first time home buyer – owner loan

Jason Bacot asked:


If you’re a first time home buyer and your wallet is not overflowing, the first thing you need to do is get yourself pre-approved by a lender. Assuming they decide you’re of good character and there’s a pretty good chance you’ll choose to pay their monthly stipend, they’ll tell you what the maximum is that they will lend you, so now you have a figure with which to work.

The easy part is to figure how many bedrooms and bathrooms you want. Find out the amount of square footage you’re living in now. Decide if that’s less than or more than you need to feel comfortable and then begin your search.

Feed your search engine with these facts, i.e. 2 bedrooms, 2 bathrooms, minimum 1200 square feet and your maximum listing price and see what pops up. Don’t forget to add to your monthly expenses the estimated property tax – take the annual amount of property tax, divide by 12 and that’s your monthly addition to your budget.

If the property you’re considering has an association – condo or HOA – there are also going to be common charges. See what they are and how often they’re assessed – usually monthly or quarterly. If it’s quarterly, divide by 3 and that’s your monthly amount. You’re probably going to need homeowner’s insurance. Usually the lender insists on it, to protect their investment in your property.

Make a couple of calls to find out what the approximate charge will be and divide that into a monthly amount. Then there are your utilities – electric, telephone, cable, water, sewer. If there’s a homeowner’s association, some of these are probably included. Find out.

Once you’re armed with these figures and you’ve decided how much of your earnings you want to give away in order to move from under that bridge or out of Mom and Dad’s or from that rental apartment that you thought was so terrific when you first moved into it, it’s time to start house hunting. And that’s the fun part!

If you haven’t done your homework, you’ll be wasting your time and your realtor’s time looking at properties that will not work for you. Give your realtor the maximum amount of information that you can. Talk about communities that appeal to you. Talk about driving time to work.

Talk about pets, your vehicles, child friendly communities or not, how important security is to you, i.e. gated communities, your need to be near public transportation or close to beaches. There’s a long list that belongs exclusively to you that makes up your wish list. Communicate well and save time. Be prepared to compromise on some of those wishes. Decide if you want a renovated property or a fixer upper or anywhere in between.

It’s my opinion that unless you have experience renovating, whatever the budget you create, it’s probably going to cost around double that number. It’s also my experience that if you’re inexperienced, it will be cheaper and easier in the long run to pay more for that renovated property instead of doing it yourself. It’s also my experience that most people don’t listen to advice and do what they want. And then live to regret their decisions.

Once you’ve seen 3 properties, it’s time to have a talk with your realtor. Is the space too small? Are you changing your mind about your needs? Or are you on the right track and just need to find the right one. Most people walk in the front door and know immediately if this is the one. Something talks to them, first saying no, no, no and then yes, I love it!

If you’re moving because you require more space, i.e. another bedroom, a larger home, a bigger kitchen, then you know what you’re looking for. And a lot of people like to stay in the same community and just move up one level. But you need to do your homework with a Lender and calculate your expenses so you’ll have that listing/selling price figured out.

Unless you have nerves of steel and can afford to carry two properties at the same time, I advise you to sell your home first and then start looking. No sense shopping for the new home till the old one is sold. That’s not to say that you can’t shop Open Houses and check out model homes. That’s a good Sunday afternoon expedition to educate yourself. It solidifies your needs and wants too. But don’t waste your time or your realtor’s time till you’re really ready.

Now for you folks who are about to buy a vacation home in the sun, it’s time to have a reality check about how much space you need or want. I always tell people that if they have a Fla in their mailing address, the people will come. And if you have children or grandchildren, they’ll come for sure – and probably bring friends for company!

So how many bedrooms do you really need? Bearing in mind that if there are children involved, Christmas, Easter, spring break, etc. are the times they’ll be able to visit. They’ll all want to come south at the same times. Unless you don’t care about creating a dormitory in your living room, it’ll be a lot easier to have enough bedrooms to accommodate your family comfortably. And save you moving twice.

So that’s my advice for choosing a home that suits your needs. Happy House Hunting!!



Sandra