So you’re thinking about buying a home but don’t know where to start. For every person we hear this from, I suspect five others are feeling the same way. Below is what I’ll call an outline. These steps will give you an idea of where to start, but you’ll find as you go I’m guessing you may want more details. We can help you fill in the gaps later. For now, let’s start with the basics.
How to choose the right real estate agent? The short answer, and what most people do, is ask a friend you like/trust for a referral. There are certainly worse ways to choose an agent, and in the absence of taking (or having) the time to interview multiple agents, this isn’t the wrong way to go. I’ll deal with this in more depth at another time — for now, a good referral is the quickest/most accessible way to go.
Lending/Loan: I am going to assume you need a loan. You don’t want to start looking for a home until you know how much you can afford. So, you will need to choose a mortgage lender. Here is some advice and a few things to consider:
- Use a local lender. You have undoubtedly heard many ads from Quicken Loans and other national lenders. We know people who have had good experiences with them — but in our experience, you are more likely to have a smooth transaction with a local lender. If a national lender screws up your deal, it won’t affect their reputation; at least not in a way that would harm their business. If a local lender makes a mistake that creates a problem with a transaction, word will travel fast. The more errors a local lender makes, the fewer referrals they will receive. A national lender’s business comes from markets across the country. Because of this, one mistake, in a market they aren’t likely to work in again, won’t affect their business in the least.
- The interest rate should not be the only measure when it comes to making a final decision. A lender may have a lower interest rate, but much higher fees. And sometimes a higher rate will mean lower fees. This topic needs some more space to flesh out entirely, but for now, know that not all rates were created equal.
- Don’t stress too much about the lender you choose. Before the mortgage crisis of 2008, it was possible to make a very bad decision when it came to lending. After 2008/2009, the industry became so regulated that it is now (nearly) impossible to make a bad decision. Don’t get me wrong, the choice you make can affect your purchase, but it’s not likely to cripple you financially (which was possible before 2008).
There are many more steps and possible hurdles when it comes to buying a home — including:
- An obvious step is deciding what kind of house to buy. You may want a new home, or possibly an older one; you may want a property with some upside or prefer a home that needs little to no work.
- You will ultimately need to decide how much risk to take to get the home you want. You may choose to go “all-out” for one particular house, or, if it’s not perfect, the risk you take may be minimal.
- Once under contract, deciding what kinds of inspections to complete is another decision you’ll need to make. It could be that a general inspection is all you will need. Or additionally, you may decide to have the sewer line looked at, or you may need an electrician or plumber look at the electrical or plumbing systems.
You will make big decisions along the way, but you will also run across many smaller choices. If you’re working with a quality agent, they should be able to help you navigate the entire process. If you’re concerned about this, or want to take a more active role, let us know. We have many more resources to offer if you’re interested.