D- Driving Range: How first time home buyers can prepare for their first home

In ABC's of Real Estate, First-Time Buyers by Doug Phelps

For the novice golfer, it is recommended that at least a few trips to the driving range happen prior to trying to play 9 or 18 holes on the course.  The driving range helps players of all abilities practice swings, take out frustrations or just get used to alignment. Even seasoned golfer enjoy visiting the driving range just to practice technique or for the fun of it when playing a whole golf game is not possible due to time.  A driving range is meant to be a low pressure way for rookies to get better at basic technique and prepare for the game. If first time home buyers had a driving range, it might look like this:

Agent and broker research:

So many first time home buyers can be overwhelmed with industry terms, sticker shock and how to even begin the process of buying a home.  Ideally, a serious first time home buyer will find a reputable agent who they get along well with and find easy to communicate with or contact.  An agent will help a buyer through every step of the way and answer any question at any time. In fact, most real estate agents don’t typically keep normal business hours and many work weekends (though it may not be appropriate to call at 3am).  An agent will probably be able to recommend a good mortgage lender as well.

Build savings:

If you are preparing to buy your first home, it’s imperative that you have some savings for any and everything from downpayment (though some first time buyers don’t need to put money down, some still do and your agent can help talk you through what is best for you), fixes to the new house, closing costs and just general savings to show the mortgage broker than you are financially stable.  

Hold off on big purchases:

Not just first time buyers, but seasoned buyers make the mistake of making a big purchase while home shopping and this is a problem mainly because of the debt to income ratio.  Purchases like large family vacations, cars, new wardrobes, new furniture sets and even lending large amounts of money can throw the debt to income ratio off so it is best to save those purchases until after the ink has dried at the closing table.  

Mortgage is not rent:

Understand that a mortgage is not rent.  Many first time buyers get caught up in the sticker shock of buying a home and forget that a home build equity which builds wealth.  Buyers also get nervous that they may not be able to stay in their home long-term due to something like a move across the country and thus they may not want to buy.  If moving in a few years is a concern, let your agent know and he or she can help you decide if it would be a good option to buy now and then rent the home out for extra income.  

Understand your debt:

We now know that debt to income ratio plays a big factor in home financing, so if you haven’t looked at what debt you currently have, including car notes and student loans, it’s time to do so.  If you think you can pay some of your debt down before the home buying process starts then that is ideal. In fact, understanding your bills in general is a good thing to do at this stage.

Keep track of financially-related paperwork:  

To speed up the closing process, and to just understand how much money they can spend on a home, many buyers go through a pre-approval process which is when a mortgage lender first sees the financial situation of a potential buyer.  A mortgage lender may ask for bank statements, paystubs, tax documents, and/or investments so keep these handy because they will be needed at some point during the process.

When you’re ready to begin your home search, contact me at (720) 323-4176, I’d love the chance to help you in your home search! – Doug