Tag Archives: First Time Home Buyer

Step-By-Step Homebuying

1. Get a REALTOR®

In the maze of forms, financing, inspections, marketing, pricing, and negotiating, it makes sense to work with professionals who know the community and much more. It is always best to use an Experienced local REALTOR® who serves your area.  The REALTOR® is the “Hub” of the transaction and will refer clients to the best lenders, home inspectors, closing/escrow companies, and moving companies.  A good REALTOR® will know who is experienced, professional, licensed (when necessary), insured and provides great service to his/her clients.

2. Get a Mortgage Pre-Approval

Most first-time buyers need to finance their home purchase, and a consultation with a preferred mortgage lender is a crucial step in the process. Find out how much you can afford before you begin your home search.  You will need a mortgage pre-approval before you can submit an Offer; we will show you homes as soon as you receive a pre-approval.  **In Fact, due to COVID many Sellers instruct listing agents to only show their home to individuals that are pre-approved for a mortgage.

Get the Right Mortgage for Your Situation

  • There are many different types of mortgage programs out there, but as a first-time home buyer, you should be aware of the three basics: adjustable rate, fixed rate and interest-only.
  • Adjustable rate mortgages (ARMs) are short-term mortgages that offer an interest rate that is fixed for a short period, usually between one to seven years. After that, the interest rate can adjust every year up or down, depending on the market. These are good for people who don’t plan on living in their home very long and/or are looking for a lower interest rate and payment.  I would STRONGLY advise against an adjustable mortgage now.
  • Fixed-rate mortgages are more traditional and offer a fixed interest rate (and thus a fixed monthly payment) for a longer period, usually 15 or 30 years, though they’re available in 20 or 25 year terms. These are good for people who like a predictable payment and plan on living in their home for a long time.
  • Both fixed and adjustable rate mortgages can have an interest-only payment. What this means is that for a certain amount of time during the loan term, you’re allowed to pay only enough to cover the interest portion of your payment. You can still pay principal when you wish, but don’t have to if your budget is tight. There is a myth that with interest-only mortgages, you don’t build equity. This is not necessarily true, since you can build equity through home appreciation. The benefit to interest-only mortgages is that you increase your cash flow by not paying principal.

3. Look at Homes

A quick search on our site https://www.homes4saleinri.com/ will bring up thousands of homes for sale.  Educating yourself on your local market and working with an experienced REALTOR®, can help you narrow your priorities and make an informed decision about which home to choose.  Good REALTORS® will ask you questions about what you want and need in a home and compare that with what you can afford.  When you receive listings to consider, before scheduling an appointment drive by them to see if you like the neighborhood.  The housing inventory is tight in southern New England, so don’t get frustrated if other buyers get an offer in before you, or they offer more money.  That happens A LOT in this market.

4. Choose a Home

While no one can know for sure what will happen to housing values, if you choose to buy a home that meets your needs and priorities, you’ll be happy living in it for years to come. Once you and the seller have reached agreement on a price, the house will go into escrow, which is the time-period it takes to complete all of the remaining steps in the home buying process. 

Don’t forget people make money in real estate when they buy it, NOT when they sell it.  A good, experienced REALTOR® will help you determine the best “Value” for your situation.

5. Home Inspection

Typically, purchase offers are contingent on a home inspection of the property to check for signs of structural damage or things that may need fixing. Your real estate agent usually will help you arrange to have this inspection conducted within a few days of your offer being accepted by the seller. This contingency protects you by giving you a chance to renegotiate your offer or withdraw it without penalty if the inspection reveals significant material damage.

Remember, a Home Inspection is a “snapshot” of the condition of home on a specific day at aa specific time. Home inspectors typically don’t have access to 2/3’s of the home so they cannot be expected to inspect/observe conditions for areas they cannot see. They cannot see behind paneling, inside walls, or around boxes stacked up in a basement or garage.

You will receive a report on the home inspector’s findings. You can then decide if you want to ask the seller to fix anything on the property before closing the sale. Before the sale closes, you will have a walk-through of the house, which gives you the chance to confirm that any agreed-upon repairs have been made.

6. Funding

The cost of financing your home purchase is usually greater than the price of the home itself (after interest, closing costs, and taxes are added). Get as much information as possible regarding your mortgage options and other costs. Your Lender will take care of all of the financing details, paperwork, arrange the appraisal and keep you informed.

7. Make an Offer

While much attention is paid to the asking price of a home, a proposal to buy includes both the price and terms. In some cases, terms can represent thousands of dollars in additional value—or additional costs—for buyers.

8. Find Insurance

No homeowner should be without insurance. Real estate insurance protects owners in the event of catastrophe. If something goes wrong, insurance can be the bargain of a lifetime.  Joe can recommend a good insurance agent who is experienced in working with home buyers – especially first time home buyers.

9. Movers

It is highly recommended that you use the services of a licensed, insured, experienced mover.  Whether moving across town or across the country, utilize the services of a professional mover.  The potential cost of moving yourself or with “amateur” movers can be significant.  Damage to furniture, floors, walls, the cost of renting a truck, quilts, dollies, straps, etc, quickly add up.  Then there is always the possibility of bodily injury; hurting your back or someone sustaining serious injury that could involve lawsuits.

The fees charged by a professional mover usually are less than the above potentialities.

The Moving Company by preferred Luca & Marano

10.  The Closing

Before the Closing, the Buyer’s REALTOR® should arrange for a Final Walk-Through, of the house to confirm that all of the Seller’s belongings that should have been removed, and those that should remain are still in the house, and that no damage transpired overnight.

Preferred by Luca & Marano

The closing process, also known as “settlement” or “escrow,” is increasingly computerized and does vary in different areas. In practice, closings bring together a variety of parties (Buyer and Seller, Closing/Escrow Representative, and sometimes a Seller’s Closing Attorney) who are part of the real estate transaction.

10. Post Closing

Don’t forget to have the utilities, internet access, landline telephone service etc switched into your name.  It is much easier to switch service while it is still “on” compared to after it has been terminated.

How to Make the Dream of Homeownership a Reality This Year

Happy Martin Luther King Day

How to Make the Dream of Homeownership a Reality This Year | MyKCM

In 1963, Martin Luther King, Jr. inspired a powerful movement with his famous “I Have a Dream” speech. Through his passion and determination, he sparked interest, ambition, and courage in his audience. Today, reflecting on his message encourages many of us to think about our own dreams, goals, beliefs, and aspirations. For many Americans, one of those common goals is owning a home: a piece of land, a roof over our heads, and a place where we can grow and flourish.

If you’re dreaming of buying a home this year, start by connecting with a local real estate professional to understand what goes into the process. With a trusted advisor at your side, you can then begin to answer the questions below to set yourself up for homebuying success.

1. How Can I Better Understand the Process, and How Much Can I Afford?

The process of buying a home is not one to enter into lightly. You need to decide on key things like how long you plan on living in an area, school districts you prefer, what kind of commute works for you, and how much you can afford to spend.

Keep in mind, before you start the process to purchase a home, you’ll also need to apply for a mortgage. Lenders will evaluate several factors connected to your financial track record, one of which is your credit history. They’ll want to see how well you’ve been able to minimize past debts, so make sure you’ve been paying your student loans, credit cards, and car loans on time. If your financial situation has changed recently, be sure to discuss that with your lender as well. Most agents have loan officers they trust and will provide referrals for you.

According to ConsumerReports.org:

“Financial planners recommend limiting the amount you spend on housing to 25 percent of your monthly budget.”

2. How Much Do I Need for a Down Payment?

In addition to knowing how much you can afford on a monthly mortgage payment, understanding how much you’ll need for a down payment is another critical step. Thankfully, there are many different options and resources in the market to potentially reduce the amount you may think you need to put down.

If you’re concerned about saving for a down payment, start small and be consistent. A little bit each month goes a long way. Jumpstart your savings by automatically adding a portion of your monthly paycheck into a separate savings account or house fund. AmericaSaves.org says:

“Over time, these automatic deposits add up. For example, $50 a month accumulates to $600 a year and $3,000 after five years, plus interest that has compounded.”

Before you know it, you’ll have enough for a down payment if you’re disciplined and thoughtful about your process.

3. Saving Takes Time: Practice Living on a Budget

As tempting as it is to pass the extra time you may be spending at home these days with a little retail therapy, putting that extra money toward your down payment will help accelerate your path to homeownership. It’s the little things that count, so start trying to live on a slightly tighter budget if you aren’t doing so already. A budget will allow you to save more for your down payment and help you pay down other debts to improve your credit score.

survey of millennial spending shows, “68% reported that shelter in place orders helped them save for their down payment.” Danielle Hale, Chief Economist at realtor.com, also notes:

“If there is any silver lining to the current economic landscape, it’s that mortgage rates are hanging around record lows…Additionally, shelter-in-place orders helped many who were fortunate enough to keep their jobs save for a down payment — one of the largest hurdles of buying a home. The combination of low rates and the opportunity to save is enabling many millennials to move up their home buying timeline.”

While you don’t need to cut all of the extras out of your current lifestyle, making smarter choices and limiting your spending in areas where you can slim down will make a big difference.

Bottom Line

If homeownership is on your dream list this year, take a good look at what you can prioritize to help you get there. To determine the steps you should take to start the process, let’s connect today.