Purchasing your first house will most likely be your largest purchase to date, and you’ll be taking on more debt than you ever imagined. If you choose carefully and the long-term economic picture is secure, the house will most likely be a solid long-term investment, a tax write-offa hedge against inflation and, perhaps most important, all yours for many years to come.
Qualification
The very first step into the home-buying process–even before deciding where you wish to live–is getting prequalified for a loan. Before you select a lender or a mortgage broker, ask your friends and co-workers for a few recommendations and then write a plethora of questions to every candidate before you make your selection. The advantage of working with a bank lending officer is this is the real person who will be calculating your loan. When you operate with a mortgage broker, he’ll be a middleman between you and your lender. He might have the ability to secure you a slightly better rate because he’ll shop about different banks, but it’s the lender who will process the loan. Ask the mortgage broker how many creditors he works with and just how many loans he’s done with every. Ask the loan officer how many loans out of prequalified borrowers are in fact approved in the long run. Get at least two prior-client references from the two.
Goals
Once you are prequalified, you will know just how much you can borrow. The maximum loan amount plus the down payment you’ll be earning is the maximum home price you can afford. Within these parameters, start listing your goals in order of priority. Proximity to your employment or public transit, excellent schools, big parks, a fireplace, a spacious yard–all these are the features you’d like in the location and the house itself. Then put those goals into queries and start asking about. Talk to relatives, friends and real estate agents to help you narrow down the city, neighborhood, house size and type. Once you’ve done that, interview real estate agents who specialize in your chosen neighborhood and budget. Get references, ask about expertise and assess with the real estate licensing entity for negative actions.
Process
Ask both your lender or mortgage broker and your agent about the entire loan and home-buying process. Have them list the steps and the time period associated with each measure. Ask what can go wrong or cause delays at every step. Then speak to friends and co-workers again. Compare the information that you ’ve ever been given against their experiences. If you are receiving information that is not panning out with either the adventures of others or your own experience as you proceed, consider finding a new loan officer or realtor. Unless you have signed a contract with them, you could always move on to someone new.
Determination and Patience
If your initial offer or two aren't approved, use the expertise to discover more. Follow those transactions to find out what the properties offered for and inquire the list brokers that which you may have done differently to have had the offers accepted. Although it’s generally price that wins in the end, sometimes it’s more to do with the way the deal was packaged. If the seller just told his broker to counter offers that came in with preapproval letters and proof of deposit, it's important that you know. Take what you learn from your initial adventures and wrap them into every new deal.
Follow-through
Once your offer is accepted, the real work begins. You will have a limited quantity of time to really have a house inspection and line up the insurance and mortgage. Although your agent can provide home inspection referrals, here, also, it's a fantastic idea to look around. Ideally you would have spoken ahead of time with the house inspector. Make sure that you choose a person who is comfortable going through the house with you and answering your own queries. Ask about the status of all the major systems: heating, plumbing and electric. If he uses a term you don't understand or you see things you are unfamiliar with, ask him to describe it.