Tips for First-time Homebuyers

Buying a home can be an exciting as well as a stressful time, especially for the first time homebuyers. Proper preparation and education before beginning a search for a dream home can help remove some anxiety from the home-buying experience. Here are some tips aimed at making the home-buying experience a smooth, efficient, and stress-free one:

Reason(s) for buying – For most homebuyers, the reason(s) for buying a home include:
  • Build home equity
  • Receive income tax benefits
  • Social status
  • Avoid rent increases and canceled leases
  • Enjoy potential price appreciation

Knowing your reasons(s) for buying a home, and how homeownership fits into your overall life goals, will make you more likely to stick with the home through thick and thin.

Things to consider – Homeownership is a matter of pride as well as a responsibility. Before buying a home, you should consider:
  • Financial Stability and Budgeting: Assess your earning potential and calculate your monthly expenditures to make sure you will be able to pay your mortgage, taxes, insurance, HOA, repairs, maintenance, utilities, as well as for emergencies, every month for several years.
  • Risks: Due to the ever-changing market, a real estate investment does not always increase in value. Your property value may increase or decrease over time.
  • Commitment: When you own a home, it is harder to pick up and move with short notice; you are obligated to sell the home first.

Having considered all these beforehand makes you a careful, confident, and committed homebuyer.

Some prep work – Take necessary steps to get your financial house in order now that will be required later in the process:
  • Check your credit report to ensure the accuracy of the items reported on it.
  • Take necessary steps to improve your credit score.
  • Hold off on large credit purchases.
  • Save and set aside money for a down payment in a verifiable account.
  • Document your rental history for at least the last 12 months.
  • Organize documents needed for mortgage pre-approval (paystubs, W-2s, tax returns, bank statements, etc.).

Getting your financial house in order beforehand shows your seriousness towards buying a home to your real estate agent and mortgage lender.

Education – Before going shopping for a home, educate yourself thoroughly on each of the steps involved in a home-buying process:
  1. Find a real estate agent
  2. Get pre-approved for a mortgage
  3. Find a home
  4. Write an offer
  5. Inspect the house
  6. Negotiate repairs
  7. Shop for a loan
  8. Shop for homeowner’s insurance
  9. Sign papers

The more you educate yourself about the home-buying process beforehand, the less stressful it will be, and the more likely you will be to get the house you want for a price you can afford. To learn more about home-buying process, visit

Find a local real estate agent – A real estate agent can help make the home-buying experience a focused, organized, and efficient one. Among many other things, a real estate agent can:
  • Recommend a mortgage broker or lender for mortgage pre-approval.
  • Help crystallize the type, features, and location of the home you want to live in.
  • Facilitate your home search, schedule and accompany you on site visits, explain pros and cons of the homes you like, etc.
  • Help you write an offer and negotiate price, contingencies, terms, and repairs.
  • Coordinate with various parties involved in the transaction and handle all the paperwork.

It doesn’t cost the buyer anything to use a real estate agent – they’re compensated from the commission paid by the seller of the house.

Good luck, and we hope you find your dream home soon!

Selecting a Location for Your Next Home

Buying a home is a major life event. The decision about the location of your next home should not be taken lightly as it will impact your daily lifestyle, convenience, and financial well-being, for years to come. While a “perfect location” may mean different things to different people, the following are the most common factors most people consider while selecting a location for their next home:

  1. Lifestyle: The lifestyle of living in urban, suburban, or rural area, could not be more different from one another. Weigh in your likes and dislikes about each of these lifestyles to select a location that offers the type of lifestyle you and your family like to enjoy.
  2. Commute: Commute costs time and money, and causes displeasure and inconvenience. Select a location that is reasonably close to the places you frequent, such as work, friends and family, place of worship, gym, airport, favorite stores and restaurants, etc.
  3. School District: Generally, the higher the public school ranking,the higher the demand and price appreciation of the houses in the area, and vice versa. Also, the higher the public school ranking, the less severe the price decline during a housing slump, and vice versa. Choose the location of your next home in a better-ranked public school district to preserve the value of your investment. 
  4. Demographics: Just as the school district, the area demographics also play a significant role in the demand and price appreciation of the houses in the area. Learn about various demographics that are important to you on websites like City-data. Some of the area demographics most people care about while selecting their next home include racial and ethnic mix, median household income, percentage of adults with a college degree, gender ratio, average age, and the area crime rate.
  5. Amenities: Local area amenities, such as libraries, parks, recreation centers, playgrounds, hospitals, public transportation, nature walks, and trails, are very important to many buyers. Consider the amenities that a location offers when buying your next home, as they will increase the desirability of your home when you sell it.
  6. Taxes: Different municipalities and counties charge different types and amounts of local taxes to their residents. Some of the examples of such local taxes include sales tax, property tax, and local tax credits and exemptions. Factor in your decision the incremental amount of local taxes you will be paying to live in a particular area.

You may also want to consider other things such as historical home price trend in the area, current home inventory, recent sales and how long were they in the market, local city and county governance, and overall infrastructure in the area. 

 Once you have identified the area you want to live in, the next step is to find a real estate agent who is specialized in buying and selling homes in that area. Your local real estate agent will help you learn about various neighborhoods in the area fitting your home price budget and meeting your home needs. Select the neighborhood that is the closest fit to your lifestyle and personality – a place where you will feel comfortable and where you are likely to get along with your neighbors. Consider the HOA fees, neighborhood amenities, and association covenants, before finalizing the purchase.

5 Tips for Mortgage Shopping

Home mortgage is one of the biggest loans most individuals borrow during their lifetimes. Yet, most borrowers enter the process of obtaining a home mortgage without a solid game plan, which can potentially cost them thousands of dollars more every year in mortgage. Here are some of the useful tips to follow while shopping for a home mortgage: 

  1. Know what you can afford: Buying more than what you can afford can potentially ruin your financial well-being. Assess your earning potentials and calculate your monthly expenditures to make sure you will be able to pay your mortgage, taxes, insurance, maintenance, and utilities, as well as pay for emergencies, for several years. A conservative approach is to borrow 10% to 15% less than what you can afford. Mortgage calculators can help you determine the amount you can borrow based on factors such as, what monthly mortgage payment you can afford, type of loan best suited for your situation, your credit score, interest rate, etc. 
  2. Learn about various loan options you may qualify for: There are different types of mortgages (fixed rate mortgage, adjustable rate mortgage, hybrid, etc.), each with various options (20-year fixed, 5/1 ARM, convertible ARM, balloon payment, etc.) and features (early payment penalty, assumability, portability, etc.) offered as either conventional (non-government insured) or government-insured (FHA, VA, USDA, etc.) loans. Furthermore, they can be classified as a conforming loan or a jumbo loan, depending on the amount you need to borrow. Do your own research and/or work with your mortgage broker or lender to learn about various mortgages you may qualify for, and understand the pros and cons of each to select the one that is best suited for your situation. 
  3. Understand actual loan cost: Once you have determined the type of loan best suited for your needs, before embarking on a shopping tour, understand the actual cost of that loan. The actual loan cost includes not just the interest rate, but also various fees that may be associated with securing that loan. Some of the lender-related fees may include discount points, origination fee, application fee, credit report fee, private mortgage insurance, title insurance fee, appraisal fee, etc. Other fees may include homeowner insurance, title insurance, recording fee, attorney fee, survey fee, etc. Never hesitate to ask questions about all fees – why they are charged and how they are calculated.
  4. Shop around: With the knowledge acquired while going through the above three steps, now you are ready to go comparison-shopping for the type of mortgage you need. You can get a mortgage from mortgage lenders or mortgage brokers. You can either contact a bunch of different mortgage lenders and compare their interest rates and fees with one another to determine the least expensive one, or you can work with a mortgage broker who typically represents many mortgage lenders and therefore can do this comparison shopping for you. Think of mortgage brokers as your mortgage “personal shoppers”. Mortgage brokers also handle all the paperwork and coordinate with all the parties involved in a mortgage transaction.
  5. Know your rights: Fair lending is required by law. The Equal Credit Opportunity Act prohibits lenders from discriminating against credit applicants in any aspect of a credit transaction on the basis of race, color, religion, national origin, sex, marital status, age, whether all or part of the applicant’s income comes from a public assistance program, or whether the applicant has in good faith exercised a right under the Consumer Credit Protection Act. The Fair Housing Act prohibits discrimination in residential real estate transactions on the basis of race, color, religion, sex, handicap, familial status, or national origin. Under these laws, a consumer may  be refused a loan based on these characteristics, nor be charged more for a loan or offered less favorable terms based on such characteristics. 

Congratulations on finding your dream home and best of luck finding the best mortgage!

10 Questions Homebuyers Should Ask their Real Estate Agent

All buyer’s agents are not created equal. While they all do the same thing – helping buyers find their dream home – they are different when it comes to their amount of real estate experience, area focus, client service, availability, and professional education. Here are some of the questions homebuyers should ask a real estate agent to hire the right agent for their needs:

  1. Do you work full-time or part-time as a real estate agent? – Buying a home is a time-consuming process. It is important that your real estate agent is available to show you homes when it is convenient for you. Compared to a full-time agent, a part-time agent is likely to be less available, and perhaps even less committed, in helping you find your dream home.
  2. How long have you been a licensed real estate agent? – Home-buying is a multi-phase complex process with a series of steps involved in each phase. Having successfully gone through this process many times before, an experienced agent can ensure a smooth transaction in a timely manner. Ask the agent, and verify if possible, how many real estate transactions he/she has handled in the past 12 months? What value did he/she add in the process?
  3. How well do you know my chosen area? – An agent who is specialized in serving only certain areas is likely to be more knowledgeable about the neighborhoods and new developments in those areas, than the agent who is not. Agent’s area-focus can be valuable in finding a home in the right neighborhood at the right price. Ask the agent whether he/she specializes in your chosen area. How many buyers has he/she helped recently in buying homes in that area? What neighborhoods in that area are better for you, and why?
  4. Do you work on weekends? – You might be competing with hundreds of other potential homebuyers for the same house, especially in the seller’s market. Since many listings go in the FMLS on the weekends and open houses are usually held on Saturdays and Sundays, having an agent who is available on the weekends is crucial.
  5. Do you have other quality professionals that you can recommend to me? You will likely need to hire other professionals during the home-buying process, including a mortgage broker, home inspector, home appraiser, real estate attorney, and insurance professional. A quality agent is usually a member of a referral network of other quality professionals; as they know how one another work and what quality of service is to be expected.
  6. Can you give me references of your three most recent clients? – Good agents are always open to give client references. Talking to an agent’s past clients can give you an idea of what it might be like to work with the agent, what he/she does well, and areas where he/she might struggle.
  7. What is your ideal client profile? – Just as you prefer certain qualities in an agent, an agent also prefers certain characteristics in his/her clients, such as dweller vs. investor, cash buyer vs. mortgagee, first-time homebuyer vs. repeat buyer, etc. It is important that you and your agent are a good fit for each other, for the entire home-buying process to be a friendly, stress-free, and productive one.
  8. Why you? – Good agents are always ready to explain why they deserve your business. Let the agent sell you on his/her value propositions and tell you what sets him/her apart from the other agents. This will allow you to understand the agent’s strengths and expertise as he/she sees it, and consider them appropriately in your hiring decision.
  9. What professional real estate designation(s) and certification(s) do you hold? – Designations and certifications help define the special skills that an agent can apply to your particular real estate needs. The two most relevant real estate designations for the buyer’s agent are Certified Residential Specialist (CRS) and Accredited Buyer’s Representative (ABR).
  10. What do you expect from me? – An agent may have certain requirements to take you on as a client, such as requiring you to be pre-qualified or pre-approved for a mortgage, have a proof of down payment, sign a Buyer’s Broker Agreement, be available for home visits, etc. It is important that you understand and agree with all of the agent’s requirements before hiring him/her as your agent.

Buying a home may be one of the biggest financial decisions of your lifetime. Hire an experienced agent who is specialized in buying homes in your area of choice, and has great client references.