According to a Pew research study from 2016, 72 percent of renters want to buy a home in the future. It’s a milestone as American as apple pie. However, going through the process is easier said than done and many people struggle with where to start. We sat down with Mallory McHugh, the supervisor of Blueprints’ Home Ownership Center, and Irene Keirsblick, our certified HUD Housing Counselor with over 40 years of experience, to ask them about the 5 facts that most people buying a home for the first time really need to know.
1. If you’re thinking of buying a home, you should come see us sooner than later.
Think you can go to the bank today, visit a realtor and a lender this month, find a home, close the sale, and have the keys in your hand by the time summer rolls around? Think again. You’re off by at least a year.
“In the movies, you see everybody signing paperwork and then they get handed a key like it’s that easy,” said McHugh.
“Just because you’ve been paying your rent on time, it’s not the same as owning a home,” said Keirsblick. “There are more responsibilities such as upkeep, taxes, and home insurance, and these are all things we can help you understand and be better prepared for that commitment. A first time homebuyer typically stays in a house seven to ten years, but you might be there for twenty to thirty years.”
Like most things, the early bird gets the worm. It takes the average person two years to purchase a home. “We can help people at any stage, but two years is a good time to start thinking about what home you want to buy and preparing for mortgage readiness,” said McHugh.
Buying a home can be intimidating. Whether you visit a realtor or a lender first, it takes time to get the process started. Sites like Zillow and Trulia have made it easier than ever to look, but there is no substitute to visiting an agency in person.
“You want to make sure you do your due diligence,” said Keirsblick. “That way you’ll know what type of agent they are, how long they’ve been in business, what demographic they work in, which areas they serve, and how they show their listings. Always be sure to go to an agency in person and see what they have available. ”
There’s no strict order you have to go in, but we recommend you go to a lender first. “Most realtors won’t even talk to you until you’re preapproved or prequalified,” said Irene. “Lenders give you an idea of what your price range is. Keep in mind that you’re preapproved for a certain amount, but based on your lifestyle, you might have to adjust your expectations.”
You’ll have a lot of questions before you go in, while you’re there, and after you walk out the door. We can help point you in the right direction and chances are, we know the people in your neighborhood, including most realtors. The Home Ownership Center maintains relationships with reputable local realtors, banks, the Redevelopment Authority of Washington County, and even Habitat for Humanity. “We have a comprehensive list of over 100 partners in the community,” said McHugh.
2. Saving doesn’t stop once you put down a payment.
Paperwork adds up. Application fees add up. When your realtor’s in-house lawyer is going through the documents that are drawn up, you’ll see all the money involved and it certainly doesn’t stop there.
“You have to pay for the house to get assessed, you have to pay for the home inspection unless the seller’s agreed to do that,” said McHugh.
Title insurance is also crucial. “Let’s say a contractor was never paid for work done on your house five years ago and he shows up a month after you just bought it,” said Keirsblick. “It’s not your fault, but he still has to be paid. Your title insurance will cover the cost and keep him from seeking legal action to get the money back, which prevents the bank from losing their investment to a lawsuit.”
You may think this isn’t a big deal. You can just put these expenses on your credit cards, which you pay off on a regular basis. Problem solved, right? Unfortunately, your credit isn’t a solution to your problem and can cause more problems down the road.
3. Your credit is not set in stone.
Credit dictates much of what people are able to do. Whether it’s applying for a loan to go back to school or start a small business or applying for a mortgage, no credit can hurt you as much as bad credit can. However, this doesn’t mean that an unexpected car repair or another emergency will crush your home owning dreams.
“Credit changes minute to minute,” said Keirsblick. “If you buy something today and it takes your balance higher than a third of your credit limit, that purchase brings your score down. That doesn’t mean it can’t go back up. “
The key to good credit is consistency. “Don’t open or close anything and keep your lines of credit the same,” said Keirsblick. “Ideally, you should have no changes in your credit profile before the closing date.”
“When you’re in the middle of buying a house, you’re trying to get the lender to make sure everything’s approved correctly. As soon as you put an offer in on the house, it doesn’t mean that the mortgage lender stops looking at your credit,” said McHugh. “They still have that right. If you sign the papers, then go to the furniture store and finance a whole bunch of new furniture afterwards because you’re super excited, that goes against what you already said you had in debts and income. They could revoke the mortgage that you agreed upon.”
4. We know you want to buy new furniture. Don’t make any major purchases.
We get it. We really do. You don’t have to worry about spackling over holes from picture frame studs or repainting anymore. You’re excited and you want to make your new home your own. For many people, it seems like an ideal time to upgrade your furniture. However, you should hang onto your college futon until the dust has settled.
“When you move into a new home, you want to buy new furniture and we warn people about not doing that because it’s going to pull on your credit if you finance furniture,” said McHugh.
“Hard pulls are 10 to 12 points off your credit score and that’s a bad combination along with your debt,” said Keirsblick. “You don’t want to change your debt to income ratio or open any new lines of credit.”
At this point, you may be considering becoming a hermit and going off the grid. There’s a lot to remember. When you buy a home, not only are you investing in a house to live in, but you’re investing in your own piece of land around it to live on. Finding the one that’s right for you takes time and work, but we want you to know that we’ll be with you every step of the way.
5. We offer you the whole package.
We believe that everyone deserves access to safe, affordable, and decent housing. It’s our vision for all people and we share it with you. Regardless of your economic status, we want you to have a place to come home to where you feel safe and happy and we’ll go the extra mile to help you get there.
“Buying a house is a huge step,” said Keirsblick. “No one wants to smile and sign documents when you don’t have a clue what they’re committing you to, but the pressure of worrying you might lose this house is very intimidating and very real. Our role is to help you understand what you’re signing so you’re making better choices, and if you don’t understand what you’re signing, you’re making the choice to step away for a second and get some advice from a trusted advisor.”
“If you go through the Blueprints program, it will make things very easy,” said Richard B., a former client. “I did everything they told me to do and it could’ve been a very rough road. With the help Blueprints gave me, it made everything pretty smooth.”
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