Success in Home Buying (the Real Deal)

Maceo Keeling - SCORE Member, Business Owner and Consultant. Photo: Urban News
Maceo Keeling – SCORE Member, Business Owner and Consultant. Photo: Urban News
By Maceo Keeling

Buying a home is the single biggest investment most of us will ever make.

Lots of people have done it and lived to tell the story.

The big surprise for both first-timers and many other buyers is that they need to finish the first five steps on this list before they even begin to look for a home. In fact, success at making the purchase depends on it!

Before we get started let me ask a few questions. Did you know that the state of North Carolina licenses physicians, attorneys, accountants, and real estate brokers? Think about that.

Would you ever consider prescribing your own medication, or performing surgery on yourself? Would you represent yourself in a major legal battle with tens of thousands of dollars at stake? Do you do your own income tax filing for the IRS? Since the largest transaction you will probably make in your life will be buying your own home, why would you consider buying a house without professional guidance?

Real estate brokers are licensed by the State of North Carolina because of the complexity of large financial transactions they complete. They have to understand the law, finance, people and their needs. Like a doctor, they have to listen and understand what your need. They have to diagnose what you need to get you into the home you can afford—and they have to make the deal happen in a smart, disciplined way.

Many people believe that the profession is simply opening doors and showing off rooms, but it is much, much more! So, let’s examine the first five steps to homeownership you need to take before contacting a broker:

Face your credit

Before you call the number on the sign in front of the house you just fell in love with, look at your credit. In today’s difficult economic times, banks are not lending as liberally as they once did. They will require you to have some money for a down payment to purchase a home. A bank, credit union, or mortgage broker can help you with this.

Get a Broker! He or she can help you analyze how much money you have that can go toward a down payment, and look at how much you’re spending every month—and where it’s going. This will tell you how much you can allocate to a mortgage payment.

Get a lender! “We need to know what you qualify for from a bank or mortgage lender. We have to know how and where a new mortgage payment fits into your budget so we’ll know what house and neighborhoods to look at,” says Sandra Kilgore, the People’s Broker at Keller Williams Realty Professionals.

As you research neighborhoods, factor in how moving would change your transportation costs to work. Take into account your vehicle type along with car payments, gas, miles traveled, and other factors to help you estimate the cost of a potential commute.

Check into benefits for first-time home buyers.

Before you start meeting with lenders, it’s good to know what constitutes a good deal. And that includes looking into special programs that might make it easier for you to find a property you can afford. Here are federal programs to help first-time buyers, and local organizations that can give you guidance as well. Take this information with you when you start looking for a mortgage.

Meet with lenders.

Many realtors will not spend time with clients who haven’t clarified how much they can afford to spend with a lender. In most instances, sellers will not even look at an offer that’s not accompanied with a mortgage pre-approval letter. That’s why, if you don’t have all cash, your next step is talking to a lender and/or mortgage broker.

A lender or broker will assess your credit score and the amount you can qualify for on a loan. He or she will also discuss your assets (savings, 401(k), etc.) and debt, as well as any local programs that might be available for down payment assistance. That’s where your homework on first-time home-buyer programs can help. If you think you qualify, look for a lender that handles the program you hope to get. Do some research online, and work with a live person who can review your situation and help you improve your credit.

“OnTrack” Financial Education & Counseling is a great nonprofit organization for this kind of assistance, with a long track record and a trusted relationship with the community. They offer pre-purchase education classes and a 12-hour course on home buying to prepare you to make the best decisions and the best deals on your home. OnTrack can be reached at 828 255-5166 or online at www.ontrackwnc.org.

Shop around for a mortgage.

Don’t be bound by loyalty when seeking a pre-approval or searching for a mortgage. Shop lenders, even if you only qualify for one type of loan. For example, an FHA loan may have different fees depending on if you’re applying for the loan through a local bank, credit union, mortgage banker, large bank, or mortgage broker.

When you’ve gotten the best deal you can, get a mortgage pre-approval so you know how much house you can buy. And make sure you are pre-approved, not just pre-qualified.

Have a back-up lender.

Qualifying for a loan isn’t a guarantee your loan will eventually get the money: Underwriting guidelines shift, lender risk-analysis changes, and investor markets can change as well. As a California Real Estate Broker, I had clients who signed loan and escrow documents, and a day or two before they were supposed to close were notified the lender froze funding on their loan program. Having a second lender that has already qualified you for a mortgage gives you an alternate way to keep the process on, or close to, schedule.

This completes the first half of a two-part article on 10 steps to purchase your home. If you have questions before the next article comes out, feel free to call “the People’s Broker” Sandra Kilgore at Keller Williams Professionals (828) 515-1588 or email [email protected].

 

 


The Conscious Call radio program airs every Monday at 11:30 a.m. on WRES-FM 100.7. In a collaboration with the radio program, the Urban News will help keep readers informed about events, programs, news, and the progress of The Conscious Call. The opinions and statements made in this column are solely the opinions of the author and not necessarily those of the Urban News.