Elkridge MD Real Estate - Columbia MD Real Estate Listings - Ellicott City MD Real Estate

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Purchasing your first home is a big step, that comes with some very serious decisions. Many homebuyers are intimidated by the process, and continue renting much longer than they should, or need to. However, if you break the home buying process down into these simple steps, and follow these important tips, you will find the process less intimidating, and much more manageable.

1) BEFORE YOU BEGIN, ASK YOURSELF ONE QUESTION...
Will you live in your next home for at least 3 years? If the answer is "Yes," you should probably purchase, rather than continue renting. With average appreciation, you'll break even on your closing costs after 2 years, and start making money at year three. Every year after that will put more money in your pocket! The most expensive aspect of real estate is buying & selling, so the longer you can live in the home the better. However, purchasing makes sense if you can make as little as a 36 month commitment.


2) YOU DON'T ALWAYS NEED A HUGE DOWN PAYMENT
It always surprises me how many people want to purchase a home, but hold off because they believe that a hefty down payment is required.  Zero, or low down payment  programs are still possible, even with the recent sub-prime mortgage crisis. However, lenders are being more responsible at examining a potential purchaser's finances before they issue a Pre-Approval Letter. Perfect credit isn't a requirement either, but the higher your credit score, the better your interest rate will be. Because real estate typically appreciates in value, it's often easier to be approved for a mortgage than it is to obtain a car loan!

Of course, saving money for your closing cost and down payment is always the best route to take. The more you can pay down your Loan, the lower your monthly mortgage payment will be.

If you have the funds for a 20% Loan Downpayment, then you can avoid paying PMI (Private Mortgage Insurance), which is a monthly fee charged by lenders to Buyers that put down less than 20%.

In Maryland, Buyers Closing Costs are typically about 3.5% of the purchase price of a home.
An important point to remember is that your Closing Costs are separate from your Loan Down payment.

For Example, if you purchase a $200,000 property, and you intend to put a Loan Down payment of 5% of the purchase price...then your approximate total funds needed at Settlement would be
Closing Costs: 3.5% of $200k =   $7,000
Loan Down:         5% of $200k = $10,000
Total Needed At Settlement:       $17,000

In the current Buyer's market, getting closing cost help from the seller is common, which could pay for some, or all of your closing costs, depending on other factors in your purchase contract.

Your Loan Officer will go over a number of scenarios with you, and help you to choose a program that fits your needs and budget.


3) GET PRE-APPROVED
Pre-Approval is a very important step, this where you will provide documentation such as Pay Stubs, Bank Statements, Credit Card Statements etc., to prove your income and debts. This will determine how much, and at what interest rate the bank can loan you.   Your Loan Officer will tell you what they need from you, and the process only takes a few minutes once you have provided all the necessary documentation.  Pre-Approval is much more powerful than "Pre-Qualification" , which usually only involves a verbal discussion with the Loan Officer.  More importantly, having a Pre-Approval will let you know how much your new home will REALLY cost - in monthly payments.
A $150,000 or $300,000 home doesn't mean a lot to most buyers - but $1200 per month and $2500 per month are tangibles that everyone can understand.
After your lender pre-approves you, ask them for Good Faith Estimates  that shows you a rough estimate of TOTAL monthly payment based on purchase price. Pick your payment, and you know the price range to shop in.
The payment estimates can be fine tuned to include the actual property taxes, home owners association fee and other charges that may be pertinent for a particular property.

4) CONSULT A REAL ESTATE PROFESSIONAL ASAP
Many first time home buyers avoid contacting a Real Estate Agent because they dislike high pressure sales. However, Real Estate Agents have an advantage over traditional salespeople because they have access to the Multiple Listing Service, which is a database that lists roughly 99% of the homes for sale in a given market.
This means that your Real Estate Agent doesn't have to sell - he/she merely presents your options. The most important qualities to look for in your Real Estate Agent are his/her knowledge of your specific market and their willingness to help.
As your Buyers Agent, I will guide you through the process. You'll find the help & insight will be invaluable. You'll be glad you contacted an Agent sooner, rather than later.


5) MAKE A LIST OF "MUST HAVES" and "WANTS"
Many new home buyers mistakenly think that they will "just know" when they "walk into the one." While some buyers DO fall instantly in love with a home, this is not the norm. You'll find your search is easier, and you will be more confident in your decision, if you take a systematic approach to your search.
The best way to organize your search is to make two lists: Your "Must Haves" and your "Wants."
Your "Must Haves" are the absolute necessities in your new home - in fact, you don't even need to view a home if it doesn't have every "Must Have." Great examples of your "Must Haves" are price, school district, size, etc...
Your "Wants" are the qualities that you would like for your new home to have, but it's not a necessity. Great examples of "Wants" are color, flooring, kitchen appliances, surround sound, and type of exterior. By taking the time to articulate what you need and want in your new home, you will know exactly what to look for when viewing prospective homes.


6) PICK YOUR FAVORITE NEIGHBORHOODS
You can always make changes to your house, but you can never change its location. Most home buyers already have a good idea of where they would like to live because of school districts, work, or other factors. However, neighborhoods can be pretty different, even in the same area of the city.
I can email you a list of homes in the specific area of town you're interested in. Take a drive through the different neighborhoods on the list, and choose your favorites.
Pay attention to area amenities, how well the yards & common areas are kept, and if you see a lot of "for lease" signs - which can be an indication of a heavy rental area, and lacking in "pride of ownership." After you have picked your favorite neighborhoods, and you know your "Must Haves" and "Wants," you can literally make a list of EVERY home available that meets your criteria, and view those homes.


7) MAKE YOUR DECISION!
Homebuyers often hesitate after they've found the right home because they're not confident about their decision, or their decision-making process.
Your home is probably the largest investment of your life, and it's normal to feel butterflies in your stomach before putting your first home under contract. However, if you do your due diligence - and you have if you followed the steps above - then you will have your bases covered.
If you've found a home that meets all of your "Must Haves," most of your "Wants," is in the right neighborhood, and in your budget - it's the home for you! Don't wait and let another buyer take YOUR home!
Buying your first home can seem very intimidating, but can be extremely exciting.

I always enjoy working with First Time Buyers, and seeing the pride and enjoyment they get out of purchasing their first home, and getting their piece of the American Dream.

Please contact me if you have additional questions, or are ready to begin your home search.

Jules Sabenorio, Realtor
Re/Max Advanced
Cell 410 375-5144
Email jks5481@Earthlink.net