2016 is going to be a great year to be a first time home buyer. Mortgage rates are very good right now, and you’re going to see plenty of inventory around the Boston Metro area. This means you’ll have lots of options to choose from which are likely to be comfortably within your price range.
That doesn’t mean you shouldn’t take some steps to help your home buying experience go as smoothly as possible. Here are the three steps that every first time home buyer should take.
- Get Pre-Approved
Deals fall apart and hearts get broken when home buyers wait until the last minute to try to secure their financing. Home buyers who haven’t gotten pre-approved also tend to over-estimate how much home they can afford. It can be pretty devastating to get your heart set on the space and amenities of a $400,000 home when the bank is only willing to give you $200,000 to work with.
So get pre-approval before you look at a single house…period.
Note that pre-approval is not the same as pre-qualification. Pre-qualification takes a 30-second online credit app which tells you the lender might be interested in selling you a mortgage. Pre-qualification is only based on your FICO score, which is not the only criteria for issuing a home loan. By contrast, pre-approval requires an intensive application and documentation of your finances. This produces a precise number. It locks in your rates and the loan amount. The actual loan isn’t signed until closing, but the terms don’t change once you’ve been pre-approved. Once you are pre-approved, all you have to do is find a home that’s in the right price range and that meets the bank’s inspection and appraisal conditions.
Furthermore, pre-approval helps you generate offers that sellers take seriously. Remember, buying a home isn’t like buying a shirt, or even a car. Sellers have to accept your offer before the sale can proceed. They won’t do that if they have any reason to believe the sale might not happen; accepting an offer takes the home off the market for a time and represents a risk on their part until the closing proceeds.
- Define the Lifestyle You Want
Choosing a home requires a series of tradeoffs. Do you want a large house and yard? You can have it, but it may mean accepting a longer commute. Do you want to be in the middle of it all, close to nightlife hotspots and the best restaurants? If that’s the case, you might want to think about scoring a trendy condo instead of locking yourself into a big single family home. If you’re trying to start a family, you might end up paying just a little bit more in order to secure your place in a better school district.
Of course, with Boston’s outstanding public transportation system you can get a taste of all sorts of lifestyles for the price of a 10-minute train ride. However, 90% of your time will be spent enjoying the neighborhood you live in. Since every neighborhood has its own personality, home style availability, strengths, and weaknesses, it is smart to know what’s important to you. You will want to make some side-by-side comparisons.
I have devoted a great many resources to gathering information on many different options so you have all the information you need to make an informed decision. Check out The Best Boston Suburbs for Young Professionals and The Best Boston Suburbs for Young Families to familiarize yourself with the options that are out there.
- Hire a Great Buyer’s Agent
It is very important to evaluate various buyer’s agent and to make a conscious choice about the one you’ll ultimately work with.
A buyer’s agent is there to advise you, act in your best interests, and answer all of your questions. This is the easiest way to make sure the home buying process moves as smoothly as possible.
Don’t neglect this process because you’re afraid of the agent’s commission. You’ll hardly notice that at closing, and truthfully, 99% of home buyers end up writing their offers through a buyer’s agent anyway. You might as well find one you’re confident about using.
Interview buyer’s agents early. Evaluate your comfort level with each agent. Pay attention to how responsive the agent is to you. Note the level of knowledge he or she displays. Remember, the agent’s role is not just about showing homes. It’s about navigating you through a purchase process that can have plenty of pitfalls. Hiring a buyer’s agent is also about dealing with someone who understands current market conditions in order to ensure your needs are met.
Want to interview me? Just contact me. Want to learn more about the purchase process? Check out The Ultimate Buyer’s Guide, a 30-page e-book which has comprehensive answers to common home buyer questions and concerns.