Buying your first home is daunting, to say the least. For most, I would say that it encompasses a realm of legal documents and situations that they have never had to deal with before. Even the thought of it is enough to tempt a person to just buy the first house they come across in their price range, or simply keep renting. It is easy to get overwhelmed when buying your first home and, I think it’s fair to say, that you will get completely and utterly overwhelmed at some point. However, there are a few things you can do to take the sting out of buying your first home. These are my recommendations:
1. Save up a few thousand dollars before you start shopping. Seriously. Most people will give you this advice and they’ll tell you the reason is so that you have a nice down payment, which is all well and good. However, if you are going with a 0% down loan option, which many are these days, you will still need a few thousand in reserve to pay for closing costs. It may be upwards of $10,000, and it won’t be considered part of your mortgage loan. You’ll have to come up with this money as cash up front. Keep this in mind so that you don’t get caught off guard.
2. Get your paperwork and finances in order ahead of time. Your mortgage lender is going to ask you anything and everything about your finances. It behooves you to have 3 years tax records, 3 months bank and income statements, 3 months retirement fund statements, among other documents. Basically, you’ll need to provide proof of income, proof of assets, and proof of debts. Trust me, your finances will be scrutinized several times over. You may be asked some unexpected questions like, how you paid off your truck last month. Be prepared to be laid bare and divulge every detail.
3. You need a Realtor. Aside from the fact that the seller, not the buyer, pays the Realtors fees, and the fact that your Realtor will do all the negotiating as well as coach you through the home-buying process, the biggest reason you need a Realtor is that in the ultra-tight housing market that we have here in Southeast Alaska, a Realtor has access to the biggest buying and selling pool, and the most current listings available. It’s not uncommon for a Realtor here to sell a house the day it gets listed, before the house even gets advertised to the public, simply because they were the first to hear that it came available on the market. That being said, be prepared to move fast if you find yourself in this situation, as the good houses won’t sit around and wait for you to make up your mind.
4. Shop around for a mortgage lender. A lot of people don’t know that you can shop around for your lender and simply opt to go through their current bank or on a friend’s recommendation. You have the option to, and you should, shop around for one that will get you the best rate and one that you are comfortable with. Not all mortgage loans are created equal. Your mortgage lender may end up being the most important person involved in your home-buying transaction. Not only will a good lender give you a good rate, they will also be there to talk you down off of a cliff if you find yourself succumbing to home-buying induced panic attacks. So do yourself a favor and build yourself the best home-buying team you can, keeping in mind that your chosen lender will be absolutely critical to your home-buying success.
5. Keep your eye on the prize. At any moment this crazy-train could get derailed by irrational thoughts and self-doubt. Keep it together! Remember: Home-ownership freedom is your reward.
Amanda was raised in a small farming town at the base of the Rocky Mountain range. She enthusiastically experiments with foraged foods, occasionally dabbles in creative design, and is fast approaching a life list of 200 birds. Currently, she lives and works in Alaska’s capital city. Amanda can be reached at: amanda_pilley@hotmail.com.
