For most people, buying a home is the most significant investment of their lives, and in spite of the doubt and confusion clouding both the financial markets and news headlines, 2011 presents many genuine real estate opportunities—especially for first-time buyers.
Just like in 2005 and 2006, housing inventory is down, prices are stabilizing, and historical data demonstrates purchasing a home has proven a sound long-term financial investment. However, first-time homebuyers are often understandably anxious when it comes time to making what could be the largest purchase in their lives.
Here is a simple do and don’t list to make the process easier for everyone dreaming of homeownership.
DO
DO utilize free online tools to arm you with as much knowledge as possible. For example, the Home Price Comparison Index, available at www.ColdwellBanker.com, offers buyers a way to compare average housing costs in more than 400 U.S. markets.
DO take time to access and closely review your credit score. A sound financial track record and solid credit score can help lock in a loan and lower interest rates. Checking your records with a fine-tooth comb in advance also will ensure you catch any errors ahead of time, as well as help you better understand how lenders may perceive you.
DO explore mortgage pre-approval. Getting this early green light will help others involved with your purchase understand that you are serious about homeownership—and well qualified.
DO line up your all-star team of professionals before game day. A team of experienced professionals will be key to making the home buying process simple and seamless. Start by interviewing and selecting a REALTOR® with whom you connect. This REALTOR® also should be able to help you indentify suitable mortgage lenders, home inspectors, title and escrow companies and others who play a role in the process.
DO anticipate your future needs and buy for lifestyle. Try to anticipate how long you will live in your next home, and plan for major lifestyle changes when possible. What may make a perfect starter home for a couple might not work as well when children come into the picture. Remember, people move for lifestyle reasons, and your first home will likely not be your last.
DO hone in on your housing priorities. Your ideal home may have a porch, a pool and five full baths. But before you start looking, make sure to separate your must-haves from your nice to haves, so you know where you can compromise to meet your budget.
DON’T
DON’T fall in love with the first house or neighborhood you see. That grand Tuscan with the picturesque view may win your heart at first glance, but don’t fall in love too fast. You need to keep an open mind to make sure you find the right fit for all your needs. At the end of your search, it may turn out the condo that’s closer for your commute is a better bet all around.
DON’T buy beyond what you can afford. It’s easy to fall into that all-you-can-eat attitude when it comes to your first home purchase. You want it all when it comes to size, amenities, location, etc. But remember that your eyes may have a larger appetite than your wallet. Make sure the down payment, closing costs, monthly expenses and taxes are truly within your income and savings range before you sign on the dotted line.
DON’T treat your home the way you treat your stock portfolio. It’s unrealistic and unwise to expect your housing investment to appreciate as quickly as you would hope for your high-risk bonds. Buying for lifestyle, as opposed to trying to turn a quick profit, will help ensure you are viewing home purchasing and ownership in the right context.
DON’T try to time the market. By the time most consumers sense a major real estate or financial market shift, the tables have typically already turned. Instead of waiting for a slim and unreliable window of time—and potentially missing out on the perfect home—buyers should focus on their own lifestyles, and buy when the time is truly right for them.
DON’T jump into an exotic or confusing mortgage. When it comes to down payments and mortgages, if it sounds too good to be true, it probably is. Be sure to read carefully through every aspect of the proposed agreements to fully understand your end of the bargain. For instance, what seems like an attractive rate now may balloon exponentially a few years down the road. So, arm yourself with information, and don’t be afraid to ask questions.
DON’T underestimate the value of a trustworthy real estate agent’s on-the-ground expertise. Being a savvy buyer and doing one’s homework will help on the road to homeownership. However, a local expert with years of negotiating experience is invaluable when it comes to scouting out the perfect home—and closing the deal.
John Karadsheh is a licensed REALTOR® with Coldwell Banker Trails And Paths Premier Properties. He also is an Associate Broker, Accredited Buyers Representative and a Certified Residential Specialist. You can contact John with any of your real estate questions. Call him at (602) 615-0843, or go to his Web site at www.BuyAndSellAZ.com.