Four Simple Steps Before You Buy Your First Home

1. Make sure you have good credit

Gone are the crazy days of the ‘mirror-fog’ test loans. (“If you can fog a mirror, you’ve got a loan!”) We are back to the good old days of common sense financing.

• You need to have a job or business with verifiable income
• You need to have some cash for a downpayment, (most likely not as much as you think you need!)
• You need to have good credit

Several months before you get into your Realtor’s car, you can work on your credit score. First, check your credit score and your credit report with any of the three main credit bureaus.

Long before you are ready to buy, you should practice good credit habits by making payments on time. Building a credit score that lenders will love is an ongoing, steady process.

Three to six months before you are ready to buy a home, start to watch your credit habits carefully. Don’t open any new credit accounts right before you apply for a mortgage, it could hurt your credit score.

If you need more help with your credit score, consider a credit counselor. If you have some negative marks, a counselor can be a great help to you to get your score up in a shorter amount of time than you can on your own. They know how to get the job done in the least amount of time. See the following resources.

Additional Resources:

• Paul Sian, Cincinnati Real Estate Agent, has some great tips to help you build your credit score before applying for a loan. Correcting credit score errors is a very important first step. Errors can happen to anyone, no matter how careful you are with your credit.

2. Make a list

Make several lists… a list of the things you must have in a house.  Whittle it down to 6 to 8 must-haves, then prioritize them from most important to less important. Make a separate list of your wants. The reality is, you’ll more than likely not find your dream house. In our market today in Frederick County, as well as in many areas around the country, the inventory of homes on the market is very tight. Buyers are finding that homes go under contract in days.

You will find that you may have to compromise one or more of the things on your lists if you want to buy a home.  Most people do.  Stay flexible, and keep an open mind. Remember what you want most and be ready to prioritize and even re-prioritize as you see what is available on the market. Be ready to cross the things off of the list that are not most important as you get out there and see what is available.

Many times over the years, we’ve watched as first-time buyers go through the searching process. When they actually see what’s available in their market, they often change their minds on what they thought was so important. Many times they are introduced to styles and home features that they had not even thought of before.

Additional Resource for Your Home Search:

• In her timely article, 10 Killer Tips for Buyers in a Seller’s Market, Petra Norris, Lakeland Florida real estate pro, has some spot on tips for buyers to win in a competitive market. Having correct expectations is everything when the market is moving fast and bidding wars are a reality.
• As you tour homes, you’ll want to find out about neighborhoods and schools, you’ll want details about living in an area. You’ll also want to document the homes you see. There are several apps that will help with the process of searching for a home. Check out my article Mobile Apps for Your Home Search.

3. Work with an experienced buyer’s agent

It seems like common sense, but it’s worth the mention. Using an experienced buyer’s agent is crucial in today’s market. You need someone who has been through a competitive seller’s market before, who knows how to navigate a competitive market and help you win.

If the agent is newer, make sure they are on a team and have the support of an experienced agent.  A buyer’s agent is much better equipped to help you navigate the present market if they have experienced both a buyer’s market and a seller’s market.

People spend an average of 15 hours researching their next car purchase, but less than 3 hours researching which Realtor they will use.  Ask friends and co-workers for referrals, and do your homework.  Your agent needs to be a trusted advisor on what will probably your largest and most important purchase in your life, your home. [Read our Testimonial Page]

Additional Reading:

• Bill Gassett, Metrowest Mass real estate pro, has 13 very important tips for buyers in his article, Why Have a Buyer’s Agent When Purchasing a Home?. One of the important points is that you need a buyer’s agent who has his finger on the pulse of the market. That market savvy agent will be a tremendous help when you are up against competitive offers.

4. Get pre-qualified… and pre-approved

Lastly, before you even start looking, find out how much you can afford.  It makes no sense to fall in love with a house and then find out you can’t afford it.  Getting a pre-qualifying letter involves a phone call to a local, reliable lender. In today’s seller’s market, we recommend not only getting pre-qualified, but starting the process of approval before you even start looking in earnest.

Pre-Approval takes a little more time, but when you find the home of your choice, and you run into the possibility of competing in a multiple offer situation, you’ll stand a better chance of winning if you are already approved.

Get a referral for a lender from your Realtor; chances are they have several that they have relationships with and trust.  DO NOT use an internet lender.  DO NOT pick up the phone book.

As real estate agents, the last thing we want to see is you sitting at the settlement table, with your kids, the dog, the cat and the goldfish, all packed up with your every earthly possession in the moving van…and then hearing that your loan didn’t fund.  That is an ugly sight that we cannot unsee.

Use a local lender with a good reputation to get pre-qualified.  You don’t have to use the lender to get your loan, but they will have clout with local sellers when you want to present your offer.  The “Pre-qual” letter is your first step.  Here’s a tip:  Be candid.  Hiding information only delays the inevitable.  Call us for our list of preferred lenders!

Additional Realtor Advice:

• Kyle Hiscock, Rochester NY real estate agent, gives an in-depth explanation of the need for a pre-approval in his article, Why Do Real Estate Agents Ask for a Pre-approval? There are several benefits that will put you ahead of the competition, most notably: it strengthens your negotiating ability.

After you are pre-approved, go over your budget and decide what price range you are comfortable with.  Then enjoy the hunt with your trusted Realtor and Loan Officer, and take advantage of one of those great deals out there in the Frederick real estate market!

For an Exhaustive Resource, Peruse these First-time Buyer Articles:

Here is a curated list of some excellent articles written by top real estate bloggers, specifically for first time home buyers.