Good Preparation Will Enhance Home Buying Success
The 2010 Year End Real Estate Report for the Lansing area published by Coldwell Banker Hubbell Briarwood shows average sales prices in the region increased 3 percent in 2010, while the average time a house is on the market declined by three days. As far as new home construction, the Michigan Housing Index published by the Michigan Association of Home Builders showed modest improvement at the end of 2010, and forecasts a 16.5 percent increase in new building permits in 2011.
The good news for consumers looking to buy a home is that prices continue to be low, there is a surplus of good inventory from which to choose, and interest rates are at historic lows.
The best advice I can offer anyone considering a home purchase is to know the rules of the housing and lending business, and spend time preparing yourself before you start your home search. A few simple strategies can make all the difference when it comes to making the best deal possible.
First, identify a reputable lender to help you get started. Your lender can assist you in getting preapproval for the amount you can afford and the type of loan program that works for you. You will need to decide the amount you are comfortable spending including your property taxes and homeowner’s insurance.
Your lender will help you determine a loan program that works best for you and your situation. There are a multitude of options from which to choose and your lender can determine the right fit. Government-sponsored mortgage programs offer affordable options for buyers. Consider opportunities with the Guaranteed Rural Housing Program (zero percent down), FHA loans (3.5 percent down payment) or the Michigan State Housing Development Authority (MSHDA), which offers down payment assistance. These programs are not limited to first-time homebuyers.
It’s also important to understand that with all the changes in the lending industry the past few years, underwriters and investors have tightened up their requirements. What that means for consumers is that you need to be prepared to provide more documentation than was required in the past. This can be frustrating, but it is a necessary reality of the times and being aware and prepared will make the process smoother.
Once your lender has received your documentation, a preapproval letter may be issued. A real estate agent will need to have this letter before you can write an offer on a house.
Once you’ve completed the preapproval process, you can contact a reputable real estate agent and begin your home search. Your agent can make the search a one-stop shopping experience. By providing a list of specifications of what you want or don’t want in a house, your real estate agent can search all of the listings and narrow down the options for you.
Your real estate agent can schedule appointments to view properties based on your preferences. Some homes will not qualify for your loan program, but your agent will help you determine this in advance to save time and disappointment.
There are several other steps along the way, including writing an offer and negotiating the deal with the seller, conducting an inspection and the lender’s appraisal. It can all seem daunting at times, but once again, proper preparation and the assistance and guidance of the right team of experts will successfully lead you through the process. It will all seem worth it when you have a successful closing and receive the keys to your new home.
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Suzanne Carr is the mortgage loan officer at Capitol National Bank.