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The market is ever changing in real estate and that is a given fact. But what never changes in real estate is what it takes to purchase a home. To some buyers it can be overwhelming, but the benefits of home ownership can sometimes outweigh the other option of renting. With the upswing in rental prices due to the recent inflation, rental rates are at an all-time high. What that means for a new homeowner is you can sometimes own cheaper than you can rent. What can you do to get the process underway to get you into the home you want?
First, anything you can do to limit your credit responsibility, such as credit card debit. If you are able to lower the amount you owe on any credit cards, get them paid off or down as much as possible. Depending on how much credit card debt you have, it will limit you on what your credit amount that can be approved by your lender. Don’t do any big-ticket purchases while you are in the process of getting approved or even buying. Big ticket items are things like cars, boats, atv’s, or even furniture. Yes, you do need things and yes you may need furniture for your new home, but don’t. You would not believe how many times a buyer has purchased furniture for their new home prior to closing and made the deal fall through and the lender rejects them.
Secondly, get your information together. Your information you will need for your loan application or approval. Lenders will require your income information from your job. This may require you to supply proof of income from your employer. You may need to supply paycheck stubs or other means of employment. Knowing what is required or needed will be asked by the lender you choose to use for you to supply. Proof of income for the last 3 months is sometimes required for some loan applications or loan approval.
Thirdly, after getting your information together and get in front of a lender. Choosing a lender can sometimes be a difficult decision. But you need to be aware of some lenders are able to do more than others. Don’t be afraid to choose a lender that is not your current banking institution. Just because you have an account with them doesn’t mean they are going to give you the best situation for your loan. Secondary, lenders and some community lenders are sometimes able to do things that other lenders can’t. Some offer programs or services that some lenders are not offering or capable of being able to process.
Fourthly, know what type of loan you are attaining. What does that mean? When you get an approval, your lender will tell you what type of loan you are attaining. Why is that important? The loan approval you get may not work for all properties. This will warrant what type of home you are going to able to purchase. Sometimes price is the main driver for a buyer, and that can be a problem when the market cannot support homes in the price range you are in. With that being said, homes that are in need of repair or distress may not qualify for some loans. Buyers have a hard time sometimes understanding this, but to waste time on a property that will not qualify is a waste of time for everyone. Government backed loans such as USDA, FHA, and VA loans require that homes are generally in good condition and must pass an inspection process to get loan approval. With these types of loans homes have to meet requirements so distressed or homes in need of repair cannot qualify for lending. VA loans are a great program for veterans, and they are a little different than some other government loan programs. The requirements for buyer and sellers are determined the loan program and cannot be bypassed. Going back to lenders and loan programs. Some lenders offer some special loan packages that can get a buyer into a home they desire. Some loan programs can do repairs or updates to get the home able to qualify for the loan. They are more detailed and will require a contractor to be on board. Some situations that would be as an example would be a home/buyer that needs handicapped updates to allow them to utilize the home. Some programs can get the home repairs that are necessary or needed to make the home qualify for approval. Some loan programs will take a little longer to close due to the work needed to be completed, so a buyer needs to know time is of the essence. One question that comes up, “can I just buy some land and build?”. It’s difficult to get approval for vacant land with government backed loans. Some lenders can do construction loans, but it requires more detailed work to with a contractor (which must be state licensed and insured). Down payment on vacant land can exceed 20% for some lenders to even consider and can be as high as 50%. Manufactured homes are hard for buyers to attain lending. Some lenders will not even consider them, some will require the home to meet requirements and potentially inspections to see they do. With that being said, singlewide homes are very difficult to attain lending on them. They are much like vacant land and sometimes asking for 20% or more for down payment, if they will even consider lending on them. Make sure your lender understands what you are wanting to purchase, knowing up front can save you lots of time and of course that will save you money.
Fifthly, know your budget. When saying “know your budget” that is pretty upfront right? But, knowing your budget and what you can afford is very important. Your loan approval may be set for up to amount of whatever? But you don’t need to spend your entire amount of loan approval. Budget your monthly expenses and know what you can afford. If you are going to save some money buying your home from what you’re currently paying for rent. Know what you can expect once the buying process is over can keep you in good shape. On the other hand, if you get an approval and you discover that you can actually afford more home than thought. In that case you may be able to move up to a higher price range than you were considering. Which means that you may get into a home in better shape and easier to qualify for your mortgage. Remember, that most lenders when you attain your mortgage, now place the homeowner’s policy and the taxes into escrow accounts. What that means is that they pay the taxes and homeowners insurance for you as long as you keep up with the mortgage.
Lastly, you are ready to reach out to a real estate agent. Agents who strive for equal representation for their clients are known as realtors. Realtors are set to a higher standard to represent all parties fairly and equally. This means as a buyer or seller both parties are treated with highest standards set by the National Association of Realtors. Once you establish what agent you are wanting to utilize. Not all agents are created equally, and that is up to you to whom you want to use for possibly the most important purchase of your adult life. Agents who utilize their resources of what their office has to offer. Your agent can let you know what the current market is like for you as the buyer. They can get you started with resources to help you know what is available. Previewing the property before you go can save you time. If you know that property is not for you, even though it may fit your search criteria. Knowing when a property hits the market may be the difference between getting the property you want and not getting the property you want. Ask your agent are they a fulltime agent or is this a secondary employment situation for them? How long have they been selling and listing property? How long will it take to close on your potential property? Questions that will come up and as I tell my clients, “No questions are stupid”. Ask questions as much as you need to make you feel comfortable with the decision you are about to make.
Looking to get started? Just click the link below for information on the area you are interested in.
Keith S. Shaver
Realtor/Salesperson
304-667-3411
Thomas H Johnson/Broker of Record/174 Northridge Drive/Lewisburg WV 24901/304-645-1242
