John Adams
If you are thinking about buying your first home, you have lots to learn and many decisions to make. Sometimes, it just seems overwhelming.
So it was good news to me when I received a copy of the First Time Home Buyers Guide from the folks at Quicken Loans. As I read through the chapters, I was impressed at the way the authors organized the many topics, and boiled them down to quick, basic topics for consideration.
In today’s column, I have condensed their booklet (even more) to give you an overview, and in the process, been able to convey their step-by-step process with some of my own suggestions interwoven.
Here is their road to the settlement table:
Home Buying 101 is the chapter detailing the business of buying a home. It points out that, for most folks, buying a home is the largest purchase you may ever make.
It also introduces readers to the concept of getting pre-approved for a loan as a buying tool and a “peace of mind” step. I agree with them that dealing with the loan application ahead of time is a smart first step, to be taken even before you begin looking at any houses.
The guide points out, correctly, that sellers today are looking for buyers who have already been through the loan approval process, and are prepared to act quickly when they find what they want.
This chapter also points out the importance of not wasting time looking at homes above your approvable loan level. Way too many prospective buyers spend weeks looking at houses, only to discover later that they are simply shopping over their heads.
Come to Class Prepared: Be a Smart Home Buyer covers topics from earnest money to offer negotiations, and touches on the topics of appraisal and title search.
If I have any complaint about this brochure, it is that they short change the role of the real estate attorney in the home buying process. It is my opinion that any offer to purchase or sell a home should be reviewed by your attorney.
Are You Currently Renting reviews the responsibilities of homeownership. This can be a particular shock if you are currently renting, as your landlord may now be covering expenses like repairs and maintenance. In some rentals, even your utilities are included.
Not so when you become the happy owner-occupant.
This chapter also covers the concept of equity buildup and loan discount points, both being topics you need to learn.
How Much Home Can You Afford details the relationship between down payment, loan amount, and monthly payments. The topic of PMI (private mortgage insurance) is touched on. But given that so many first-time buyers will utilize high loan-to value loans, the importance of PMI is almost overlooked.
A Real Estate Agent Can Guide You Home has suggestions on how you can benefit from working with a real estate professional.
Their five questions to ask any agent are especially helpful:
• How long have you worked in real estate?
• Is this your full-time job?
• Are you familiar with the area where I want to look?
• How many home sales did you participate in last year?
• Will you be present at the closing?
Each is a valid question you need to ask, but I would add one more: What professional designations or certifications have you achieved in the past 24 months?
That will give you insight as to the agent’s commitment to ongoing education and industry involvement. And I believe that to be very important in today’s world of real estate.
Additional chapters on house hunting, the importance of inspections, and insurance are each important but brief, in keeping with the overall nature of the brochure itself. It’s a short brochure, not a detailed encyclopedia.
As a first step at introducing the topic of searching for a home, this brochure lands on my recommended reading list. My advice is to ignore the chapter on Quicken’s In-House real estate agent service, and find an agent on your own. You should use the questions above during your interviews (that means more than one, please).
As always, when it comes to selecting your lender, it pays to shop and compare among several reputable sources. In my estimation, that can include Quicken Loans.
You can download a free copy of the Quicken First Time Buyers Guide along with additional helpful material at my Money99.com website.
