First-Time Home Buyers: Don't Overlook This Step!

Most home buyers go through the experience of buying or selling a home only a few times in their life. Add to that the fact that those events are separated by a span of several years and it’s easy to forget the myriad of details involved. That’s where an experienced real estate agent proves an invaluable guide through the world they navigate every day. If you’re a first-time buyer, don’t attempt this journey alone!

Important First Step

In my many years as a real estate agent in Orange County, probably the most critical step I’ve seen first time home buyers overlook is the pre-qualification or pre-approval stage of the lending process. Knowing up front what type of loan and amount your lender will approve for you can really make or break your successful search for a home.

Why Pre-qualify or Pre-approve?

In this competitive real estate market where cash players and even multiple bids are common, sellers are more likely to consider buyers who come to the table with their financing prepared. Until you’ve talked to your lender, you won’t have defined that important piece of the home buying process.

It is actually preferable to get pre-approved for a loan rather than pre-qualified -- it involves gathering more detailed financial information and in some cases may even involve running a credit report. When you have a letter from your lender stating that you are pre-approved for mortgage financing, you put yourself and your agent in a better position for making a legitimate offer on your dream home when you find it.

What Does The Lender Want?

The lending business is based on risk assessment. The lower your risk of defaulting on a loan, the better the rates and terms the lender will offer you. Your risk level is estimated by examining your borrowing habits, credit history, employment history, and amount you’re able to apply to a down payment on the property, to name a few. If you have a lot of debt in relation to your income, outstanding judgments, child support or alimony, or any other financial contingencies, the loan approval process gets trickier.

The Market Is Changing, Are You Ready?

Orange County home sales volume for May was up over 11% compared to 2012, and the median price increased 24% compared to last year.* If you’re thinking of buying soon, talk to your lender and get your financial piece of the puzzle sorted out. Then find a trusted agent and begin your search!

A professional, licensed real estate agent has the experience, the knowledge, and the time and resources to help you find the home that meets your needs and help guide you smoothly through the entire process. For example, my clients not only benefit from my 15+ years’ experience in Orange County real estate, but they also have access to proven trustworthy and reliable lenders, escrow and title companies, as well as contractors and home inspectors. Choose someone who will remain committed to you throughout the journey, and who will treat your search as if it were for their own home.

Nanette Shapiro

(714) 924-0781

nanette.shapiro4@gmail.com

www.homesbynanette.com

 Follow me on Facebook!

*Source: DataQuick

First-Time Buyer? How to make your Dream Home a reality:

June is upon us: Famous for all the dads, grads, and brides who are celebrating this time of year. College graduates and newlyweds are just starting out in a new life, full of big plans and dreams. Home ownership is usually a major item on their to-do list, but there are often hurdles to overcome on the way to fulfilling this dream.

Hurdle #1: REALITY

Most young adults face a gap between what they want in their first home and what they can realistically find, afford, and be pre-qualified for in their neighborhood of choice.

Before starting out on your home search, write down your list of top features in order of preference. Property location, number of bedrooms and baths, yard size, garage size, single or multi-level, detached house or condominium are all important questions the list should answer. Be prepared to compromise on some points on the list if your search fails to locate a property that miraculously meets every one of your requirements.

Hurdle #2: CREDIT & LOAN PRE-QUALIFICATION

Unless you’re in the position to pay cash for your home, you’ll need to borrow money in order to make the purchase. How much you’re able to borrow, the interest rate and terms of the loans available to you will depend on a number of factors, your individual (or combined in the case of a married couple) credit score being one of them. Your credit score is determined by your history of borrowing and repaying on things like revolving charge accounts, car or school loans, and so on.

Another crucial factor affecting your borrowing power is your ratio of debt to income. Lenders have strict limits on that number, and most borrowers with a ratio of 55% or more will not qualify for a loan, even if they believe they can afford the monthly payment. 

For example, let’s say you’re a newlywed with a combined income of $80,000 and $50,000 in school loan debt. Your income-to-debt ratio is 62.5% and would likely prevent you from qualifying for a mortgage. You can understand now why it’s so important to have your lender pre-qualify you for a loan BEFORE beginning your search: it not only saves time, but it also spares you any disappointment in finding a dream home that is beyond your reach.

A number of internet sites can help you with preliminary loan calculations based on your income, expected down payment on the property, and other factors such as debt and property taxes. The FDIC (Federal Deposit Insurance Corporation) offers some valuable information about credit for consumers here: http://www.fdic.gov/consumers/consumer/ccc/establish.html

Hurdle #3: INEXPERIENCE

Face it, the home buying process can be extremely complicated, time-consuming, and overwhelming, especially for first-timers. A professional, licensed real estate agent has the experience, the knowledge, and the time and resources to not only help you find the home that meets your needs, but to also help guide you smoothly through the process. Choose someone who will remain committed to you throughout the journey, and who will treat your search as if it were for their own home.

Are you ready to search for your first home? I can e-mail you my First Time Buyer Packet for a complete understanding of my services and what to expect from me in helping you navigate your way to owning your first home!

Nanette Shapiro

(714) 924-0781

nanette.shapiro4@gmail.com

www.homesbynanette.com