With Interest rates rising, most banks are still operating under tight lending conditions, and inventory is shrinking. The competition for a well-priced home, especially in the first-time buyer price range, is tightening. Here are 10 ways to improve your chances of getting the home you want-
1. Know what to expect.
No two real estate transactions are the same, so buyers that have an idea of how things work will have a leg up. In my opinion, buying your first home is one of the most important financial decisions of your life, yet most people lack in-depth knowledge of the process. Working with an agent you can trust is KEY…. And while you might be tempted to use the lady down the street who just got her license or your brother-in-law’s cousin’s half stepbrother, your best bet is to ask for referrals from your core group and interview a few. After all, there are hundreds of thousands of dollars at stake.
2. Know the market and know it well.
In real estate, things change quickly. Make sure you keep up on what’s happening with mortgage rates as well as home sales and prices in your target neighborhood. You’ll also want to know if any homes are in default – this will shed some light on neighborhood stability, and may also uncover a great real estate deal for you.
3. What’s your ideal neighborhood?
That abandoned house on the corner might be a great deal, but as for neighborhood charm, how do you feel about a real-life Breaking Bad situation going on across the street? You don’t want to end up on the news as a witness or victim to a drive by shooting, trust me. So make sure you consider more than price when narrowing down the neighborhood. How are the schools? Great Schools can give you some insight. If you don’t know anyone living in the neighborhood, reach out to contacts through social media and make use of your extended network. You’ll also want info on area crime rates, which your agent should be able to provide. I would recommend contacting the local police department for information. Finally, you’ll want to check registered sex offenders in the area, which you can do on a site like Family Watchdog.
4. Understand your credit score.
Minimum credit scores needed to qualify for a mortgage vary and depend on the type of loan you are seeking. The lender, current rates and the amount of money you are putting down is a complicated equation your lender can help explain. For an FHA loan which is what many first-time buyers use because of the relaxed requirements, buyers typically need a minimum FICO score of 580 to qualify. Buyers should know that a score that low in combination with the minimum down payment may result in a more complicated loan approval process and possibly a higher rate. Remember, the higher your credit score, the lower you mortgage rate will be.
5. Know how much it really costs to buy a home.
Down payments are one thing. Have you factored in any upfront fees you are expected to pay? The earnest money required to show the seller good faith? How about closing costs? These will vary depending on your lender and the loan, but closing costs are usually between three and five percent of your loan amount, which can be a hefty and sometimes unexpected output of cash on top of everything else you just paid.
6. Know how much you can afford?
And stick to it, even if it’s tough to find a home you like. Breaking your budget won’t pay off in the end if it’s a constant struggle to keep up with mortgage payments. A good rule of thumb is that you can afford housing that runs about two-and-one-half times your annual salary.
7. Understand how monthly payments really work.
Many real estate sites and online calculators only calculate principal and interest only, but as a homeowner, you will also pay insurance and taxes. If you put less than 20 percent down, you will also have to add in private mortgage insurance. And if you are in a planned community, you need to account for homeowners association (HOA) dues as well. Make sure you ask your agent about HOA fees, and ask your lender to do a calculation including everything you will pay on a monthly basis.
8. How to win friends and influence people.
Nothing tests the patience like losing out on the home you’ve fallen in love with (unless it’s losing out on 2 or 3 or 10 – hey, it’s tough out there. A good agent should be able to reach out to his or her network to potentially find you a home that is not currently on the market. But you can also take it into your own hands. To stand out from the pack, an increasing number of buyers are taking the old-fashioned approach and penning a love letter to sellers telling them what they adore about the home and why they are the best buyer to end up with it. Making a personal connection may change everything in your favor.
9. Play hardball!
Is somebody who’s working for you under-performing? Remember your realtor, lender, and title company are all there to help you, but they’re being paid to do so. It’ll be easier to have a tough conversation if and when necessary.
10. When to cut and run – and how.
An inexperienced, overly busy/inattentive or unethical agent or lender can turn what should be a great experience into a disaster. Once you’re ready to break up with your agent, make sure you have it in writing. This protects you from paying unnecessary commission and keeps the agent from continuing to work on your behalf after you’ve moved on. Make sure you have the agent revise a contract of representation if you signed one to make it clear that the relationship has been cancelled.
If your not quite ready to buy and would still like to move. Real Property Management has a diverse selection of rental homes available. Good Luck!