Ten practical tips for aspiring first-time homebuyers
By Kara Thompson, special at AFRO,
Buying your first home is a daunting task, but it’s also one of the best long-term investments you can make. The Mortgage Bankers Association views home ownership as a major asset that helps families obtain, grow and pass wealth from generation to generation.
However, the home buying process isn’t easy to navigate, and succumbing to common buyer mistakes can keep you from closing on a home.
This week, AFRO spoke with local real estate professionals in Baltimore and the surrounding area for advice on buying a home.
Read below to see their tips!
- Check your credit
Although many people think the home buying process begins when you decide to buy a home, it actually begins much earlier than that. Have you checked your credit?
According to Shalynn Mills-Arasanmi, broker and real estate agent at Integrity Home Team, a good credit score is essential to ensure you can get a loan to buy your home.
She recommends that you review your credit score and start working to improve it at least nine months before you start looking for a new home. Establishing a credit card and making small purchases – even if it’s just for gas – can keep your credit score stable when it comes time to buy a property. It’s crucial that you keep a low balance and pay the bill on time!
Krystal Leonard, a Harris Hawkins & Co. real estate agent, also stressed the importance of credit when buying a home.
“There is a minimum credit score required by lenders, but the important part of credit is debt to income,” she said. “Debt isn’t bad, but it’s not something we can ignore because we need lenders to be able to approve you to service a new loan.”
Realtor Keller Williams, Jazmine Owens said many first-time home buyers overestimate the credit score required to qualify for a mortgage. She says it’s possible to get an FHA loan with a 580 credit score, but she said it’s best to have a minimum 620 score. Owens recommended that all first-time buyers work with a credit repair company to clean up their credit reports.
Create a budget and start tracking your expenses. Good financial habits are essential for home ownership and long-lasting financial health. Look at your bills each month and compare them to your income. What percentage of your salary goes to food, car bills and gas, rent and electricity? How much can you afford, while balancing your other bills?
- Get pre-approved for your mortgage
Before you even start looking for your home, it is essential that you get pre-approved for a mortgage loan from a lender. Pre-approval lets you determine what price points you can afford, so you don’t waste time shopping outside of your budget.
- Budgeting of the deposit, down payment and closing costs
These are the most common fees buyers typically consider when buying a home. You should be prepared to pay a down payment (EMD), which demonstrates your seriousness about buying a home, within days of a signed and accepted offer, according to Owens. EMD can vary from three to six percent of the purchase price. If you’re a first-time home buyer, there are a host of grants and programs available to help pay your down payment, according to Owens. The EMD includes things like your lender, title and attorney fees, and possibly mortgage insurance.
- Find out what the market is in your area
Depending on where you live or where you are looking to buy a home, home prices can vary widely. Prices can also fluctuate over the months, and the market can shift from a buyer’s advantage to a seller’s advantage.
“In the Baltimore area, we’re seeing a shift in the market,” said Brittany Campell, realtor at Harris Hawkins & Co. “Educating the home buying process will be the biggest key to success. ”
Campbell said when it comes to market trends, “pairing yourself with an educated agent who can really guide you” is important.
Estate agents who know how the market works can be essential in helping you determine the right time to buy, which brings us to the next tip!
- Do your homework on the neighborhood
Although a property may seem like your dream home, it’s important to remember that when you buy a home, the neighborhood comes with it.
Broker and owner of Conway Real Estate, Missy Conway, said it’s essential to do as much research on a neighborhood as possible to understand what it has to offer in terms of school districts, amenities and commute times. It is also important to look at criminality. Depending on your community, there may be neighborhood covenants or homeowners association (HOA) fees and regulations that are important to keep in mind before buying.
Old-school wisdom suggests walking past your future home at night and on weekends to get a sense of typical neighborhood activity.
- Find a good real estate agent
“Some people automatically go with the realtor they know, which is perfectly fine,” said Jadaya Cason, a realtor at Harris Hawkins & Co. “But I always tell people – interview around. There’s nothing wrong with interviewing other real estate agents to see if they’re knowledgeable, and if you know you’d be a good fit to work with.
Researching real estate agents in your area can help you find the one that best suits your home buying needs. They can help make the home buying experience much easier by guiding the process from start to finish.
- Look for more localized lenders in the area where you want to buy
When it comes to determining where you are getting your loan from, there is a difference between a national lender and a local lender. While it’s good to understand the pros and cons of each, localized lenders have in-depth knowledge of the local market that could be of great help to you.
“They know what’s going on in the local real estate market here in Maryland, they know more about Maryland or Baltimore County or local county programs than someone who is out of state” , Cason said.
- Manage your expectations
“It’s very easy, especially for a first-time home buyer, to want the Taj Mahal for $250,000,” Campell said. “So you have to be able to know that for less than $250,000, there are only certain houses that you will be able to buy, and that’s not a bad thing. You need to be able to manage your expectations and understand the value of your mortgage payment.
Basically, make sure to be realistic. Make a list of the amenities you want your new home to have, but understand that you might not get them all.
- Understand all the documents that go into the home buying process
Buying a home comes with many documents that must be signed to officially own. This paperwork can be overwhelming and contain a lot of information, but understanding what it says is crucial.
“A lot of people are preparing to become owners. They are only preparing to buy, not for the home ownership process,” Leonard said.
Leonard said the documents can help new owners navigate situations like “what happens when things stop working? » It is important to have a good understanding of documents such as insurance policies, warranties and the authority they hold.
- Make a complete inspection of the property
Once you’ve found a property you like, it’s important to make sure it’s structurally sound and ready to move into, and won’t have any issues down the line. Mills-Arasanmi recommends doing a full property inspection, but at least a structural and termite inspection.
Leonard also recommends this step.
“Take a look and see exactly what’s going on with the property” so you know if there are any damages or repairs that need to be made.
Without having their home inspected, buyers may find foundation cracks, experience structural problems, experience plumbing problems or discover other defects on their property after buying their home, according to Owens.
Whether you’re buying a home to live in or a rental property, it’s important to know every detail about your property before you close. Having your home appraised allows you to confirm that you are paying current fair market value, according to Owens. It can also tell you the equity in your home. Home inspections and appraisals will require you to set aside additional funds
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