Owning your own home is the ultimate expression of the American dream, and with interest rates at historic lows it appears to be a good time to buy. While 2020 has already been a trying year for many industries and businesses, the local real estate market has been brisk in the aftermath of COVID-19. Buyers are taking advantage of low interest rates and homes are selling.
But before you start dreaming about spacious kitchens and walk-in closets, it’s important to understand the details. There’s a lot to buying a house, and at the end of the day you’ll want to make a sound purchase that fits your budget, builds equity, and fulfills your needs.
A good place to start is by sitting down with a licensed realtor who has experience in the location in which you hope to buy. “A real estate broker will help you chart the course of home buying from start to finish,” says veteran broker Gaye Landry, owner of Landry Team Real Estate in St. Francisville.
“Start by researching the areas and communities that you like. Consider factors such as public schools, neighborhood amenities, and property restrictions,” says Gaye. “Don’t be afraid to interview realtors until you find one who understands your needs and who you feel comfortable working with, as it could turn into a long-term relationship.”
Your realtor is like a symphony conductor, says Gaye. She or he orchestrates the process of buying a home by coordinating all the different components necessary to becoming a property owner. These include recommending a lender, showing you properties that fit within your price range, and negotiating a sale price that works for you and the seller. Additionally, your realtor will coordinate with an inspector, appraiser, insurer, and closing attorney, and finally, walk you through the closing process, explains Gaye.
“The first step is to select a lender so that you can understand exactly what you can afford,” says Gaye. You and your lender can determine how much you can reasonably shoulder in a monthly note, which will include the cost of the house plus homeowners’ insurance, property taxes, and sometimes mortgage insurance. Your lender will provide a Lending Estimate document detailing these costs. You will also want to consider how much cash you are willing to put down on a down payment, and how much you’ll need on reserve for closing costs or property improvements.
“Getting with that lender is such an important factor, because then you and your realtor will know what price range you need to be shopping in,” says Gaye. “It’s really disappointing to shop in one price range only to discover that you can’t really afford it.”
Your lender will also review your credit, which is an essential factor in borrowing and securing the best lending terms. The better your credit, the better your interest rate. Saving as little as a half percent lower on your interest rate will save you a little money each month, and a lot over the life of the loan.
If your credit score needs some work, your lender will also guide you toward strategies that can help to improve it, including reducing personal debt and paying bills on time.
Once your financing is in place, and you’re confident about your realtor, it’s time for the fun part – looking at houses. It might take some time to find the perfect property, but once you do, you’ll be just a few steps away from home sweet home.
Click HERE to access a helpful home loan toolkit from the Consumer Financial Protection Bureau. To make an appointment with a BSF loan officer or to learn more about buying your dream home, click HERE or call 225-635-6397.