Expert Eye: Are you fed up paying rent every year?

Expert EyePooja Shah

If you are a first-time buyer, the mere thought of securing a mortgage may be overwhelming.

For most people, a home is the largest purchase they will make, and very few can take on this purchase without a loan.

Here are some helpful tips and best practices for first-time home buyers:

The good news is that we are in a cycle where the tables have turned and it is a buyer’s market.

Purchasing a home in a buyer’s market presents you with great opportunities to find the right home at the right price.

Along with this opportunity though comes a different set of potential challenges.

With a greater number of homes in the market and bargaining power in your hands, you are faced with numerous choices and the temptation to negotiate on just about everything.

To make the process easier, focus and narrow your search based on your needs, wants and affordability.

And when you find the right home, focus on which concessions are really critical to helping you meet your goals and needs.

However, before all that, you need to first focus on your finances and that means pre-approval from a preferred bank.

Down payment

Most mortgage lenders require a cash down payment of 25% of the sale price.

Buyers today may find it difficult to save for a large down payment, especially young adults saddled with substantial car loans and credit card debts, although most local banks help out in terms of personal loans and most developers have worked out schemes where one can move in and pay three years after.

See Mortgage options for budget properties here

Home improvement costs and household expenses

With today’s wide inventory of affordable homes for first-time buyers, many buyers will find themselves settling on a home that requires no renovations or upgrades.

For buyers who have not lived on their own or for those who previously rented, the added costs of running a household can be a shock. Monthly costs for utilities, homeowners association fees, cable and Internet can add up quickly.

Factoring these expenses in at the beginning of the mortgage financing process can help borrowers better assess their overall budget and realistic monthly mortgage payments.

Mortgage options

We know that the best mortgage experience for buyers occurs when they have an open and ongoing communication with their lender.

Finding a lender and discussing financial needs and budget should be the very first step a buyer takes in the home-buying process, even before finding a realtor.

The common setback is that saving for a down payment is a barrier to homeownership for many first-time buyers.

That’s why, it is important to find a lender that helps buyers understand what they can afford and share what financing options are available.

Today, mortgages are not “one-size fits all.” To find the option that best fitstheir needs, buyers should discuss their financial situation with the lender they trust.

Be clear as to what suits best for you

Take advantage of sitting one-on-one with your mortgage broker and understand what is offered by local financial institutions.

Following that, you will be able to share information on the criteria lenders use to evaluate a borrower, the documentation buyers need to provide, what each portion of a mortgage payment goes toward, and the mortgage team that processes and approves the loan.

Hope this break-up works as a useful tool and provides a valuable background for borrowers who are daunted or are overwhelmed by the process.

Source: Pooja Shah, Director, Greenshouse Real Estate, Special to Freehold


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