Getting Started

One of the reasons that some first time homebuyers have so many problems when they buy a home is that they don't understand the home buying process or the roles of the people who are typically involved. In brief, they just don't understand how to get the process rolling or how to keep it rolling. Because so much is at stake, this often creates an anxiety level high enough to cause them to spend several years in a series of false starts before they move forward with a home purchase. In the end, they sometimes buy with little care or forethought simply because they want to get the process over with.

The natural place for most first time buyers to begin their home search is by driving neighborhoods, dropping by "open houses," or looking at model homes in new subdivisions. While this can be a useful way to begin to get a feel for the market, it can lead to serious problems. You may fall in love with a home that you can't afford -- or even lose several thousand dollars by getting involved in a purchase contract that you can't follow through on. You could also find yourself unable to obtain the assistance of a buyer agent when you need one. Since many home listings are now available directly to consumers over the internet, searching for a home on your own is a more realistic proposition than it was just a few years ago. Still, there is no good reason for a buyer to try to work without the help of a buyer's agent. Start the process by sitting down with a good loan officer and real estate agent so that you start with a good understanding of the process and the options available to you. Even if you determine that you prefer working on your own, you will have picked up some information that should be useful along the way. You have great resources available to you at little or no cost. Use them.

Why do I encourage you to start out with a meeting with a loan officer and real estate agent? Briefly, during a one hour meeting with a good loan officer, you should be able to find out what you would be able to borrow under a standard 15 or 30 year fixed rate loan, how much you might be able to extend that with an adjustable or balloon mortgage, how much you could afford if you limit yourself to the monthly payment you're comfortable with, and how much cash you will need to complete the purchase. If you are short of cash, you will also get an education on the sources available to help you come up with it. There are a wide variety of programs that provide assistance to home buyers who are short of cash for down payment and/or closing costs.

Similarly, in an hour or so with a good real estate agent, you should be able to put together a fairly realistic perspective on the kinds of homes that are available in your price range as well as the surrounding local communities. If you have already met with a loan officer, you should be able to begin to think through some of the tradeoffs. That is, whether you may have to maximize the amount you borrow to afford the home you want or whether you may want to think about compromising house size or location to keep your payments within a more comfortable range. In many cases, homebuyers can reach a clearer understanding of their options in an afternoon talking with a knowledgeable loan officer and real estate agent than they would in six months working on their own.