Clearing the Hurdles to Homeownership
When 1997 is over, will you finally have emerged from the wilderness of confusion to buy your first home?
Real estate experts know that many renters are hindered by their own mystification with the buying process. But the path to homeownership is lined with those who would relish answering your questions.
“Most first-timers are very inquisitive, and that’s good,” said Stanley D. Haper, a broker-associate for the Re-Max real estate chain.
As a novice buyer, you may have dozens--even hundreds--of questions. Yet the right buyer’s agent should be patient enough to give you a basic primer on the process that lasts at least two to three hours, Haper said.
Ditto for a serious mortgage lender. Although many brand-new buyers dread a preliminary conference with a lender, believing that it’s his or her objective to find excuses to decline a loan, just the opposite is true. In fact, as Haper points out, most loan officers earn no commission unless a mortgage is made.
Here are 10 pointers that could help make you a homeowner this year:
No. 1: Make your first stop the office of a seasoned mortgage lender.
Pre-approval is what you’re seeking. This means you’re nearly guaranteed to get a mortgage up to a set amount. These days you don’t have to provide much financial information for a letter of pre-approval. Such a document defines your borrowing range. It also strengthens your bargaining position with the home seller.
But not all lenders are equally savvy. Haper, of Re-Max, suggests you pick one with no fewer than three years in the business.
No. 2: Look for special low down-payment loans, if you’re shy of cash.
Never has the mortgage industry expended more energy trying to draw renters out of their apartments. Why? Because lenders depend on a steady flow of new loans coming through the pipeline. And the aging of the U.S. population threatens to reduce demand for home loans. In other words, your lender needs to make you a mortgage.
If your lender doesn’t know about special mortgage options for first-time buyers, which require only 3% down or less, then search for someone who does, said Richard Sachs, who sells homes through Coldwell Banker.
No. 3: Watch out for “neg am” mortgages.
In their quest for low monthly payments, some borrowers accept a mortgage with “negative amortization.” That’s a fancy way to say that when you next move, you could owe more on the mortgage than when it was first made.
“Neg am” mortgages, as they’re known to industry insiders, are constructed so that interest charges may be deferred, meaning that they’re tacked onto your principal balance. “That way you could wind up with no equity--or negative equity--when you sell your home,” Sachs cautioned.
No. 4: Make a “wish vs. want” list for your first home.
You may consider a fireplace a heartwarming feature. But more important to you is a second bathroom. And though a spacious backyard is vital to you, a garage is secondary.
The best way to separate wishes from sincere desires is to make a priority list, suggested Juanita G. Limes, who sells homes through Century 21.
No. 5: Get a real estate agent’s guidance early.
For many first-timers, there’s a fear of commitment tied to picking a agent. So, instead of choosing an agent early in the process, they spend weeks meandering on their own. Selecting a good agent is a vital step, though not one that can’t be undone if there’s a mismatch. And an agent can save you time by tutoring and chauffeuring you to homes of interest.
No. 6: Select an agent who loves buyers as much as sellers.
As the field of real estate becomes increasingly specialized, more agents are defining themselves as “listers” who work primarily with sellers. Obviously a first-timer is better off with an agent who is thrilled to see a buyer get the keys to his starter home.
No. 7: Find an agent who is an expert negotiator.
Why should a first-timer pay too much for a home just because he’s perceived to be gullible? The key to finding a superior negotiator is to ask for references from buyers who have used that agent’s services in the past, or still do today, says Haper.
No. 8: Don’t let mom and dad pick apart your dream.
It’s ironic but true that many parents inadvertently ruin an offspring’s chances of buying the right home. Called in for their opinion, many parents feel an obligation to find flaws in the property, which colors their child’s view of the place.
“Unfortunately, there are no perfect homes,” Haper said.
While few in the real estate business would suggest that your parents be excluded from seeing the home you plan to purchase, they advise that you keep your parents’ comments in context.
No. 9: Avoid buying a home with an “incurable defect.”
Homes that face a busy intersection, suffer from a poor floor plan or back to an unsightly water tower are examples of properties with “incurable defects,” which can’t be corrected no matter how hard you try.
You may not mind the water tower. But remember that the next buyer of your home may demand a deep discount to take the property off your hands, Sachs said.
No. 10: Look at plenty of homes before making a final selection.
The adage that “buyer’s are liars” is not as negative it sounds. What it means is that buyers often claim to want one thing yet buy another. As a first-timer, you may well find your preferences evolving over time. Searching for the right home is a process of self-discovery that shouldn’t be abbreviated, advises Sachs, who says buyers ought to see at least 10 to 15 homes--even if the first one looks right.
“You shouldn’t vacillate, but you shouldn’t rush, either. The first house might look good. But the 12th or 15th house might look even better,” he said.
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Distributed by Universal Press Syndicate.
