Buying a home can be a relatively worry free process or it can be wrought with difficulties. A lot of what you get is a result of how you go about it. To get the best results, it's best to understand each step of the process and set yourself up for a smooth transaction.
Determine if Buying is Right For You
Income, debt, job, and other lifestyle components should be taken into consideration before you start viewing homes. Income has a huge impact on property purchases. Being able to show a stable income is required for approval of financing, and for actually paying the mortgage. If your income fluctuates seasonally, or if your employment is too new to establish an income history, timing for purchase may need to be pushed forward until you can qualify for approval from a lender. It seems simple, but buyers put carts before horses all the time. It isn't uncommon for a buyer to look at homes online that they think they can afford, but it ends up being a total waste of time because they can't get approved for the price range they've been searching.
Debt to income ratio is also considered by lenders. It may be a good idea to pay off some financial responsibilities prior to seeking a mortgage pre-approval. Your debt will limit your approval amount, and can even hinder an approval at all.
Your job location, position, and satisfaction should be considered when determining if you should commit to property ownership. If you think you may be making any type of career move within the next 2 years, it may be a good idea to wait to buy your house. Your job location can change with a transfer or promotion, and your income may change as well. Short term ownership rarely provides the equity to justify the purchase, and you may end up on the short end of the sale if you have to move.
Find an Agent
You, the buyer, should choose to be represented by a professional real estate agent. There is quite a bit of misinformation about this topic, particularly regarding the compensation to your agent. Please allow me to explain...
Some new buyers believe that they can save money by going into a sale without hiring an agent, which is not the case. The seller agrees to pay both agents up front before the home is listed. The commission is an agreed percentage of the sale price, and the seller's agent agrees to split the commission with the buyer's agent. Your agent is already paid for by the seller when you hire them. Should you make the unfortunate decision to go into a real estate transaction unrepresented, YOU DO NOT get the money that the seller would have paid your agent, and they don't knock it off the sale price. Either the seller's agent gets to keep the whole commission, or divide the "savings" with the seller. The entire job of the seller's agent is to secure the most money and the best terms for their seller, and they are contractually obligated to continue to work in the seller's best interest if there is no buyer's agent. Your agent will work just as hard to secure the best terms for you, so let them.
Who you hire can and will affect the outcome of the sale. Real estate agents are easy to find, and it seems that everybody knows one. Purchasing a house is the single largest investment that most people will make in their lifetime. You should hire an agent with experience, that you believe will be strategic, confident, and will fight to secure the best terms for you. Find an agent that will communicate with you using your desired method, and your desired frequency. Whether you prefer to text, email, or call, make sure your agent can accommodate that request. Ask about scheduling availability as well. Make sure your agent can accommodate your schedule, or works with others that can provide service when you need it.
Please consider myself as a resource, either to represent you or to refer an agent that will work hard for you.
Finding a lender is also pretty easy. You can throw a rock and very likely hit a mortgage rep. Finding a trusted lender that will do what it takes to get you to the closing table, isn't quite as easy. Each buyer is more than just a stack of papers, and it's important that the lender understands that. I recommend asking around to people who have recently purchased a property, and finding out if they were happy with their service. Ask your agent too. Your agent likely has worked with dozens of mortgage reps, and has a few that they would recommend. Your agent has a front seat to the back stage process and has seen how these people handle their business. I also recommend using somebody who is physically present locally, so if there is any problem you or your agent can go to their office to work out the details. Out of area lenders aren't as available for communication, and can be completely inaccessible in times of urgency. It matters that the lender appreciates that they are working for clients that are actual people, not just deals per month. If financing is postponed or fails to be completed, actual people (you) are stuck with belongings in a storage unit with the moving truck waiting in the parking lot.
Once you determine that buying is the right move for you, and you secure a trusted lender, it's time to find the property that meets your wants and needs.
Ready for more? Read Buyer Series #2 here!