Tips for First-Time Homebuyers

When it comes to buying your first home, the process can be a bit intimidating. Aside from getting your credit inline and pinpointing an area to focus on as you search for homes, there are other ways you should prepare for your first home buying experience.

Tips for Buying Your First Home

Here are a few tips to help you get started down the path of home buying success:

  • Understand How Much Home You Can Afford: There is more that goes into owning a home than simply a monthly mortgage payment. You’ll want to make sure you can easily cover everything from taxes and insurance to repairs. Try using a mortgage calculator to determine exactly how much home you can afford while still leaving enough money for savings and the rest of your household budget.
  • Connect with a Real Estate Agent: While it might be tempting to try it on your own, enlisting the services of a real estate agent is invaluable, whether it’s your first or fifteenth home purchase. Your real estate agent will be able to provide you insider information about neighborhoods and market trends. In addition to guiding you through the home buying process, they will also serve as your advocate and handle the negotiations and legal requirements along the way.
  • Do Your Homework: Before putting in an offer on your first home, check out the neighborhood thoroughly. Your DeSoto County realtor will be able to provide you with comps of other houses in the area that have sold, along with community stats like crime rates and household demographics. You might want to do a bit of research yourself too. Drive by the house at night and on the weekends to see what the neighborhood is really like. If you’re not familiar with the area, spend a weekend in a local hotel so you can experience the area first-hand.
  • Cover Your Basis: When putting in your offer, consult with your real estate agent. She will guide you through the process and point out potential issues and red flags that might need to be addressed. Together, you can work to develop an offer on your first home that is worthwhile for the seller, but will also protect you as the buyer, with contingencies that will allow you the ability to back out of the deal should something unexpected be discovered along the way.

My Commitment to Your First Home Purchase

As your Realtor, I am committed to being available to you and providing you with exceptional service throughout your real estate transaction with an unmatched level of sincerity and integrity. It’s my goal to earn your trust and build a relationship with you so that together we can achieve your goals and get you to the next chapter in your life.

I would love the opportunity to talk with you and answer any questions you may have about the purchasing process.  You can contact me here or just give me a call at 901-496-4565.

Ready to search for your new home?

Red Flags When Buying a Home

Before you put in an offer on a new home, there are a handful of red flags you’ll want to look for with your realtor. Bad neighborhoods aren’t always easy to spot, so do a bit of digging first. If you see any of these red flags, you should stop and ask some questions.

Home Buying Red Flags

Too Many Houses on the Market: Now, I’m not saying that there is anything wrong with a few listed houses on the same street. However, if you see more than just a couple throughout the neighborhood, it might be wise to find out why so many homeowners are wanting to leave the neighborhood all at once.

An overwhelming number of houses that are up for sale in the same neighborhood at the same time could be a sign that the local market is on the downturn.

Empty Storefronts and Commercial Buildings: While you might not be interested in living in an area with a hopping night-life, you still want to be in an area that has a thriving and sustainable economy.

If you find the area has a high number of empty stores and commercial buildings, that is a sign that the area isn’t doing well financially. If the local homeowners can’t afford to go out and support the local businesses, then odds are they aren’t able to handle the upkeep of their houses either.

Low School Enrollment Numbers: Even if you don’t have a school age child, this is a statistic you’ll want to look at because it’s an indicator about the type of neighborhood you’re moving into.

School districts with a healthy enrollment, like those in DeSoto County, will have a steady enrollment rate and not a declining one. Declining numbers mean families aren’t buying in the area, which could make it hard for you to sell your home later or bring down the market value of the home you looking to purchase in the area.

No Parking….Anywhere: If you’re looking at a home with a one-car garage or garage-port, you’ll need to ensure there is still a place for your spouse or friends and family to park when they come over.

If the street has a high traffic volume, parking on the street could be a chore. Not to mention, it potentially puts the parked car in harm’s way. Make sure there are plenty of safe areas close to your house for parking.

Get Home Buying Help

If you’re ready to begin the search for a new home, contact me today. I’ll guide you through the entire process and will make sure you’re home choice doesn’t raise any red flags.

Short Sale 101 for Buyers

Short Sale Homes

Whether you’re an investor or a prospective home buyer, you’ve probably heard the team “short sale” but just might not be that familiar with the process. Before you ask, no, short sale doesn’t mean the process will be faster or shorter.

To help you get your footing on the subject, let’s take a few minutes to get you up-to-speed on the term and what all the short sale process encompasses.

In a nutshell, a short sale means that a home is sold for less than the outstanding mortgage. Simply put, the seller will end up ‘short’ on paying back the lender; however, the lender has agreed to accept the lesser amount owed.

While not the norm, short sales aren’t totally uncommon or unheard of in today’s marketing. In fact, according to RealtyTrac, about 5 percent of all US single-family home and condo sales are short sales.

Typically a short sale will arise if the homeowners are experiencing financial issues that make it impossible for them to pay their mortgage. In order to avoid foreclosure, they are needing to sell their home; however, they are finding it difficult to sell their home at a price that would cover their current outstanding mortgage.

Buyer Benefits of a Short Sale Purchase

A short sale property can be a bargain for potential home buyers or investors, but it will require a bit of extra work and can take 90 to 120 days. If you’re looking at a short sale property, be prepared to jump through additional hoops. Because of the extra pressure and requirements, short sales aren’t typically recommended for first-time home buyers.

Why extra hoops and a longer timeframe? Lenders, while in agreement to the short sale process, will be covering the closing costs a home seller usually sells. As such, they will often counter with their own demands in an effort to raise their bottom line. Dealing with a lender can extend the overall process timeframe.

The Difference Between Foreclosure and Short Sale

People often confuse foreclosures with short sales, and while they share some similarities in that both typically happen to homeowners in distress, the process and consequences are very different.

One difference is that a foreclosure is typically a faster process as lenders are eager to recoup the costs they are currently incurring on the property via way of unpaid mortgage payments and house upkeep. For one, foreclosures typically happen very quickly, since lenders are eager to recoup the costs incurred by the unpaid mortgage.

Secondly, a foreclosure will negatively impact an individual’s credit score by appearing as derogatory markings on their credit report. Because of this, individuals with a foreclosure on their credit report will often find they are not likely to qualify for another mortgage for at least five years.

While selling a home as a short sale is hardly ideal, many experts argue it’s smarter than pursuing more drastic measures like foreclosing on a house.

Should I Buy a Foreclosure Home?

While foreclosures can also be bargains, buyers should know that a foreclosure also comes with a lot more risk than a short sale. One of the biggest risks is that foreclosures are often sold at auction at a courthouse, sight unseen. Buyers will inherit all liens and any issues tied to the property.

When done right, a short sale is a better option for both the buyer and the sell.

Wondering about selling your home via the short sale process or interested in touring a short sale property you’ve seen on the market? Contact me today!

What Happens When You Go Into Escrow?

When it comes to buying a home, some of the terms and steps within the process can be a little confusing. Case and point — escrow.

Let’s jump in and break down exactly what “escrow” means and how it applies to you during the home buying process.

Going Into Escrow

The definition of an escrow is that it’s a financial arrangement whereby a third party holds funds in safekeeping pending the completion of a contract or other obligation.

Typically a homebuyer will enter into escrow after agreeing with the seller on a final price for the home they are purchasing. Both the seller and homebuyer will sign an agreement that declares the agreed upon price and then, that agreement will be given to the Escrow Officer or the escrow company.

The escrow company is responsible to for keeping the earnest money, or the “good faith deposit” of the homebuyer, and the money from the lender safe throughout the process until the transaction is completed during closing. As part of the closing process, the escrow officer will handle transfer of the property and the release the funds being held to complete the process.

What’s the Point of Escrow?

The short answer for why escrow takes place as part of the home buying/selling process is that it creates a way to keep the monies involved in the real estate transaction safe. As a neutral third-party to the transaction, the money will remain safe and secure until it is needed.

With the exception of the earnest money, the buyer won’t put down any additional money at the start of escrow. The money received is typically deposited by the escrow company into a trust until it is needed.

During escrow, things can pop up that might impact the transaction such as the buyer’s loan financing might fall through or the two parties might not be able to resolve a disagreement during the home inspection process.

Essentially, escrow let’s both the seller and the buyer know, without worry, that the money to complete the transaction is available and will be ready once the process is completed or the transaction is terminated (due to issues that cannot be resolved). It protects both parties while giving them both peace of mind.

Steps of Escrow Process

You should check with your realtor to be sure as the actual steps can vary by state, but the escrow process generally follows the steps below:

  1. Mutual Acceptance – the buyer and seller agree on the price and sign the initial contract
  2. Contracts Sent– both the buyer and seller send copies of the signed contracts over to the escrow officer who will compare them and ensure they match
  3. Escrow Opened – during this phase there are three things that will occur:
    • the escrow and title are opened
    • the escrow officer will request the seller’s mortgage payoff information and verify that there are no outstanding HOA dues
    • the escrow officer will reach out to the buyer’s lender and loop them into the process
  4. Identity Verification – the escrow officer will request affidavits to confirm the identities of the buyers and sellers
  5. 30-Day Wait – during this phase, the escrow company waits while the house goes through the inspection and appraisal process and the lender works through the underwriting process
  6. Closing Preparation – the escrow company will prepare the necessary closing documents and schedule the appointments for closing
  7. Closing – both the buyers and sellers will sign the required paperwork to make the deal official and then the escrow company will send the documents to be recorded with the county

Hidden Cost Surprises for First-time Homebuyers

first time homebuyerYou’ve found the perfect home in a great neighborhood that fits your budget!  Congratulations…you’re on your way towards becoming a first-time homebuyer!

Many first-time homebuyers are surprised to find out about the additional, and often unexpected costs, that go with purchasing a home.

But don’t despair or panic just yet because this is where your DeSoto County Realtor comes in!  Together we will discuss the entire process and create a plan so you will be ready and won’t be caught off guard.

First-time Homebuyer Costs

When it comes to purchasing a home, most first-time homebuyers are prepared for the down payment, home owner’s insurance, and various closing costs (like the appraisal and lender fees).  However, there are a handful of other costs they aren’t prepared for.

While it will be hard to prepare for every possibility, you can for most.  So, as you’re putting your home purchase budget together, allocate funds for these potential unexpected costs:

  • Appliances – The current homeowners may take some or all of the appliances with them or the appliances might be on their last leg and will need to be replaced immediately.  Make sure you allow wiggle room in your budget for appliance replacement —- specifically we’re talking about the refrigerator, dishwasher, oven, and washer and dryer.
  • Inspector Finds – You’ll have an inspector tour your potential home well before you sign the papers, so pay close attention to what he finds and the suggestions he makes.  If he finds larger issues, like bad electrical wiring or a weak foundation, think hard about how you will handle these issues down the road if you purchase the house in its current condition.  And double check with your Realtor and Insurance Agent to understand what items are and aren’t covered by the homeowner’s insurance you are purchasing.
  • Remodeling – Kitchen or bath remodeling might be something you have planned for your new home.  If so, create a strategy for how and when you’ll be able to knock out this task.  Include all construction costs/estimates along with a cushion to cover the inevitable surprise costs that come with all remodeling project.
  • Home Improvements – While bigger items, like carpets and blinds, are often covered in the purchase agreement, there are other home improvement items you’ll want to keep in mind as you’ll be handling them yourself.  Even the ‘perfect’ home will need a bit of touching up once you move in, if for no other reason than to truly make it your own.  Allocate money for repairs, painting, and landscaping.
  • Nesting and Lifestyle – Along with paint and a bit of landscaping, there are other costs first-time homeowners often fail to prepare for when creating their budget.  Not only does your budget need to include your mortgage, but it also needs to cover expenses such as cable, electric, water and sewage, and home owner’s association dues (if you’ll have any).  You might also discover that you’ll want a larger bedroom suit because of space or that you’ll need yard equipment now.  Make sure you allot money in your budget for these type of lifestyle and nesting expenses.

It’s true that you can’t be prepared for absolutely every possibility because in life, sometimes things just come up.  However, with the proper planning, you and your realtor will be able to identify most of the potentially hidden costs associated with your new home purchase, giving you the opportunity to plan for how you’ll handle any surprises with out breaking a sweat!