Even for experienced home buyers, the buying process can be a bit overwhelming. Not only must you choose a house, which is a major undertaking in and of itself, but you must also navigate negotiations, legal paperwork, appraisals, banks, and much more.
Because of this complexity, it's extremely important for all home buyers -- particularly first-time home buyers -- to get help from highly regarded professionals.
That's why I reached out to Debra Kroon, a professional real-estate broker of over 30 years with Yosemite West Real Estate in Oakhurst, Calif. Debra has extensive experience negotiating foreclosures and short sales with major mortgage players like Freddie Mac. If anyone can help first-time buyers make the right decisions while avoiding pitfalls, it's Debra.
To help all of the first-time home buyers reading this, she broke down her best advice into these eight critical points.
1. Work with a knowledgeable, experienced realtor
If there is a single piece of advice every home buyer should follow, this is it. Seasoned, trained professionals do this for a living; they can save you time, money, and headache. Consider an Accredited Buyer Representative (ABR), who will have additional training working with buyers of real estate.
2. Get pre-approved for your loan
Your realtor should be able to recommend loan professionals who have solid reputations, close on time (or early), and work hard for their clients. Going to the bank first will help you fully understand exactly what you can afford based on your income, down payment, and credit score. Having a pre-approval letter can also benefit you in the negotiation process, as sellers want to ensure that potential buyers can actually obtain the financing to purchase the home.
If you discover you can't afford as much as you initially thought, or that your credit score isn't good enough, the loan officer should also be willing to tell you how to clean up your credit and improve your chances of qualifying for the loan.
3. Limit expenditures until you own your new home
Lenders will be checking credit and bank statements until your loan closes. Excessive spending could lower your maximum loan amount -- and might even price you out of the home you thought you were buying.
The key here is proper planning and understanding your budget. A home is a significant purchase that requires a strong financial foundation. You've worked hard to put yourself in a position to purchase a home, so don't let a last-minute mistake ruin your chances.
Ask questions. If you're not sure about some aspect of the process, ask away until you do understand. The realtor and your mortgage banker work for you. If you aren't comfortable with anything, then it's absolutely OK to slow the process down.
But remember that these professionals are not mind readers. It's their job to help you, but they will only know that you're having trouble if you tell them. And that leads us into the next point...
5. Be open and honest
Lenders and realtors need full information from you in response to their questions. That means filling out all documentation and paperwork fully and honestly. It means disclosing any pertinent information regarding credit problems, income, and your net worth.
Failure to do so can have serious negative consequences for you as a home buyer, the least of which is that you may lose the house altogether. The worst-case scenario is that the bank may consider your dishonesty to amount to mortgage fraud -- a serious crime. However, for the vast majority of home buyers, being honest with your realtor and banker will simply result in a better home and a better loan for your family and your finances. These professionals want you to be successful; your openness and honesty go a long way to ensuring they can do their job as best as possible.
6. Let your realtor negotiate on your behalf
Your emotions will interfere with your ability to obtain the best price on your new home.
The negotiation is one of the realtor's primary jobs. They should help you understand what the home is worth using actual market comparables in your neighborhood. From that basis, they can help you decide how to make an offer, at what price, and with whatever conditions are required by your particular state's laws. To get the best deal, listen to your realtor's advice.
7. Time matters
Respond promptly to all requests for paperwork from your lender, your realtor, and your closing office; this will keep time on your side.
In your contract with the seller, known as the offer to purchase, there will be a deadline by which you must close on the home. If there are delays, and that time limit expires, you could easily lose the house. There's a lot to do between making the offer and closing the deal, so it's important not to drag your feet on any step.
8. Remember that all the frustration and hard work will be worth it in the end
Don't forget the end game of this entire process. When it's finished, you'll be the proud owner of your own home. As Debra says:
Closing day is a celebration for all involved -- as a Realtor, it is the culmination of a "job well done," with happy buyers moving into their new home -- and happy sellers able to go forward with their needs in life -- and knowing we were able to achieve those goals for them.
Take a few minutes to stop and smell the roses. Buying your first home is a big deal! It won't be long until you're paying taxes, doing repairs and maintenance, and figuring out some of the more challenging aspects of home ownership. But don't worry -- there's expert advice on all of those things, too.