On the surface, buying a home is a scary proposition.
The litany of terms, numbers and documents before even submitting an offer can be overwhelming and confusing, to say the least.
To help you wade your way through the process, we spoke with a few agents plus some recent home buyers to learn some of their best tips, mistakes and what you can do to make your next purchase a bit more manageable.
1. Before you do anything, get pre-approved
“Before we even start looking, I ask my clients to get pre-approved by a lender,” says Triplemint agent Steven Kopstein. In an ultra-competitive market like New York City (where Kopstein works), it’s that much more important to know how much you can actually afford.
He also notes that in NYC, there are co-op specific mortgage lenders he’ll send clients to. Co-ops can be much more difficult throughout the mortgage process because so many different parties are involved. (Because co-ops are very much an NYC-specific issue, we won’t touch on them much here).
“It will also help you discover any credit issues you didn’t know you had,” says agent Rachel Bernhardt of Cooper Realty in Portland, Oregon. She adds that in the ever-growing freelancer space, those who are either self-employed or contract workers need at least two years of verifiable income before most mortgage lenders will consider them for approval.
2. Use your friends
“I was able to get things together pretty quickly because I went through an agent from a friend I trusted,” says Portland resident Kate Buska, who bought a home in January.
Referrals mean better business and rates for just about everyone involved and it will provide a piece of mind knowing you’re working with someone who has your best interests in mind. You can enlist your friends for help finding everyone you’ll need in the process: agent, lender, inspector, etc.
3. Think about what you really want
“Write down what your must-haves and absolute no’s are,” says Triplemint agent Boris Sharapan Fabrikant. This will help organize your search and help narrow down your neighborhood, size need, etc.
Things to consider include:
- overall square footage
- garage space
- yard space
- laundry and other amenities on-site or in-unit
You’ll spend less time sifting through homes that don’t meet your need and spend more time on potential winners.
4. After you’ve found the one, then comes the offer
As you’re writing up the offer, there’s plenty to consider. “You should know what the final fees and any contingencies are before you submit,” says Saopon Cha (MLS#1419551), owner of her own brokerage and a 13-year veteran of the industry. “Your rate isn’t guaranteed until you lock in the property.”
She also urges buyers to shop around for mortgages. “People don’t think it matters who they go with – that their rate will be the same – but it does,” she says. “Get a second opinion.”
5. You got the house! Now about those closing costs.
“Closing costs” is probably the most generic/overused term in the whole house buying process, but what does it actually mean?
Closing costs refer to all of the fees, taxes, and charges associated with finalizing the purchase of a home. This ranges from a “loan origination fee” to title insurance, which protects you as the buyer during the process should something come up with the sale of the home.
“A good rule of thumb is that closing costs will total 1-2% of the purchase price,” Bernhardt says. She adds that depending on the competition in the marketplace, certain coverage of closing costs can be negotiated into the sale.
Other things, such as appraisal fees can factor in the total and can depend on how hot the market is at any given time.