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.
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.
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.
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.
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.