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Top Tips for First-Time Homebuyers

So many of our brides and groom are tackling many major milestones within a few years of getting married, such as: continuing education, relocation, career change, having a child and buying their first home. We thought it might be helpful to provide some insight from qualified professionals we are well-acquainted with. So, we asked a series of questions to both Jeff Day, mortgage broker, and Doug King, realtor, for their professional advice. We will be starting a guest blog series over the next few weeks.

MANY YOUNG PEOPLE ARE COMING FROM THEIR PARENTS’ HOMES. WHAT IS YOUR INTIAL ADVICE TO THESE YOUNG COUPLES LOOKING FOR THEIR FIRST HOME?
Jeff Day:  Be picky, but don’t be unrealistic. There is no perfect starter home. Do your homework before you start looking. Decide specifically what features you want in a home and which are the most important. As a first time home-buyer you will likely have to make some sacrifices.
Doug Martin: Walk through the buying process with a realtor before you start looking. The discussion should lead into defining your home requirements and search strategy.

STARTER HOUSE OR LONG-TERM HOUSE?
Jeff Day:  Think long-term. Are you looking for a starter house with the idea of moving up in a few years or do you hope to stay in this home longer? This decision may dictate what type of home you’ll buy, as well as type of mortgage terms that suit you best.
Doug Martin: The average time a buyer stays in their home is trending upward from the 7 year period. Many buyers remain in their home for 10-12 years. If you do go with a starter house, make sure you have some room for growth. The condition of the home is an important factor too. If you purchase a starter home that needs updating, you will more than likely not be in an equitable position should you choose to sell in the near future.

FROM A FINANCIAL PERSPECTIVE, IS THERE ANYTHING A COUPLE NEEDS TO DO BEFORE LOOKING FOR THEIR FIRST HOME?
Jeff Day:  Get your finances in order. Review your credit report and be sure you have enough money to cover your down payment and your closing costs. Don’t wait to get a loan. Talk to a lender and get prequalified for a mortgage before you start looking.
Doug Martin: Jeff couldn’t have said it better.

NEWLYWEDS ARE USED TO AND PERHAPS SOMEWHAT TIRED OF GETTING A LOT OF ADVICE FROM A LOT OF DIFFERENT PEOPLE IN THEIR LIVES. IS IT TIME TO RELY ON THEMSELVES OR SHOULD THEY STILL SEEK OUT ADVICE?
Jeff Day:  Don’t ask too many people for opinions. It will drive you crazy. Select one or two people to turn to if you feel you need a second opinion.
Doug Martin: It is important to interview realtors and select one you can communicate well with. Let the real estate professional provide consistent advice about the home buying process and the current market conditions. An experienced realtor should have a documented Buyer Process and guide you from start to finish.

IT IS HARD FOR MANY TO LIVE WITHIN THEIR MEANS. WHAT IS YOUR BEST ADVICE?
Jeff Day: Don’t let yourself be house poor. If you max yourself out to buy the biggest home you can afford, you’ll have no money left for maintenance or decoration or to save money for other financial goals.
Doug Martin: Make sure you work with a quality lender to determine how much house you can afford. Once you have established a comfortable price range, work with a realtor to locate homes that meets most of your criteria within your budget.

HOW DOES A COUPLE TIME THEIR FIRST MOVE ASSUMING THEY ARE CURRENTLY RENTING?
Jeff Day:  Determine when your lease is up.  If you find a home quickly, are you allowed to sublet?  If you have already been pre-qualified for a loan, the home buying process can vary. You could find a home the first day you look. However, it typically takes at least 30 days working with a realtor. And then once your offer is accepted, it typically takes 30-45 days to close.
Doug Martin: The process general takes 60-90 days depending on the availability of all parties. Start by speaking to your lender and realtor. I usually advise clients to start looking for neighborhoods before starting a formal search, which can take several weeks.

ONCE A COUPLE HAS FOUND A HOME, WHAT IS SOME OF YOUR BEST ADVICE?
Jeff Day:  Don’t be naïve. Insist on a home inspection and if possible get a warranty from the seller to cover defects within one year.
Doug Martin: Don’t fall in love with the home until you close. Keep an open mind and have alternative homes as backups should you not come to agreement on the first home. The buying process has many steps including the independent home inspection and negotiating process,, appraisal, financial approval, etc.

WHAT IS A MISCONCEPTION ABOUT HOME BUYING?
Jeff Day: Hire a realtor as a buyer’s representative. Unlike a listing agent, whose first duty is to the seller, a buyer’s representative is working only for you. And often, buyer’s reps are paid out of the seller’s commission payment.
Doug Martin: I agree with Jeff.

WHAT ARE THE SECRETS TO GETTING A MORTGAGE?
Jeff Day: 
1) Work with a local lender. Preferably select someone that was referred to you.
2) You should be sure that your lender reviews and validates your income and assets before issuing a pre-approval. Many lenders issue this without verifying this.
3) Don’t assume your bank is the best option. Your bank may be a great bank but are not necessarily a great mortgage company.  They are often limited on products or may not be able close on time.
4) Credit scores affect your ability to not only qualify but what loan terms you get. Ask your lender if they have the ability to help you improve your score. 50 points could make the difference of .50 better rate

IS IT REQUIRED FOR A COUPLE TO HAVE A 20 PERCENT DOWN PAYMENT?
Jeff Day:  It is a misconception. There are some zero down options, 3% down even with a gift, and all closing costs can be negotiated to be paid by seller.

We would like to thank both Jeff Day and Doug Martin for their professional advice.

Jeff is a loan officer with Access National Mortgage. He can be reached via email (jday@accessnational.com) or phone at 317.819.3926.

Doug Martin is a realtor with FC Tucker. He can be reached via email at (dougmartin@talktotucker) or phone at (317) 908-9753.

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