So I guess my attempt at creating a blog is also an attempt to streamline “frequently asked questions” into a canonical resource, so that when friends and clients ask questions that I’ve heard before once or twice, I don’t have to re-invent the wheel. One of the questions I hear most often from my close friends, the majority of which will be first time home buyers, is “Where Do I Start?”
Unfortunately, most of these people have left the Charlottesville area after our fantastic college years, and are now looking to make purchases in New York, LA, DC, and the like- lots of different markets where I would never venture to represent someone!
My answer- the very first thing you need to do as a first time home buyer is get a Realtor! Shameless Realtor promotion it’s not- I just do not believe that the average first time home buyer is equipped with the information to go at it alone. The very worst thing you can do for yourself as a first time buyer is guess-timate the amount that you can afford on a house. This scenario often looks a lot like this;
- Assume the amount you can afford for a house.
- Do tons of research on everything in that price range.
- Memorize listings inside and out.
- Research neighborhoods inside and out.
- Choose the home you love.
- Find a Realtor to help you make sure you’ve seen everything and then to help you buy the one you’ve already chosen anyways.
- Be put in touch with a lender by way of your Realtor.
- Lender throws a wrench in your entire plan because s/he has to tell you that you can only afford $200,000 and not $250,000 and now everything in your price range is hugely disappointing compared to what you were shopping.
My advice: save yourself the time and the effort and hook up with a Realtor immediately. Your agent will not pester you. Be clear about your expectations; if you only want to be contacted by email, let them know. Your Realtor should be able to set you up in an automated search that will update you on properties in your market that meet your requirements, and it should save you the effort of going online to a home search aggregator that often will force you to look through many more listings than you’d like by not allowing you to narrow your search as precisely as you could.
Your agent will also recommend one or several local lenders to you, and unless you have a strong lending or banking relationship elsewhere I would recommend you use someone who they’ve had good experience with. In the current mortgage market, I would absolutely recommend a local lender, and do not think that your mother’s lender two states away who helped her finance your family home in 1994 is a great choice. Although there is a strong relationship there and probably several years of trust and reliability built in, it just isn’t the right choice for most people to go outside of their local lending sphere. More about this later.
You can share as much or as little financial information with your Realtor as you feel comfortable. I have had clients whose entire financial history I’ve been privy to and who have wanted to tell me about every last penny to make sure we weren’t forgetting any major funds and could get them approved for the highest mortgage possible since one of the pair had just gotten a major promotion and would be making much more money in the near future. I have also had clients who went to a lender I recommended, returned with a strong pre-qualification letter in hand, and who I rarely spoke to again about finances until we hit the closing table. The clients in the latter situation are usually the one who have done this more than once or twice, understand their financial limits, and don’t need several opinions on what they can afford- I am willing to help either group and point them to the advice they need.
You may have noticed that this entire post is made under the assumption that you have or can find a good Realtor and can trust their recommendations on who to use for the several different steps in the process; financing, the home inspection, home warranties, insurance, the closing company or attorney, etc. I will try to address that topic in the next post!