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It is said that the two most traumatic experiences that people go through are marriage and buying a house. The end result is worthy of celebration; getting there can be hell. In the case of buying a home, for most of us it’s an undertaking on a scale unlike any we’ve ever experienced. The startup costs, the debt that’s incurred, the process of finding a house and then finding the right financing – all of it is new, all of it is alien, and for most of us it generates a lot of fear. That, in turn, makes it a tough experience. So here are a few things to keep in mind.
• Don’t let the marble countertops dazzle you. Start this process with some realistic decisions on what sort of down payment you can manage, and what is the maximum monthly payment you can live with. Note that we suggest a number you can live with, not just survive with. Pick the home price that is the top end for you, and don’t even look at houses that cost more. That way, you’ll be happy when you find the right one.
• Understand this fact about all realtors, lenders and mortgage brokers: they need you more than you need them. So just because this is a new process, you need not be intimidated by the professionals you’ll be dealing with. No question is a stupid one, and there is no limit to the number of times you may ask it.
• Let your realtor work for you. The internet has made the first pass at home shopping much easier. Nevertheless, take some time and come up with a half dozen characteristics that you’d want in your ideal home, and give the realtor your list. The garage must accommodate two cars, fenced back yard, fireplace, lots of light – whatever you can do to help your realtor zero in on properties will help you too. Realtors walk through homes for sale – let yours pick out a few and make an afternoon of touring them. There’s no more efficient way to learn the market.
• Let your financial officer work for you. Whether you’re working with a lending institution or a mortgage broker, insist on multiple offerings. When the products are presented, ask for comparisons to market interest rates. Ask for an itemized flat list of all closing costs. If you’re unsure on whether you want an adjustable rate mortgage or a fixed rate, ask your lender or broker to walk you through the cost comparisons – if you have the mortgage five years, ten years, fifteen and so on. If you work with a single broker, insist on a contract that obligates him to produce the best available deal for you.
• Don’t be afraid to negotiate! Unless you’re in an overheated housing market, ask how long the place has been on the market. Your realtor will give you a suggested offering price; it’s good to listen to the pros but don’t be afraid to throw out a lower number and wait. This also applies to your mortgage agreement. Look at the list of closing costs and ask if one or two might be passed over. Suggest to the lender that you’ve seen similar loans with fewer closing costs elsewhere. When it’s your money being passed across the table, you hold most of the cards.
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