Renter to First Time Buyer
Hire the Right Team
This really is step one. You need to be surrounded by professionals who know their business and SINCERELY want to help you get the home of your dreams at the best price and with the least amount of stress. Our A Team buyer agents, Brian Gaiefsky and Wendy Chercass will work tirelessly to not only find you your perfect home, but help you surround yourself with like-minded individuals to guide you through the process. The best work with the best. From mortgage lender to closing agent, we will give you the names of the most experienced, ethical professionals we know, so that you have a choice and can pick those who make you feel the most confident and comfortable.
When is Your Lease Up?
Timing is everything and coordinating buying a house with the expiration of your lease can be tricky. Moving is stressful enough without running into problems between the end of the lease and the closing of your home. The ideal would be to close on your home about two weeks before your lease is up so the transition allows you to take your time moving and setting up your new home. After our buyer consultation, we can help you set up the timeline. Maybe we won’t start looking right away but we can monitor the market and see which neighborhoods you like the most. Having extra time can also give you a chance to make your credit stronger or save more money for a stronger down payment. As you begin your search for a home, check your lease. Learn about penalties for breaking the lease in case it comes to that and ask you landlord if you can get an extension if needed. Tell your landlord that you are planning to buy your own place and hope to close as close to the end of the lease as possible. Many landlords will allow you to stay on after the lease expires as long as you give them a 30-day notice when you know you will be moving.
Know Your Credit
If you think you want to buy a home in the next year or so, watch your credit. You should know your credit score and know your credit history. You need a minimum credit score of ___ and a history of paying your bills on time. Be sure your credit reports are accurate. If you are renting, you probably have decent credit or your landlord understands what may have happened in your past affected your credit and decided to take a chance on you. If you have a good credit score, all you need to do to keep it that way is to AVOID any large purchases until after you close on your new home. This includes cars, furniture, appliances, and luxury items – anything that can wait until AFTER closing. Seriously, if you need a refrigerator for your new home, purchase it the AFTER you close on your home. This is also not the time to quit your job or do anything that will change your monthly income. If you have a poor payment history, now is the time to clean up your act. Start paying your bills on time. Do not make any big purchases that you can live without. And if your credit score is below ___ hire a legitimate credit repair firm to get your credit scores improved – we can help you with this also. The process can take anywhere from six to eighteen months.
Figure Out a Budget You Can Live With
Determine your budget and the monthly payments you can afford. Add up all your monthly expenses and see how much you can comfortable pay toward housing expenses. Not just the principal and interest; add in taxes, insurance and utilities. It is no fun to be ”house poor”. Your home should be your haven, not a burden. In this market with interest rates and values projected to rise the normal 4-5% per year, stay within your budget. Your home will increase in equity and after a few years, you can upsize or upgrade and possibly have saved more cash for a bigger down payment.
GET PRE-APPROVED FOR A MORTGAGE
Now the work starts. Your credit is good and you hired the right Realtor. Looking for a home before you know how much home you can afford is not only a waste of time but can be a dream crusher if you don’t get pre-approved for a mortgage. Make sure you get a preapproval from a lender before you even begin hunting for a home. No seller will accept an offer without a pre-approval. And make sure it’s a true preapproval and not just a prequalification. A pre-qualification is based on information the buyer provides. To get a pre-approval, the lender must verify your income and not just check your credit.
CONSIDER DOWN PAYMENT ASSISTANCE
Many first-time homebuyers overlook down-payment assistance programs that may be available to them through state and local housing authorities. Again, the A Team can guide you through the process. We will help you check with your local housing authority for a list of lenders that participate in these programs. These are not always based on income but they are strictly for the first-time home buyer.
If you have a friend or relative who is willing to help you with the down payment, there are guidelines for “gifts” that your lender can guide you through to make it an acceptable part of a transaction to the seller.