Most of my first-time homebuyers are anxious about preparing to buy a home. Excitement and doubt set in and the mental back and forth consumes many thoughts. Luckily, I have worked with multiple first-time home buyers and have a defined process on how to coach them through the process.
Please don't be scared of the process. I ensure it is less painful once you are going through it. With that said, it is important to choose a great agent to represent you. An agent can make or break your experience. And remember, choosing an agent to represent you is completely free!
C'mon now, who doesn't like free!
If you’re aware of these five potential mistakes -- and able to keep yourself from making them -- then you’ll be saving yourself some significant stress on your homebuying journey.
1. Check your credit!
It is important to know what your credit score is. Generally speaking, to qualify for a loan you need good credit. If your credit isn't the best, it is nice to know what your credit score is early on so you can work to get your credit score up. I have some great tips for this, so if this is you, please give me a call!
On a yearly basis, you are entitled to a full credit report. I advise you have the credit bureau send you a full report. Go through this report and not anything that doesn't look right. You can dispute items that have been incorrectly placed on your credit.
Before qualifying you, lenders will look at your debt-to-income ratio, along with your credit score. This is confusing to some who haven't been through the process so it is a great idea to reach out to someone you trust or myself.
2. Not understanding your down payment options
This is where many first-time homebuyers or buyers in general get freaked out. Don't let the downpayment scare you! I have a great saving schedule here for you that will help you save $10,000 in a year.
A down payment of just a couple thousand dollars can get you a head start on your car. If you don’t have a certain amount to put down on your home loan, however, you might find yourself paying private mortgage insurance (PMI) on the lifetime of the loan. I can walk you through what this looks like, so please don't hesitate to give me a call.
Depending on your credit score, the bank, and other factors, PMI could cost between 0.5 percent to 1 percent of the total loan amount.
Most banks require at least a 20 percent down payment before they will waive the need for PMI on the loan. And most homes in this area cost about $300,000, so that means a buyer would need to bring $60,000 to the table in order to avoid PMI.
Some government organizations and lenders try to incentivize first-time homeownership by offering free down payment grants or loans to qualified buyers. Depending on your age, income level, credit score, and other factors, you could qualify for free money to wrap into your down payment. Please call me if you are interested in learning about your options or visiting my preferred lender page to contact one of my favorite lenders!
3. Not getting prequalified for a loan
This is so important! Nothing personal, but I will not show any of my buyers home until I know that they are prequalified. Viewing properties before you know if you have the buying capabilities or not is a huge waste of time on both of our parts. Not to mention, it is incredibly disheartening when you find the home of your dreams and then learn you won't be able to purchase it for one reason or another.
Before you trust those “estimated monthly mortgage loan amount” numbers that you see popping up next to your potential new dream home on Zillow or a brokerage website, it pays to figure out what you can actually afford -- and that means getting prequalified for a home loan.
Please make sure you speak to a lender before taking the next step in purchasing a home. As mentioned before, I have some great lender partners available for you on my Preferred Lender Page. Feel free to call them!
4. Not finding a qualified real estate agent
It is my hope that if you are reading this, you already have my services in mind, however. It truly is important to find an agent that best suits you and your personality. Yes, it is easy to find homes online, and with the amount of information available to you, you may wonder why you even need an agent. After all, isn’t the hard part -- finding the place you want to buy -- something you can do yourself?
I don't know how many times I have heard my cleints horror stories of them trying to do it themselve or choosing an agent that wasn't truly invested in their outcome.
Agents have a wealth of knowledge that is available at your fingertips without having to research it yourself. Please do yourself a favor and choose an agent to help you through the process. I promise you, you will not be disappointed.
5. Not spending some time in the neighborhood
I have over 20 years of experience in Solano County and that alone is enough to guide you to the right neighborhood, however. I do advise my clients to spend some time in the neighborhood before they make a purchase.
Is an 8 a.m. arrival time at work still reasonable with this neighborhood’s commute?
Where are the closest grocery stores, parks, rec centers, and hiking trails?
What are the overnight noise levels? If there’s a train that rolls through town in the early hours of the morning, you’re near a highway or a flight path -- and any of that is going to disturb you -- then it’s best to figure it out before you’re spending your first night in your new home and wake up to unpleasant (and unexpected) noises.
At the very least, you can learn enough about the neighborhood to know how close to (or far away from) the bus line you need or want to be and target your home search accordingly.
And the list can go on. Fortunately for all of my buyers, we go through an in-depth buyer analysis. This helps me understand your lifestyle, needs, and desires. Through this process, I am able to identify neighborhoods that I believe would be great fits for you. That being said, I would still advise you to experience it first-hand.