There are many emotions associated with the acquisition of an expensive item. Though we rarely regard it as simply an “item” your home is most likely the most expensive acquisition you’ll ever make. There are many upsides to purchasing a home whether it’s your first or tenth. We’ll review those in this article and hopefully you’ll finish your reading having obtained more knowledge which is the power to overcome anxiety, fear and trepidation often associated with a home purchase.
Firstly, at the risk of sounding flagrantly rude, forget what you think you know about real estate purchasing. There are going to be a minimum of 3 professionals to help or hinder you. Learn what the jobs of these 3 people are and you’ll enjoy the trip much better!
Mortgage Professional – most people call this person as a side note. Generally people call a real estate agent first. Hmmmm, why would this be the wrong order? Simple, if you can’t afford it don’t waste your time looking at it. A trained and seasoned mortgage professional like those at Novation Mortgage will spend plenty of time with you helping you understand the basics of real estate finance. While it’s impossible to compact 5 to 10 years or more of mortgage experience into a 30 minute consultation your loan professional will do their best to understand your desires and address the parts of the industry which most apply to your situation.
The average loan professional at Novation Mortgage has been a part of at least 50 or more real estate closings just in the last 12 months. Most real estate agents have been a part of less than 1 per month. So it’s simple to see who has a vastly greater experience and knowledge of the financing of real estate. However …
Real Estate Agent (or broker) – is the second person you need to contact. Do NOT attempt to make a home purchase on your own. Even if your parents have bought and sold 15 houses in the last 20 years they do not have at their disposal the tools and knowledge base available to a professional real estate agent. I do urge you to choose an agent who has been in the business for at least 5 years and has sold at least 50 homes but even if you don’t and you do choose an agent who is new or part time and they have the understanding that we know more about real estate financing than the owner of their company we’ll do just fine and get along famously. I love real estate agents, my baby sister has been an agent and broker for over 30 years!
Your agent has a lot of responsibility beginning with finding the property which most fits your needs and budget. That’s why we work together first to set your budget. Your agent will be “making the offer” on your behalf using the number YOU pick as an offer amount. Your agent also has responsibilities which are outside the capabilities of the average friend or relative such as being able to find the history on the home, subdivision, area, etc. And finding the amount of taxes for your property and even getting any special disclosures on the property.
Things that are not and need not be your agents responsibility or task starts with scheduling the closing date (a very backwards thought of the real estate industry) since they have absolutely no control over when the lender will be ready to cut the check (the lender is actually buying your home and you’re just paying them back), selecting an appraiser (in fact recently most lenders require you to use an approved appraiser) and never ever speaking to the loan office on your behalf. It’s your money and those payments could last up to 40 years!
Real Estate Appraiser – never tell the appraiser what you’d like to see the value on the home be. Let them tell you what it actually is. Appraisers may bring in a value lower than the asking price at which time it is the responsibility of your agent to renegotiate the contract (hopefully they did the right thing and made the offer subject to appraisal so you can get your earnest money back)! If you want the house really badly and the appraiser brings it in at a lower price and the seller won’t budge: you ain’t buying and they ain’t selling!
Everyone has a different set of psychological factors which result in different emotions relative to the same subject. In this article the subject is the psychological factors related to the acquisition of your first home.
Let’s examine why you may be in the market for a new home. While this list is not exhaustive it most likely includes points relevant to your situation.
1. Getting Married
2. Having a Child
3. Tired of Paying Rent
4. Getting a Divorce
5. Forced by Disaster
6. Discovered the Value of Ownership
7. Inherited Some Money
8. Building a Retirement Plan
Just look at that list. Do you see anything there which would not have its own load of stress? You may think that inheriting money would not have much associated stress but it can and usually does. It presents a whole new set of challenges with which the recipient is unfamiliar. Unfamiliarity inherently causes fear. Fear is overcome by knowledge and experience.
That’s where we come in. We have knowledge and experience in working with new home buyers in almost every situation. We can really take a load from any new home buyer by sharing this article with them so they’ll have some idea of what to expect!
Regardless of the reason behind your drive to make this new acquisition the steps to finalize are ultimately the same. You’ll need to first locate the property which holds your
interest, you’ll need to make an offer, you’ll need to satisfy the offer (pay for the acquisition) either with your own money or someone elses, you’ll visit an attorney’s office and then you’ll get your keys and can move in. At least that’s the general idea. But let’s start from the top.
Chances are it’s too late for you to follow our first steps and almost every first time (and seasoned) home buyer do things in the wrong order – so don’t sweat it if you did.
But here is the correct order of events for every home purchase using someone else’s money whether it is your first, your third or your one hundredth.
Be Sure of Your Motivating Factors
Why are you making this acquisition? What special purpose will this acquisition serve? What is it about buying a home that you need to consider?
Don’t just ponder these questions in your mind … write them down with your detailed answers! That first question is very important. If you don’t know why you’re doing this you have no purpose and an event without purpose is difficult to control. I have long said to my children, “Control your life or life will control you.”
Entering into a major event like the acquisition of a home without knowing why you’re doing so is asking for trouble. You want negative emotional factors? Try buying a home “just because”. Chances are your reason is one of the eight listed above or at least similar to one of those reasons. Let’s take a brief glimpse at some of the possible stress factors related to each of the above events. You should be able to identify your own stress factors but these will help you get started. Again, as you identify your stress factors write them down in detail.
Getting Married – certainly has stress. Men handle stress differently than women in almost every situation and perhaps none is more punctuated than how differently men and women deal with the wedding and the prospect of marital bliss. Men are generally quiet and feel uninvolved in the wedding process and so leave it to “the woman”. Nothing could be more dangerous because in a man’s mind he’s already assuming that he knows nothing about weddings, it’s girl stuff and no matter what he does someone is going to change it.
Meanwhile the poor fellow is either taking this step very seriously and being rightfully concerned about how to be the proper man of the house or he’s obliterous and carefree leaving everything to “the woman” to make it all right. Either way he’s about to experience one of the most major reconstructions of his life since birth.
Ladies have their stress for sure. Some of it is manifested in the wedding planning phase which may be a good diversion for them but underneath they are concerned about the
changes soon to come to their lives as well. Will he be okay once we get married? How will he change? How will I change? When will we have children? What if one of us gets transferred? Oh my gosh! We don’t have a home yet!
There ya go. That’s about enough stress for me just writing the words and I’ve already been through these things. That’s why we’re here to help and hopefully you’re reading this long before your wedding date. If not be cool, help is on the way.
Having a Child – is certainly a special and privileged event. It is usually the time where a man an woman are focused intently on the same thing with many of the same emotions.
Don’t get me wrong, the lady is certainly going to experience child birth in ways far beyond that of the man but in love and confusion, fear and hope I believe most men and women are on the same page even if the woman understands the words on that page to a much greater degree!
It’s likely the uncertainty that causes the most stress when dealing with giving life to a child. Will it be a boy or girl? Will he be healthy? Will she have brown eyes? How
much hair will he have when he is born? Will I be afraid to hold her?
And the lady immediately thinks: Nursery. I want the best baby room ever! I want white walls with yellow trim and little dancing elephants ….. wait. We live in an apartment!
Honeeeeeee…!!!!!
Tired of Paying Rent – happens to almost everyone who ever rents. Some people like to rent because it means less responsibility. There is usually no upkeep to the property and rarely upkeep to the landscaping unless you are renting a private residence. Less responsibility means less stress and I fear there are many renters simply not making the short step to ownership solely because of the fear of this responsibility. Hint: it’s not that much stress and the payoff is large.
I remember when I got tired of paying rent. It became a point of great contention. I did what any red blooded young man would do … I moved. To another place where I was still paying rent. Duh!
Realizing that you are “pouring money down the drain” can have a very exhaustive effect on your psyche. It really gets you every time you have to write that rent check. Well,
there is hope. Keep reading!
Getting A Divorce – is a celebration for a very few. Even for them it’s usually only one sided. Somebody has to get a new home. I’ve dealt with quite a few recently divorced buyers and I do my best to make it smooth and simple. Generally recently divorced buyers are going to have to provide more documentation to the lender than the “average” buyer.
Firstly they’ll have to show their divorce decree to show how the previously owned property was divided and who owes what. There’s an uh-oh that comes with almost every divorce:
Just because the judge says your ex is totally responsible for any previous debt does not, in the loan holder’s view, relieve you from your duties of repaying it. If your name is on the loan you are still responsible for the timely repayment of that loan. The judges DOES NOT have any authority over the lender – if your ex doesn’t pay and on time it WILL affect your credit and your ability to borrow in the future.
Forced By Disaster – when I started penning this article some months ago New Orleans had yet to be devastated. With hundreds of thousands of people displaced we’re all, at least in the SouthEast, seeing the impact and what it’s like to be forced to move because of disaster. There is no way to completely understand the stress of moving because of the loss of a home. Needless to say this is a very emotional time and I would not want to be in your shoes if this is you.
Discovered The Value of Home Ownership – Hello! If you’ve just now discovered the benefits and powers of home ownership (property ownership in general) I’m proud of you.
Hopefully you’re still a teenager but, if not, welcome aboard! Now you’re about to discover a whole new world. Just do yourself a big favor and don’t pretend you know what you’re doing. Even if you have a clue that’s about all you have. What you really need to do is interview the professionals you’re going to choose to help you along the way.
Don’t select a real estate agent just because it’s your friend’s sister. Select an agent who has at least 5 years of experience. Chances are they’ve bought at least five homes in that time period for their clients – but ask them how many closings they’ve had where they were representing the buyer – 100 or more would be best. Chose a loan specialist who has been in the business for at least 2 years. If they work for me this means they’ve done at least 100 closings so they are well experienced. Don’t be afraid to ask!
Inhereted Some Money – I believe there is no greater investment than real estate. What you probably don’t want to do, unless you inhereted millions, is use all of your available cash to make the purchases. What you will want to do is use cash for down payments and repairs. You’re in a very good position if this is you and you’ve inhereted at least a few thousand dollars.
Building A Retirement Plan – Thinking ahead is great. Investing in real estate can bring a very solid future and allow you to continue the lifestyle you’ve been used to. You may even be able to give yourself a raise. Do what? How will it affect your medicare? Come ON! You want to live as a slave to a government funded (my taxes) retirement and medical plan or do you want to be able to go where you want to go and do what you want to do? If you’re under 50 and plan on retiring at 62 you can still build yourself a great retirement plan.
Special Considerations For First Time Home Owners
Chances are you’ve never purchased an entire house full of window treatments. Maybe you’ve never purchased your own furniture. You’ve almost certainly never been responsible for the acquisition and maintenance of major appliances like a refrigerator. Don’t panic but these are important considerations for buying your first home. (Although you will be allowed to panic momentarily when you realize just how much your drapes are going to cost!)
Maintenance costs will obviously be greater on older homes, larger homes, special construction homes, homes built on or near the water, etc.
END PART ONE
(c)2006 Ken Cook. All rights reserved. Permission to reprint this article is granted with the following limitations: The article must not be edited except for spelling. This copyright must be included immediately following the article as it appears here. This article may not be included in any materials commercially available for sale or where any fee is charged even for other materials without prior written consent.
Ken Cook – Nationwide Specialist – Information/Marketing – FHA Home Loans
678-439-8683
— admin