Purchasing real estate is likely to be the biggest and most complex financial transaction you’ll make in your life. A trusted real estate professional, like myself, is a strong advocate who understands the information and emotional support that buyers need throughout the process of finding and acquiring a home. As an expert with local market knowledge, I am well prepared to guide you the buyer(s) through all the practical details and potential obstacles that may occur during the purchase process.
What Clients are Saying!
After you have selected me as your buyer agent, I will guide you through the entire process of buying the best home for you and your family.
Search with an open mind — it’ll be easier than adjusting your expectations later on. I’ve seen first-time homebuyers paint themselves into a corner by getting caught up in their idea of a dream home.
The vast majority of first-time home buyers are unlikely to get their top choice. The more flexible you are, the higher your chance of success. It may be helpful to rank the features you want most before you start your search –that’ll help you assess your options once you begin visiting potential homes.
Critical Items to be on top of
Critical: Understand your real estate contract
Real estate contracts are dry and long, but they’re not written in stone until you sign. You can negotiate any parameter when you submit an offer. If something doesn’t make sense, ask for an explanation. Keep in mind, if any part of it does not suit your needs, you can request modifications before you submit the contract to the seller. When in doubt — or to get a reality check — you should consider the advice of your knowledgeable and experienced agent.
Know your “contingency elections.” These determine what types of inspections and negotiations can be done and in what time frame, such as standard home inspections, inspections for pests, whether you can qualify for a mortgage and more.
A home inspection won’t reveal everything
After the contract is signed by both parties, the homebuyer usually has 10 to 14 days to get a home inspection. Based on the results of the inspection, your real estate agent (or lawyer, depending on the state) can request monetary concessions or ask that repairs be added to the contract to offset any concerns or potential problems.
A thorough inspection report can be overwhelming, especially if it’s an older home. No house is perfect and most problems are addressable. But if you come across something you don’t want to deal with, you can always negotiate or walk away — as long as you are within the contingency period.
On the other hand, inspectors are not foolproof. They won’t be able to get behind walls or move the current occupant’s belongings to inspect. They also won’t be responsible for any mistakes made or issues missed in their assessment.
If you’re searching in a hot market — where homes are selling fast and competition is fierce — you may feel pressured to forgo an inspection. If you’re considering that, recruit some help: bring someone knowledgeable about buildings and systems to the showing. It may give you more insight into the state of the home and highlight major red flags.
You don’t have to put down 20% to buy a house
While the traditional 20% down payment has its benefits — like a lower monthly mortgage payment and exemption from private mortgage insurance costs — there are drawbacks, too. “There’s definitely a misconception, especially among first-time homebuyers, that 20% down is needed to purchase a home. I hear this from new customers all the time,” said Cruz. “But for some homebuyers, it’s a major hurdle.”
And private mortgage insurance isn’t always a major expense. Generally, PMI costs 0.5% to 1.5% of your mortgage balance per year, so as little as $125 per month on a $300,000 mortgage. And that rate is partially determined by your credit score, so if you have good credit, it may boil down to a negligible amount. “You’ll also have the opportunity to discontinue PMI down the road once your equity reaches 20%,” Cruz said.
In my own time as a real estate agent, clients were consistently surprised by the actual cost of PMI versus their impression. Most people thought their payments would be way higher than they were quoted for.
There is a risk in waiting to save up for a bigger down payment, too. If increases in home prices outpace your savings rates — not to mention inflation in other areas of life — you may be doing yourself a disservice by waiting. Even if home prices stay stagnant, mortgage interest rates are on the rise. With the Fed likely to raise interest rates through 2022 in response to high inflation, this trend is expected to continue for now.
A smaller down payment may also allow you to keep a healthy pile of savings accessible for unexpected repairs on your new home.
Financing is not one-size-fits-all
There are also various loan products designed for different types of mortgage applicants that are tailored to specific financial circumstances. For instance, FHA loans allow for smaller down payments and let people with lower credit scores qualify for a mortgage. Physicians’ loans allow medical doctors and pharmacists to qualify for 0% down mortgages to account for their often-nonexistent savings, large school loan balances and high earning power. VA loans, meanwhile, exist for service members and veterans to acquire a home with no down payment and other benefits. Even conventional loans allow you to put as little as 3% down.
But you should never make a purchase you cannot afford. Be mindful of what you feel comfortable spending, both upfront and on a monthly basis, because that’s a far more important metric than whatever purchase price you may be preapproved for. Check out “How Much House Can I Afford?” to assess your budget.
The path forward to a new home should be a little more clear now. Start figuring out how to budget for your home ahead of time so you’re not tripped up by logistics when you find the right house. And remember, homeownership is not necessarily for everyone — there are pros and cons to both owning and renting. Make sure you want to be a homeowner before you make this commitment.