries on your credit report could also lower your credit score. That might hurt your interest rate if you haven’t locked or even knock you out of qualifying range all together.

2. Shuffle Dollars and Cents

Lenders will scour your most recent bank statement as part of the pre-approval process. It’s not like they forget about it after that. They’ll take another look at your assets and bank records again during the underwriting process.

You’ll need to explain any unusual deposits or withdrawals. Lenders will require clear documentation and a paper trail if you’re putting gift funds toward a down payment or closing costs. Stuffing a wad of undocumented cash into your account is going to raise some red flags.

3. Get Behind on Bills

Having a late payment hit your credit report before closing can devastate your deal. Payment history comprises about a third of your credit score.

One solitary 30-day late payment can clip 60 to 110 points from your credit score. Maybe not a huge deal if you had an 800 score, right?

Possibly. But if that 30-day late blemish is a mortgage or rent payment, some lenders will boot your application altogether. Many will require at least 12 consecutive months of on-time payments to qualify for a home loan.

4. Co-Sign on a Loan

Co-signing a loan is arguably a bad financial move whenever you make it. But it’s especially risky during the mortgage lending process. It means you’re financially liable for someone else’s debt.

Yes, that someone else might be the most responsible person on the planet. Lenders will still need to factor that new monthly obligation into your overall affordability profile. Adding one more debt to the list could stretch too thin your debt-to-income ratio and assets.

5. Changes in Employment

Probably goes without saying, but losing your job is going to be a big problem. Even job-hopping can present some major hurdles. Lenders crave stable, reliable income that’s likely to continue.

Lenders are likely to slam on the brakes if you take a new job in a different field. Or if you decide to start your own business. Or even if you get a promotion but see some or all of your income shift to a commission basis.

The bottom line: Any change to your employment is significant. Keep your loan officer in the loop, and ask questions when in doubt. The last thing you want is to waste time and money on a home loan you’re never going to get.

Throughout the mortgage process, it can also be helpful to monitor your credit scores for changes so you can know whether you need to address any problems. To do that, you can use a free tool like Credit.com’s Credit Report Card, which updates your credit scores and an overview of your credit report every month.

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This article was written by Chris Birk and originally published on Credit.com.

 

Barry Thomas ~ Living Bowen

Bowen Island Real Estate Specialist

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Follow the road to homeownership on this handy infographic!

Infographic: The Road To Homeownership

Barry Thomas ~ Living Bowen

Bowen Island Real Estate Specialist

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We want to thank the Real Estate Buyer's Council  (REBAC) for forwarding us this great list!  For all potential home buyer's seeking a new home, be sure to go over this list to ensure everything meets your requirements.

Step One: The Home

Here is everything you will want to look over and ask about for each house that you look at:

  1. Square footage
  2. Number of bedrooms
  3. Number of full baths
  4. Number of half-baths
  5. Condition of walls (interior)
  6. Closet/storage space
  7. Kitchen storage space
  8. Basement – well kept? any strange odors? no mildrew or mold?
  9. Fireplace
  10. Cable TV/Internet
  11. Exterior appearance (condition of outdoor walls, overall appearance)
  12. Front and back lawn areas
  13. Deck/porch/patio?
  14. Fence
  15. Garage
  16. Windows/screens
  17. Age and condition of roof

Step Two: The Neighborhood

Here is everything you’ll want to ask about, look into, and research about the neighborhood you move into:

  1. Appearance/condition of neighboring homes
  2. Safety
  3. Noise level
  4. Traffic issues
  5. Kid-friendly? Average number of children per residence?
  6. Parking
  7. Police
  8. Fire Protection
  9. Pet restrictions
  10. Parks/recreational facilities
  11. Trash removal

Step Three: Schools

If you have children or are looking to start a family in the next few years, here are the things you’ll want to check for in relation to education:

  1. Age/condition of schools and buildings
  2. Reputation of school district
  3. Test scores of current students
  4. Quality of teachers and educators
  5. Private school locations (if you’d prefer private school)
  6. Play areas/playgrounds
  7. Class sizes
  8. Curriculum
  9. School safety

Step Four: Community

It’s important to live in an area where you not only love your house, but you feel at home in the community. Here are some things you’ll want to ask about:

  1. Schools
  2. Religious community centers (churches/synagogues/etc)
  3. Shopping centers/grocery stories
  4. Proximity to your place of employment
  5. Hospitals
  6. Doctor and dentist locations/quality
  7. Parks and recreation
  8. Restaurants
  9. Entertainment (movie theaters, shopping malls, etc)
  10. Airport
  11. Proximity to highways
  12. Public transportation – bus? metro?

Barry Thomas ~ Living Bowen

Bowen Island Real Estate Specialist

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Here is a great infrographic from our friends LGI Homes.

 

Barry Thomas ~ Living Bowen

Bowen Island Real Estate Specialist

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