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Health & Fitness

First-Time Buyers - Prep Now for Spring!

Rising rents and low interest rates are a mix that motivate many to choose home ownership over renting.  If you’re looking to purchase your first home and want to jump into the spring 2014 market, we recommend using these quiet winter months to your advantage!  We all know how competitive our local housing market can be, especially in the spring.  Luckily, with a targeted action plan, you can set yourself up now to be in the best possible position as a buyer.  Come spring, you’ll be a step ahead of your competition and can move quickly to make a successful offer.

So what should you do right now?

- DEFINE WHAT YOU WANT – Make a list of what you want AND what you need in a home.  Further define which  items are non-negotiable and which are areas of possible compromise.  If you’re part of a couple, have an open and honest conversation.  Understand your partner’s priorities because they can sometimes differ from yours.  To set everyone’s expectations, do some online research on Zillow, Trulia, and Realtor.com to see what types of homes and amenities are available where you’re hoping to live.

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- REVIEW YOUR FINANCES -  Ideally, you’ve been setting aside funds for this purchase. Remember you’ll need both a down payment and cash for closing costs.  Check your credit score.  The best interest rates and terms go to those with the best credit.  If there are any flags on your credit report that you can fix, take care of these now!  You won’t want surprises later that could make you lose the home you want.  Next, determine what you can really afford.  Start with the monthly rent you’re paying now and work backward to see what price home you can buy given your down payment, current interest rates and your comfort with a monthly payment.  Using an affordability calculator is helpful.  Try to be realistic.  Fannie Mae recommends you spend no more than 28% of your income on housing costs otherwise you risk becoming “house poor.”  Remember that ownership comes with maintenance, taxes and other expenses that renting does not….and you’ll need to be financially ready for these realities.

-GET  PRE-APPROVED FOR A LOAN – Once you have an idea of your price range, take steps to get pre-approved.  Pre approval differs from pre-qualification and requires you to complete a full loan application and supply supporting financial documentation.  Gathering and organizing all your financial papers now is a worthwhile exercise and makes securing the actual mortgage that much easier.  Your total financial picture will determine how much someone will to lend to you.  Once this exercise is done the lender will provide you with a pre-approval letter to give sellers with your offer, outlining your financial strength.  Although not a final loan commitment, a pre-approved buyer is far more attractive as it shows your financial ability to secure a loan for the needed amount.  It may mean the difference between closing the deal or losing out to someone else!  To get pre-approved, you can contact a bank, a mortgage broker or mortgage company.  Be sure to ask about loan programs for first time buyers as there are many special programs that could work to your advantage.

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-FIND A REALTOR YOU TRUST – Research the real estate agencies covering the geographical area where you want to buy.  Peruse ads and notice who locals use when listing their homes.  Finding a local realtor who specializes in your desired location is a huge advantage.  An agent with a proven track record of successfully closing transactions means you will have all that expertise, knowledge and experience on your side.  Since it’s your first time buying, you’ll need their guidance during the negotiation process and closing period. Your realtor should earn your trust as a businessperson but also should be someone you can connect with on a personal level.  Buying a home is a very personal process – not just a financial transaction.  A good realtor understands all the emotions and desires that go into finding a place to call home – and they’ll want to guide you to the one that’s right for you on all fronts.  Interview a few realtors before settling on someone with whom you can build this important relationship!

Once you’ve got your home goals defined, your finances in order, your pre-approval secured and your realtor on your team, you’ll be ready to hit the spring open houses!  We hope to see you there!

Mendosa-Balboni & Associates, www.mendosabalboni.com

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