Buying your first property can be intimidating. Taking the time to understand the entire buying process, who the key players are, and how to evaluate your property for the long term is vital to securing your financial future. These are the top 10 Questions first time home buyers ask our team:
Property Buyer FAQ Index
- When is the right time to buy?
- How do I pick the right home?
- What’s the correct procedure to buy a home?
- How much can I afford?
- Do I qualify to buy a home?
- How do I find a good Mortgage Lender?
- How do I find a good real estate broker?
- Should I break my lease to buy a home?
- What should I do in event of job relocation after purchasing my first home?
- What are some of the “hidden” expenses I should account for when buying a home?
#1 When is the Right time to buy?
Many real estate professionals will tell you different things but you’re here for the truth. This is going to be a long one but stick with me, it’s worth it. The truth is the time to buy is always and right now. I always tell clients, if you plan on investing in real estate for the long term, your property will appreciate no matter what. If someone bought a house for double the price of his neighbors’, by today’s standards and value, that house is considered a “good deal” despite a ‘few’ market declines.
I always make the argument that home ownership is much better than renting. The answer is obvious to me but it may not be for some. When you own a home and pay your monthly mortgage payments, you’re putting money into your house. After an estimated 3 or more years depending on conditions and market, you essentially have a relatively substantial amount of money saved up just by paying for your property. This money is just sitting there and can be used to do a cash-out refinance to pay for renovations, cars, debt, or better yet, another property! This builds with time and there’s no better time to start owning real estate than now.#2 How do I pick the right home?
Some people can picture the perfect house they’d like to be in, some can’t, no problem. A few questions I consider to be critical for my clients to think about are: Where would I like to live? How will my life change a few years from now? Will I need more room for a family? What are some key features I can’t live without? It’s important to identify what’s most important to you and go from there. In my experience, I knew what kind of house I wanted to buy but it took time and looking at many different homes before I finally found what I was looking for. It’s encouraged to go see as many properties that fit the criteria as much as possible and hire someone to be apart of your team (more on that later).
#3 What’s the best procedure to buy a home? Where do I start?
There are many ways you can go about to buying a home. The most efficient and stress free way is to figure out how much you can afford first (see below). In order to figure out how much we can afford, we need to go talk to our bank/ credit union/ mortgage banker & broker. The procedure should be as follows: talk to many mortgage bankers to find one you like, get a pre-approval not a pre-qualification (yes, there’s a difference), find the right broker, go house hunting, find the right house, have your agent write an offer, tell your lender which house you’re set on, get conditional approval from lender’s underwriting, close on the home, and then move in! Keep in mind, the procedure changes if you’re purchasing with all cash but we’re going to stick with the most common and effective way.
#4 How much can I afford?
I briefly talked about this in the last question, the best way to figure out how much you can afford is to talk to a mortgage banker from a bank, credit union, or independent mortgage banker/ broker. Once you have found the right mortgage banker, it is paramount you send your banker proper documents such as W2s, pay stubs, bank statements etc so your banker can ACCURATELY tell you how much you are qualified for with loan programs available. I am speaking from experience when I talk about the banking process because I used to be a mortgage banker before I became a full time real estate agent.
#5 Do I qualify to buy a home?
I’m glad you asked. Obviously I cannot tell you whether or not you qualify as you’re reading this (obviously) but I can tell you what it takes to qualify. Every loan program and bank will have their own requirements. During my time as a mortgage banker, the requirement for Washington State First Time Home Buyers was/ is a 620 FICO (credit) score minimum, stable W2 income for the past 2 years, and haven’t bought a house recently. There are obviously further guidelines within Washington State’s first time home buyer program such as maximum purchase price ‘cap’ per county and maximum income ‘cap’ per borrower. I encourage you talk to your chosen mortgage banker/ broker about further loan program guidelines.
#6 How do I find a good mortgage banker/ broker?
It’s important as a first time home buyer you know how to identify which mortgage banker/ broker is good and bad. A good banker/ broker is a good problem solver, asks many questions to understand your situation. You should know that big major banks such as Chase for example will have different loan options and requirements than an independent mortgage company such as On Q Financial, Guild Mortgage, and Loan Depot to name a few. The advantage with partnering up with an independent mortgage banker/ broker is a wider range of options especially for anyone with complicated financials as well as your standard conventional loans.
#7 How do I find a good real estate broker?
Finding a good real estate goes hand in hand with finding a good mortgage banker/ broker. I’m going to be honest and say that your friend from college who’s now a real estate agent MAY not be the best fit. It’s recommended you interview each broker to find one that fits your need. Some of the criteria you need to consider is how experienced the broker is, how “hungry” the broker is for your business, how knowledgeable the broker is in their respective market, what kind of niche role this broker fills, and whether or not they are good negotiators. At the end of the day your broker is working for you and must put your needs above their own. A good broker is fast, communicative, and a good negotiator. Find out which factor you care about most in your ideal broker and get to interviewing!
#8 Should I break my lease to buy a home?
Obviously everyone’s situation is different and each cost can be different. This question gets asked a lot and my answer is the same. I recommend not breaking your lease since it can be a pretty hefty fee however, it doesn’t hurt to start looking at homes on the market and finding which real estate professional is a good fit for you. By the time you are 100% ready to buy a home, your lease would probably be close to ending and by the time you find your actual house you’d like to buy, your lease should most definitely be up.
# 9 What should I do in event of job relocation after purchasing my first home?
This is a very important question for those that move a lot especially if you’re in the military. I’ve held many first time home buyers courses on Joint Base Lewis McChord and have addressed these concerns time and time again. Whether you’re PCSing (permanent change of station) or moving to a different location for a better job opportunity, do not let that stop you from buying real estate and enjoying it’s rewards and benefits. After buying your home and realizing you need to move, there are options available such as renting out your property and making money off your home. A popular option is to hire a property management company that handles all the work of managing your property while you sit back in a different state or country, reaping the rewards. At this point you can be considered a real estate investor!
#10 What are some of the hidden expenses I should know about before buying a home?
Buying a home is more than putting down a down payment and let financing do the rest. Consider how much furniture you will need because after all, you are buying a home and hopefully it is an upgrade from your current living situation. Make sure to set aside some money for lender fees, it is important you talk to your mortgage banker/ broker about an estimate of all lender fees and your real estate broker of all fees as well such as escrow fees, home inspection, appraisal, and title fees to name a few.
