Whether you’re buying your first home, your fourth home, or downsizing to your retirement home, the process can be daunting! At Hagan Real Estate, we pride ourselves on making the process as easy as possible. We’ll partner with you to understand you and your needs as much as possible upfront so we can shorten the buying “process” and eliminate the stress. Buying a home should be FUN and we’re here to make it as enjoyable and easy as possible! We’re happy to answer some common questions below or you can download our free HOME BUYER GUIDE for a more in-depth look at the home buying process. Ready to get started? Schedule your free consultation today!
Why Work With a REALTOR®
REALTORS® aren’t just agents. They’re professional members of the National Association of REALTORS® and subscribe to its strict code of ethics. This is the REALTOR® difference for home buyers:
1. Ethical treatment
Every REALTOR® must adhere to a strict code of ethics, which is based on professionalism and protection of the public. As a REALTOR®’s client, you can expect honest and ethical treatment in all transaction-related matters. The first obligation is to you, the client.
2. An expert guide.
Buying a home usually requires dozens of forms, reports, disclosures, and other technical documents. A knowledgeable expert will help you prepare the best deal, and avoid delays or costly mistakes. Also, there’s a lot of jargon involved, so you want to work with a professional who can speak the language.
3. Objective information and opinions.
REALTORS® can provide local information on utilities, zoning, schools, and more. They also have objective information about each property. REALTORs® can use that data to help you determine if the property has what you need. By understanding both your needs and search area, they can also point out neighborhoods you don’t know much about but that might suit your needs better than you’d thought.
4. Expanded search power.
Sometimes properties are available but not actively advertised. A REALTOR® can help you find opportunities not listed on home search sites and can help you avoid out-of-date listings that might be showing up as available online but are no longer on the market.
5. Negotiation knowledge.
There are many factors up for discussion in a deal. A REALTOR® will look at every angle from your perspective, including crafting a purchase agreement that allows enough time for you to complete inspections and investigations of the property before you are bound to complete the purchase.
6. Up-to-date experience.
Most people buy only a few homes in their lifetime, usually with quite a few years in between each purchase. Even if you’ve done it before, laws and regulations change. REALTORS® handle hundreds of transactions over the course of their career.
7. Your rock during emotional moments.
A home is so much more than four walls and a roof. And for most people, property represents the biggest purchase they’ll ever make. Having a concerned, but objective, third party helps you stay focused on the issues most important to you.
Questions to ask a Prospective REALTOR®
1. How long have you been in residential real estate? Is it your full-time job?
Like most professions, experience is no guarantee of skill. But much of real estate is learned on the job.
2. Do you have any designations or certifications?
Real estate professionals have to take additional specialized training in order to obtain these distinctions. Designations and certifications help define the special skills that an agent can apply to your particular real estate needs. One designation buyers should look for is the ABR®, or Accredited Buyer’s Representative.
3. What’s your business philosophy?
While there’s no right answer to this question, the response will help you assess what’s important to the agent and determine how closely the agent’s goals and business emphasis mesh with your own.
4. How many buyers did you and your real estate brokerage represent last year?
This will tell you how much experience they have and how up-to-date they are on the local market.
5. What’s the average variation between your initial offers and final sales price?
This is one indication of a REALTOR®’s pricing and negotiating skills.
6. Will you represent me exclusively, or might you choose to represent the seller as well?
While it’s usually legal to represent both parties in a transaction, your REALTOR® should be able to explain his or her philosophy on client obligations and agency relationships.
7. Can you recommend service providers who can help me obtain a mortgage, make home repairs, and so on?
Practitioners should be able to recommend more than one provider and let you know if they have any special relationship with any of the providers.
8. How will you keep me informed about the progress of my transaction?
The best answer here is a question. A real estate agent who pays close attention to the way you prefer to communicate and responds accordingly will make for the smoothest transaction.
9. Could you please give me the contact information of your three most recent clients?
Ask their former customers if they would use the agent again in the future.
What Should I Do to Get Ready to Buy?
1. Talk to mortgage brokers.
Many first-time home buyers don’t take the time to get prequalified. They also often don’t take the time to shop around to find the best mortgage for their particular situation. It’s important to ask plenty of questions and make sure you understand the home loan process completely.
2. Be ready to move.
This is especially true in markets with a low inventory of homes for sale. It’s very common for home buyers to miss out on the first home they wish to purchase because they don’t act quickly enough. By the time they’ve made their decision, they may find that someone else has already purchased the house.
3. Find a trusted partner.
It’s absolutely vital that you find a real estate professional who understands your goals and who is ready and able to guide you through the home buying process.
4. Make a good offer.
Remember that your offer is very unlikely to be the only one on the table. Do what you can to ensure it’s appealing to a seller.
Factor maintenance and repair costs into your buying budget.
Even brand-new homes will require some work. Don’t leave yourself short and let your home deteriorate.
5. Think ahead.
It’s easy to get wrapped up in your present needs, but you should also think about reselling the home before you buy. The average first-time buyer expects to stay in a home for around 10 years, according to the National Association of REALTORS®’ 2013 Profile of Home Buyers and Sellers.
6. Develop your home/neighborhood wish list.
Prioritize these items from most important to least.
7. Select where you want to live.
Compile a list of three or four neighborhoods you’d like to live in, taking into account nearby schools, recreational facilities, area expansion plans, and safety.
How Can I Prepare Financially?
1. Develop a budget
Use receipts and your banking transaction history to create a budget that reflects your actual habits over the last several months. This approach will better factor in unexpected expenses alongside more predictable costs such as utility bills and groceries. You’ll probably spot ways to save, whether it’s cutting out a Starbucks run or eating dinner at home more often.
2. Reduce debt
Lenders generally look for a debt load of no more than 36 percent of income. This figure includes your mortgage, which typically ranges between 25 and 28 percent of your net household income. So you need to get monthly payments on the rest of your installment debt—car loans, student loans, and revolving balances on credit cards — down to between 8 and 10 percent of your net monthly income.
3. Increase your income
Now’s the time to ask for a raise! If that’s not an option, you may want to consider taking on a second job to get your income at a level high enough to qualify for the home you want.
4. Save for a down payment
Designate a certain amount of money to put away in your savings account each month. Although it’s possible to get a mortgage with less than 5 percent down, you can usually get a better rate if you put down more. Aim for 20 percent of the purchase price.
5. Keep your job
While you don’t need to be in the same job forever to qualify for a home loan, having a job for less than two years may mean you have to pay a higher interest rate.
6. Establish a good credit history
Get a credit card and make all your bill payments on time. Pay off entire balances as promptly as possible. Also, obtain a copy of your credit report, which includes a history of your credit, bad debts, and late payments. Ensure that it’s accurate and correct any errors immediately.
7. Keep saving
Even if you have enough money to qualify for a mortgage and cover your down payment, you will also need to factor in closing costs, which can average between 2 and 7 percent of the home price, and incidentals such as the cost of hiring a home inspector.
8. Decide what kind of mortgage you can afford
Generally, you want to look for homes valued between two and three times your gross income, but a financing professional can help determine the size of loan for which you’ll qualify. Find out what kind of mortgage (30-year or 15-year? Fixed or adjustable rate?) is best for you. Also, gather the documentation a lender will need to preapprove you for a loan, such as W-2s, pay stub copies, account numbers, and copies of two to four months of bank or credit union statements. Don’t forget property taxes, insurance, maintenance, utilities, and association fees, if applicable.
9. Seek down payment help
Check with your state and local government to find out whether you qualify for special mortgage or down payment assistance programs. If you have an IRA account, you can use the money you’ve saved to buy your first home without paying a penalty for early withdrawal.
Choosing a Mortgage Lender
1. What are the most popular mortgages you offer? Why are they so popular?
2. Are your rates, terms, fees, and closing costs negotiable?
3. Do you offer discounts for inspections, home ownership classes, or automatic payment set-up?
4. Will I have to buy private mortgage insurance? If so, how much will it cost, and how long will it be required?
5. What escrow requirements do you have?
6. What kind of bill-pay options do you offer?
1. What would be included in my mortgage payment (homeowners insurance, property taxes, etc.)?
2. Which type of mortgage plan would you recommend for my situation?
3. Who will service this loan—your bank or another company?
4. How long will the rate on this loan be in a lock-in period? Will I be able to obtain a lower rate if the market rate drops during this period?
5. How long will the loan approval process take?
6. How long will it take to close the loan?
7. Are there any charges or penalties for prepaying this loan?
8. How much will I be paying total over the life of this loan?