advice for homebuyers

Advice for First Time Home Buyers

Whether it be for investment, for rental or personal, there is an obvious increase in the purchase of residential real estate in the most recent years. Before running out to make an offer on that dream home you saw in that amazing neighborhood, you should review these common mistakes made by many first time home buyers.

It’s More Than Just Picking The Right Property

Although many believe that choosing the right home is the most important aspect of buying real estate, that is not always the case.  For example, one of the most common mistakes made by first time home buyers is the failure to understand mortgage rates.  Another common mistake is choosing a Realtor who you have a relationship with.  This doesn’t mean if you know them, you should use them as your real estate agent; what it means is that you should choose your agent wisely and not based off of a personal relationship.

All Agents are NOT the Same

Many first time home buyers believe that all real estate agents are created equal — that is simply NOT the case.

When choosing your dentist, you would look at reviews of past patients, why not do the same with a real estate agent?

Because of that misnomer, many people buying their first home may use their cousin, ex-coworker or their Brother’s best friend – this usually proves to be a mistake. Knowledge of the local real estate market and experience in many transactions comes in very handy in a home purchase.

How to Choose the Right Real Estate Agent

One of the most crucial aspects of your process when ready to buy a home is choosing the right Realtor that can present options that are best fitting. It is important to choose an agent that is looking to match you with a home or property that best fits and not just looking to make a sale.

To do this effectively, searching should include figuring out the necessary credentials for a Realtor, conduct interviews for potentials, browse current listings and review agent or agency’s online presence before making a decision or entering a contract.

In Louisiana

If purchasing in the state of Louisiana, salespersons must obtain a high school diploma or GED, be at least 18 years old, complete 90 hours of education, comply with LREC application procedures & background check, pass a licensing exam and be sponsored by a Louisiana real estate broker for at least 2 years. Even with homeowners looking to sell a home, these requirements are necessary for all Realtors, above being a good fit for your needs.

Buying or Selling

Whether looking to buy a home or even sell a home, the real estate agent must have knowledge and expertise on the local market, processes, and mistakes. Most Realtors will agree that a common first time buyer mistake is the miscalculation of interest rates or homeowners insurance and not having enough as down payment. It is typically recommended to invest at least 20% of the value of the home you’re looking to purchase as down payment.

Skin in the Game

There are loan programs that offer the opportunity to purchase with between 0 – 3.5% as down payment, but many who took this option have since expressed regret. Most first time buyers or buyers under the age of 35 agreed that waiting to accumulate a bigger down payment would have been ideal. Discussing the best approach and practices in regards to down payments and overall rates with your Realtor and loan company is paramount.

Mortgage Options

Another common mistake first time buyers make while purchasing a home is not considering USDA and FHA loan programs. Buying a home can seem like a scary and lengthy process, but purchasing in a city like New Orleans could potential mean landing in a neighborhood close to rivers and lakes with never ending possibilities of activities and history.

Buying New Home

In a state like Louisiana, a program like the Federal Housing Administration (FHA) loan program gives those with low credit scores the opportunity to purchase with only 3.5% down and a credit score of 580 or higher. The USDA loan program is a buyers assist program that offers mortgage guarantees to lenders looking to fully finance in rural areas.

If looking to purchase a home in New Orleans, there are Louisiana Housing Corporation (LHC) first time home buyers programs such as LHC Choice Conventional program, Market Rate GNMA program, Mortgage Revenue Bond Assisted program, Mortgage Credit Certificate program, Delta 100 program, LHC Home/MRB program and more. There are many options that offer assistance to first time buyers to ensure an efficient process.

Be Prepaired

There are countless shocks to first time buyers of their first home, but there are also certain steps that can be taken to reduce the effects unexpected issues. As the thought of owning a home and investing for the future is rather exciting, it is important to take a step back and consider the necessary processes that will ensure a seamless outcome. Efforts such as taking time to save at least 20% of the home’s worth, considering and applying for right loan programs, finding the perfect Realtor that is knowledgeable will help each the process as saving grace.

Take Your Time

Realizing that the process is not a race and landing on the perfect fit might take time and hard work is, but it is necessary. The market is constantly evolving and growing, which makes now the best time to start saving or even browsing potential homes for the future.

Buying New Home

Purchasing Your New Home

The United States’ real estate market is currently in an upward turn that proves that the economy is once again booming. Interest rates are fairly low and there is a good number of inventory on the market for buyers to choose from. Many people are looking to purchase a new home, however, many are uncertain of the steps to take to make this desire a reality.

 

PICKING A REALTOR AND OBTAINING PREAPPROVAL STATUS

The first two steps in the process of purchasing a new home are picking a local Realtor and obtaining a preapproval status on a mortgage loan. These steps are often done at the same time to help save additional time later on. Some people choose their Realtor first. This is a great step for people who have no idea which financial lending institution they wish to do business with because many Realtors already have business relationships established with various bankers and brokers.

 

Lending institutions will require various information prior to providing a preapproval loan status. This information will include things such as the individual’s personal information and work history. Credit reports will be ran and bank statements will also be reviewed.

 

This is also a great time to find out what current interest rates being offered are. These rates are usually determined by the borrower’s credit history and down payment amounts. Prospective borrowers can also expect to receive a Good Faith Estimate based on the loan amount they are seeking to obtain.

 

FINDING A HOME

Once you have chosen your real estate agent, and obtained the preapproval status on a mortgage loan, you can begin searching for a house. The preapproval status will allow the prospective buyers the knowledge to know which houses they can afford to purchase. It will also help your offer look more attractive to a seller who may have multiple offers on a property.

 

APPRAISAL AND FINAL APPROVAL

Once you have found your dream house, you, or your Realtor, will need to go back to your lender with the property information. The lending institution will then order an appraisal to be completed on the subject property. This appraisal will be done by a licensed real estate appraiser who has a reputable relationship with the institution. This process may take a few days, to a week, depending on the appraiser’s schedule and access availability to the property.

 

Once the lending institution has received the appraisal, they will continue processing the loan documents. This includes sending the entire file to their underwriting department who will give final say over the loan approval. This process may also take some time as the underwriter will thoroughly examine the information provided on the subject property and potential buyers.

 

CLOSING

The closing of the transaction is a series of events in itself. Once the loan has final approval the loan documents will need to be drawn up. These documents will then be taken to the title company, or Realtor’s office, where the closing will be scheduled. Typically, the buyers will do a final walk through of the property at this time. This insures there is no new deficiencies that arose after the acceptance of the offer.

 

During the closing, both parties will sign the various documents that are necessary to record the change of ownership. These signatures are often obtained at separate times, rather than everyone meeting at once. When all of these signatures have been obtained the buyers will receive the keys to their new home. The final step in this transaction includes the title agency recording the necessary documents with the appropriate court reporting department.

 

MOVE IN

The only thing left to do in this process is to move and begin the new journey. Many times the people who are in the process to sell a home have already vacated the premises. However, this is not always the case as many people must first sell a home before they can buy another one. Moving in also includes having the utilities switched over to the new owners’ information. Some utility companies will wave deposit fees with proof of the new ownership information.

 

One of the most important moments in a person’s life is when they buy a home. People gain a sense of accomplishment and pride in the journey to buy a home. It is also one of the greatest means of wealth in this day and age.