First Time Homebuyer

Asked by Carrie, Davison, MI Mon Jan 5, 2009

I am looking to a buy a home in the next couple of months. My husband joined the Air Force and will be graduating in a couple of weeks then is off to tech school. I have no idea where we will end up after he is finished with that. (He does have preferences but it all depends on the need of the Air Force). I would really love to buy a place because I hate renting! Is there something that I can start doing now in order to make this process easier, more efficent when we do know? I have been looking at Real Estate in the places that he has perferences (Wichita Falls and Abilene, TX - Omaha, NE are the top 3) and have a few homes that I would like to look at more closely. He will get his orders sometime in tech school. I am just not even sure what the first step is! Thanks.

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T.E. & Naima…, Agent, Dallas, TX
Tue Jan 6, 2009
First, figure out where you want to live and for how long. Then, figure out how much you can afford. Finally, contact a Realtor in that area, armed with a pre-qualification letter from a lender.

Where seems to be an issue right now, but how long may influence your decision. Even though no one likes to spend money on rent and get nothing out of it, sometimes you have no choice. The transaction costs of buying and selling real estate can wipe out any equity you might build up, especially if you are going to move quickly. For example, the transaction costs of selling a home may be 7%. If you sell before prices have risen by 7%, you will not only not pocket any of your equity, you may be required to bring money to the closing table.

Inflation up until now has been pretty mild in the mid-continent. Yes, on the coasts house prices went up wildly, but they have settled back and people with negative equity are all over California, Nevada and the North and east coasts. On the other hand, the coming tsunami of inflation in 2010 will make everybody wish they had tons of real estate at today's prices. There is substantial risk that the house you buy today will not sell at the same price in two years, but we don't know whether it will be down or up wildly. Your choice of where will dictate the risk, but you should be prepared for owning there over the long term.

Budgeting is not a task that anyone likes, but you have to do it. Look at your projected income over the next few years and how much of that you can spend on housing, including base allowance and base housing. Banks will not let you spend more than about 40% of your gross income on housing and you need to take account of that. Once you have a monthly housing expense guideline, go to a loan officer and find out what your credit looks like.

If you have problems on your credit report, now is the time to take care of them. If you have good credit, then get a pre-qualification or pre-approval letter from the lender. The letter will tell you what the bank will allow you to borrow. Rates right now are extremely low, but they won't stay that way for more than about six months, if the stimulus packages are put into effect. By summer I expect everybody to have regained some degree of confidence, and by year-end inflation will start to raise its ugly head. If you have bought by then, you'll be pleased at the equity you gain over the next year, because it will outstrip the mortgage rate and the transaction costs of selling.

With your letter of approval in hand you can confidently go out and make offers on houses, knowing that the bank will lend you the money. So, contact a local Realtor where you have decided to own (even if you eventually move out) and start looking. If it turns out to be the Dallas area, give us a call or use our website to find your dream home, we'll be happy to welcome you to the neighborhood.

If you do need to move on, you have a choice of selling the property or renting it out. When inflation is raging, hard assets like real estate maintain their relative value, meaning they rise in price. So, you can keep a renter in your old house while your equity rises.
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1 vote
Joan & Brad…, Agent, BOONE, NC
Tue Jan 6, 2009
Hi Carrie,

Very simple...GET PRE-APPROVED FOR A LOAN! This can be done over the phone, with a KNOWN local mortgage company. This is the FIRST step, which will allow you to be aware of your borrowing power. DO NOT start looking at houses until this is done! The loan officer will be your best advisor, and will eliminate looking at properties that you cannot afford, AND, most importantly will inform you of your limits.

This HUGE MORTGAGE MESS that we're now facing as a nation occurred because CAUTION was not used by FIRST TIME BUYERS! ALWAYS get counsel from family, someone you trust, before you SIGN anything!Depending on your credit scores, debt level, savings for a down payment,and income, you will be aware of what you can AFFORD, NOT WHAT YOU WANT! Not EVERYONE should buy a home! DO NOT BE IMPULSIVE! DO NOT LOOK AT ANYTHING OUT OF YOUR PRICE RANGE! DO NOT USE THE MAXIMUM LOAN AMOUNT TO BORROW!

Secondly, interview real estate agents, find a fit, and make sure he/she is a REALTOR!. This is very important, as this person needs to be WORKING FOR YOU! Make sure you engage a BUYERS' AGENT! Ask LOTS OF QUESTIONS ABOUT EXPERIENCE, REFERENCES, and if possible, get a referral from a friend/family member who is a real estate professional! Also, remember, you can FIRE your realtor if they are not performing in your best interests!

There are great bargains out there, hope one of them has your name on it!
1 vote
Rachel Case, Agent, Wichita Falls, TX
Fri Aug 27, 2010
Hi! Congrats on wanting to buy a home! The first thing that any home buyer should do is get PRE-APPROVED! It is often as easy as a phone call to a trusted lender and getting W-2's, paycheck stubs, etc... The lender will tell you what info they specifically need! Often a home buyer will be looking at a price range that is well above or below what they can or can not afford. Don't waste your precious time falling in love or settling for a home. Let the banks help you narrow down your search. Then find a real estate agent in that area. Always use someone that you trust! Interview several and see what they each have to offer!! Hope this helps.
0 votes
Ashton Gusta…, Agent, Wichita Falls, TX
Wed Mar 18, 2009
See - This is the only site made just for Wichita Falls Buyers.
0 votes
Voices Member, , Benton County, OR
Tue Jan 6, 2009
One of your first steps will be to determine what you can afford so you know what price range is in your buget..
Find a reputable Broker/Lender and determine what you are eligible for and what you can afford..Avoid spammers and scammers find a reputable mortgage person to work with..
0 votes
Scott Godzyk, Agent, Manchester, NH
Tue Jan 6, 2009
Carrie the forst step is getting prequailfied with a local and trusted mortgage company, it can be done at no cost and you should try and avoid internet lenders. Once you are prequailified you will want to get a buyer broker who can assist you with your purchase, usually you can get a buyer broker at no cost to you, they get paid by the listing agent at closing a fee advertised in the mls. This way you will have someone who can provide you with a list of properties that meet your search criteria and assist you through each step of the buying process. Thank your husband for me for serving and protecting all of us. Good luck with your search.
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0 votes
, ,
Mon Jan 5, 2009
Hi Carrie,

I give free one-on-one credit consultations. But it also includes all of the things required to become a homeowner.
The short list is:
1. Get pre-approved.
2. Find a trusted buyer's agent to represent you on the purchase.

Good luck!!
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