Let’s Talk Turkey: The Recipe For Homeownership
Buying your first home can be intimidating, since you’ve never done it before and it’s not something most people study in school. Yes, it is a big commitment and a big investment. It also has equally big benefits that can change your life.
Countless people successfully buy their first home each month. Knowing how to get started and what to expect can take away the intimidation.
Here is a winning recipe to help you navigate the process with confidence.
STEP 1: BUILD A TEAM
Buying a home may be the biggest investment you ever make, so it pays to call in the experts. You’ll need a REALTOR and a loan officer.
In both cases, look for people that you can relate to, who you trust, and who you feel sincerely want to help you.
Your REALTOR will help you scout properties and will represent you and your interests during the home-buying transaction. Their commission is generally paid by the seller, so as the buyer, these services are essentially free.
When looking for a real estate agent, it helps to find someone who is an expert in the neighborhood in which you’d like to live. Their familiarity with the neighborhood’s properties and sellers can help you negotiate the best deal, which is particularly important in today’s competitive market.
Once you find a REALTOR, ask them to recommend two to three loan officers.
STEP 2: GET PREAPPROVED
Talking numbers before you begin shopping for houses will set you up for success. If you start looking at homes that cost $850,000 when what you really can afford is a townhome for $350,000, you’re wasting your time and setting yourself up for heartbreak.
Instead, get preapproved for a loan first. During the preapproval process, you will find out how much you are qualified to borrow and what you can afford, then begin your search. You’ll save time and effort, and when you find your perfect home, you’ll be in the position to make a solid, competitive offer.
During the preapproval process, the loan officer will evaluate your income and your expenses to determine how much house you can afford. He or she will run your credit report, and if there are issues, a good loan officer will help you address them.
Your loan officer should also be able to advise you on different loan opportunities and programs for which you might qualify, such as VA loans or the Mortgage Credit Certificate.
Be prepared by gathering the paperwork your loan officer will need: two years of tax returns, two months of bank statements, and 30 days of pay stubs.
STEP 3: ESTIMATE THE CLOSING COSTS
Closing costs are the fees that you pay to legally transfer the ownership of the property from the seller to you. Typically they cover the services provided by appraisers, inspectors and the fees charged by your lender to set up the mortgage. They also include escrow fees, which in Hawaii include homeowner’s insurance and property taxes.
These fees are due at closing in addition to your down payment, so it’s important to get a good estimate of what they will be as part of your loan application process, so that you can budget accordingly.
STEP 4: START A SMART SEARCH
This is where the fun begins! With your budget and preapproved loan in hand, you can start your house-hunting.
You can search online 24/7 at PrudentialLocations.com, which has the most comprehensive real estate search for Hawaii, including new projects, foreclosures and for sale by owner properties. The “power search” feature lets you search by many criteria at once: price range, neighborhood of interest, number of bedrooms, yard or pools, and more.
When you’re on the go, the Prudential Locations mobile app (free), will show you listings, photos, property details, open houses and more, keyed to your GPS location or the neighborhood you specify. Download the mobile app from the iTunes store and the Android market.
Prudential Locations offers free, no-obligation seminars for new homebuyers. Call 377-4890 for more information.