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    The Ultimate Guide to Buying (and Then Selling) Your First Home
    The Ultimate Guide to Buying (and Then Selling) Your First Home
    The Ultimate Guide to Buying (and Then Selling) Your First Home
    Ebook189 pages2 hours

    The Ultimate Guide to Buying (and Then Selling) Your First Home

    By Adam Wright

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    About this ebook

    For most people, the largest purchase they will ever make in their lifetimes is a house. When facing the prospective of buying your first house, you can be both exciting and intimidated by the process. What do you do first? Who do you need to buy a house? What do you do when you find a house you like? What are option periods and earnest funds? Should I take out a FHA loan or a conventional loan? The questions just keeping popping into your head. Luckily, you have this ultimate guide on how to buy your first book to lead you through the process. This step-by-step guide is written by a veteran realtor who knows the ins-and-outs of buying your first home. For those who have their first home, the process of selling it the first time can be as intimidating as buying your first home. You know how the process works, but you were the buyer the first time around. There are several things that sellers experience differently than buyers, so this ultimate guide will also lead you on the right path to get your first home sold. There is no reason to go in blind to the process. This book will give you practical advice along with the various real estate theories involved in the industry today. Don't miss out!

    LanguageEnglish
    PublisherAdam Wright
    Release dateFeb 7, 2018
    ISBN9781370085873
    The Ultimate Guide to Buying (and Then Selling) Your First Home
    Author

    Adam Wright

    Associate Professor of Medicine, Division of General Internal Medicine and Primary Care, Brigham and Women’s Hospital/Harvard Medical School, USA Areas of expertise: Clinical Decision Support and Data Mining.

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      Many incoherent sentences. Seems to have some good facts but they're all lost in an attempt to tell a story which really only serves to expand the length of the book.

    Book preview

    The Ultimate Guide to Buying (and Then Selling) Your First Home - Adam Wright

    I met with Steve and Sally, one afternoon in my office. One of the first things I asked Steve and Sally was this. Did you know that buying a home can be one of the most stressful things you can do? It ranks up there with starting a new job or having a child. Because of the amount of stress involved in the process, it is always a good idea to do some preparation before officially launching your home search. Sure, you can lurk online through various sites checking out the homes, dreaming about getting into the one that you love the most. However, when you decide it is time to get serious about buying your first home, please make sure to do these three things.

    1. Get preapproved for financing - Did Steve and Sally talk to a mortgage professional before coming to me. It is great to make the giant mental leap to decide to buy your first home. It is a very brave to decide to commit a large chunk of your time and resources for the next several weeks to finding your dream home. Your first step is to discuss your finances with a mortgage professional. Why? In order to truly understand your options in purchasing a home, you need to know what your budget will be, or even if you qualify for a mortgage. Nothing is more frustrating, and heart breaking to find the home of your dreams and then discover that you can't get a large enough mortgage to buy it. It also helps to know what areas of your target area to search. If you can only afford $150,000 homes, it does not make sense to search in communities where the average price is $200,000. You do want to make sure you get preapproved for a loan and not prequalified. What is the difference? With prequalification, a mortgage professional will take a very cursory look at your finances and tell you that you will probably be able to get a mortgage for a certain amount. For most mortgage professionals, preapproval takes you to the next step where they delve more deeply into your life to determine that you do qualify for that mortgage. Be sure to ask your mortgage professional for more details. Happily, Steve had already been approved for a mortgage of $175,000, which was the top of their budget for their new home.

    2. Interview at least three real estate agents – I then asked the young couple if they knew that most people go with the first real estate agent they meet. I do not advise this approach at all to the Smiths. It might seem strange advice coming from a real estate agent to interview two other agents. However, I feel people need to find the right fit for them when it comes to getting help with purchasing the first home. Here are some things to keep in mind when interviewing the agent. How successful have they been as an agent? What is their communication plan? What is their availability? How many active clients are they currently assisting? What areas do they specialize? What geographic areas do they cover? Who is their broker? Ask them about their typical day. One thing to realize about working with an agent is that you are actually in a fiduciary relationship with the agent's broker. The agent acts on behalf of the broker. You might also not realize that you don't typically pay the broker (agent) anything to help you buy a home. The seller's broker pays your broker for bringing you to the table. Sally said she had done some extensive research on agents and talked to one other one. They were sold on me helping them.

    3. Make a list of Your Must Haves – Sally then handed me a long list of her must haves in their first home. I was impressed because I was just about to tell them that they should make that said list. I then asked them if they had another copy of the list. Sally said yes. I handed the list back to her and told her to tear it up. I stopped her before she did it. I told her I as just attempting to make a point. Most first-time home buyers will go into the process with very unrealistic expectations of their first home. For one thing, most of the features you want in a home will most likely not exist in your price range, at least not all the desired features. You might want a large Master Suite and granite counter tops in the kitchen, but if you can only afford a home from the 1980s, you won’t' get this unless upgrades were made to the home. As a first-time home buyer, it is important to realize that your first home is going to be where you live for five to eight years. When the times comes to upgrade your home, you will be in a better position to find a home that more closely matches your must-have list. Dream homes are realized by very few first-time home buyers. It is good to go into the process with this right frame of mind.

    Luckily, the young couple did not end our relationship right then and there. Instead, they seemed excited to get started. I told them that they had a great start with the preapproval letter and have a list of must haves. However, we still needed to go over a few things that they might have been told by their mortgage professional about buying their first home.

    Chapter 2 - Three Things Mortgage Professionals Fail to Tell First Time Home Buyers

    Task number one for Steve and Sally was to get preapproved for a mortgage. How does one get approved for a mortgage? The easiest way is to call a mortgage professional or apply online. You want to check out at least three because you will work closely with mortgage professionals, so you want one that fits your personality and pace of life. If you need suggestions, ask around. Everyone will have a recommendation.

    Once you find one you can work with, they will start by asking you for some basic information about your income and debt obligations. They will also check your credit score. If all looks good, they will give you a prequalification letter saying that you are likely to get a mortgage. If you want to take it a step further (which is recommended) provide some documentation on your income and debt. If all looks good, you will then get a preapproval, which carries a little more weight with sellers.

    Steve and Sally did a preapproval with a lender who did much of the qualifying work on the front end versus waiting until a house is under contract. Mortgage professionals have a tough job with first time home buyers. Clients come to them with the highest of hopes on getting a mortgage to purchase their first home. Often, the mortgage professional is faced with educating them at the same time as working with other clients and attempting to get it all done for everyone. Most mortgage professionals will do an adequate job with first time home buyers, but there are always a few things that fall through the cracks. Here are three facts I wanted to make sure Steve and Sally to know about the mortgage process.

    1. Your first step is not your last step - I have been told by many first home buyers that they are surprised that the initial review of their credit and employment is not the final step in the process. Steve and Sally were also surprised to hear this. Why do they make you supply so much paperwork at the beginning if there are more steps to it. Steve asked me. . I told the young couple that they need to realize that mortgage companies will be very intrusive into their lives, asking for things that might feel very private. It will happen during the whole process so just when you think you are done, you will get another email requesting one additional item. It is a necessary evil of the process. If you want to get a mortgage today, you should expect to be an open book for the mortgage professional as they will ask about employment history, where you have lived, about charges on your credit card statements, deposits made to your checking accounts, etc. Some will even ask you to write letter explaining why you are purchasing the home. It can be very overwhelming and stressful. Be patient with the process and it will be over before you know it.

    2. If you home doesn't appraise at the sales price.... First, Steve and Sally did not even realize that an appraisal is required by the lender. An appraisal is where a certified licensed individual will determine the value of a property. These certified individuals, called appraisers, will be the only ones who can give true value of a home. The lender will require it to be assured that the loan they are giving matches, or is less, than the property value. They do this to ensure that if things ever get dicey for the first-time home buyers and they must foreclose on the home, that they can regain the loan amount when selling it. It can be a hit and miss on whether the appraisal will come back at the contract sales price of the home. It is a very subjective process. I have had the same home appraised twice many times and they are never the exact same. If the market prices are accelerating at a fast pace, sometimes appraisals will be lower than the agreed upon sales price. When this happens, the seller will have to lower the price. If they seller does not want to do this, the buyer will have to come up with the difference between the sales price and appraised value. A third option is that you find a middle ground where the seller lowers the sales price somewhat and the buyer puts more of a down payment. As with everything else in real estate, it is a negotiation that drives the final decision.

    3. We recheck everything the last week before you close – I told Steve and Sally to pay very close attention to this next tidbit of my unending wisdom. When all is said and done with the mortgage where the lender has given you a green light, you still need to be careful. I told them to picture the following. You have gotten through the constant questions, the appraisal came through, you have a time and date to close on your first home. You are a week away from getting the keys. Boom! The mortgage company asks for more information. They check your employment and credit one more time. There are more questions to answer. I have found the last week before closing on a home as the most stressful period of the home buying process. Because they do check things up to the day of closing on your house, I told the young couple here are some things to consider during the mortgage process.

    1. Don't get any more credit cards. Don't even apply for them.

    2. Do keep all credit cards active.

    3. Don't get crazy with purchases and max out your credit cards.

    4. Do keep your same employer

    5. Don't try to consolidate your debt.

    6. Do take care of any collections, judgments and/or tax liens

    7. Do pay all your bills on time.

    8. Don't make any large deposits into your accounts!

    After I finished my speech on my soap box about the mortgage, Steve let out a sigh and Sally looked worried. I told them that not to be concerned. Just set their expectations accordingly about the mortgage process and they

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