So you’ve decided it’s time to buy a home. Congratulations! Here’s a quick rundown of what you should consider when looking to purchase real estate.
Get Pre-Approved First
This is the essential first step
Mortgage lenders offer a variety of home loans, with rates that vary based on criteria such as your income, debt, down payment and credit rating. It’s best to get in right away to learn your price range. (Wisconsin is fortunate to have some excellent first time home buyer and income based loans such as WHEDA, which offer lower down payments and/or down payment assistance and tax credits.)
Having that pre-approval letter is a great way to convey to the seller that you are a serious, viable buyer. In a competitive market where a home may receive multiple offers, a pre approval letter puts you ahead of other buyers.
Related to Step One…
Shop around for a mortgage broker
There’s a ton of variety in quality and price
Why do we shop at 3 different stores to find those favorite jeans on sale, but most people do not shop around for help with the biggest purchase of their lives? While many people use their current bank or credit union, it is wise to look at a variety of lenders as rates and services vary. (I recently had a new buyer who was offered $40,000 more from a mortgage broker different than her current bank!)
Some mortgage brokers only do home financing, service the loan in-house, and as such become masters of their trade. Try for 2-3 lenders to compare and do it at the same time, so your credit rating does not take a big hit.
Think local rather than huge bank. Often if there are any hiccups or issues on obtaining financing to buy a home, a local lender is easier to access and can be more responsive when timing counts. Keep in mind, there can be no monetary partnership between lenders and realtors, but over time, certain lenders tend to stand out for their great service and programs. I am happy to share my list of preferred lenders to start the process.
Find a great Realtor
A ‘Buyer’s Agent’ will represent you and your interests first and foremost. Insert Katie here…
Did you know that if you do not sign buyer agency with a realtor, all real estate agents in the transaction are actually working for the seller and the seller’s best interest? Buyer agency is a contract which secures your representation for a length of time and outlines a brokerage’s duties to you, the client. As a member of the South Central Wisconsin Multiple Listing Service (SCWMLS) I can show you any property on the market in South Central WI, including most FSBO’s. In most cases, the buyer agency commission is paid for in the transaction by the list agent offering up a split on the commission. This means getting representation does not cost you an arm and a leg. (Disclosure: commission varies by brokerage and agent, and there is no set standard fee across real estate as a whole.)
The Fun Part
Your wish list – and viewing homes
Once you have your basic price point, creating a list of ‘must haves’ and ‘would like to have’ and ‘absolutely not!” can help you narrow down your search. Location, style of house or condo, fixer upper or move in ready, number of bedrooms, bathrooms…all shape your search. Communicating your list with a realtor who listens, you can begin to narrow your search and begin viewing homes. I also recommend driving and taking walks through neighborhoods to become acquainted with their vibe and proximity to parks, open space, shopping, restaurants, traffic flow, work, and more….
Think Big Picture
Balance the realist with the dreamer
Often for a first time home buyer the wish list of the spacious home with granite countertops, high end appliances in the perfect location do not match their budget. (Thanks HGTV–you made it all look so easy!) However, with the average home buyer moving every 7 years, finding a home that meets most of your desired criteria at price you can afford generally pays off and can lead to building equity for the next dream home –(or taking out a home equity line to make improvements.)
Think of it this way: Would you rather rent the next 7 years and pay for the landlord’s mortgage, or buy a home in your price range and invest in your future?