August 13th, 2017 7:22 AM by Jackie A. Graves, President
Take advantage of workshops aimed at helping you get past the
initial steps of purchasing a house.
For most, homebuying seems to be an overly complicated process.
Viewed from a wider lens, you have multiple steps – mortgage
application and approval, making an offer, competing with other
buyers, contract negotiation, the due diligence period and (hopefully) a
successful closing – rolled into one larger process that leads to your
For something the majority of Americans
will undertake at least once in their lifetime, shouldn’t it be easier?
All told, simplifying the homebuying
process is hard without taking out key elements that ensure honest lending,
sales negotiations and understanding of the details of the deal for both the
buyer and seller. But resources for homebuyers to better get a handle on the
process are growing.
First-time homebuyer workshops are popping
up throughout the U.S. as real estate agents, lenders and agencies approved by
the U.S. Department of Housing and Urban Development have taken up the task of
providing more transparency for homebuyers about getting approved for a
mortgage, making an offer and preparing to close on a home.
This is particularly important as new
buyers flood the market. First-time buyers make up about 35 percent of
homebuyers in the U.S., according to the National Association of Realtors’ 2016
Profile of Home Buyers and Sellers.
For many, an education in jumping into
homeownership is necessary. “They’re coming in fresh and brand new and just
wanting to understand the whole process,” says Darlene Bharath, a housing
counselor for Belair-Edison Neighborhoods Inc., a nonprofit housing organization
in Baltimore and
a HUD-approved counseling agency.
Of the 50 people that typically attend the
organization’s semimonthly homebuyer classes, between eight and 10 have spoken
to a lender or real estate agent so far, but the rest aren’t quite ready, says
John Watkins, also a housing counselor at Belair-Edison Neighborhoods Inc.
workshops aren’t exclusive to first-time buyers. Jessica Diaz, a
Realtor for Coldwell Banker Residential Services in the Atlanta area
who puts on first-time homebuyer workshops with colleagues, notes clients
listing their home with her decided to attend her recent workshop because they
previously purchased their home from the builder and wanted a refresher
course on the buying process for an existing home.
“It took the edge off, because [buying and
selling] can be scary to do at the same time,” Diaz says.
A first-time homebuyer class can be key to
pointing out steps you may have previously been unaware of, walk you through
some of the challenging aspects and help you identify the right timing and location
for your home purchase. Here are eight things you’ll learn in a
first-time homebuyer boot camp.
Your credit history is
important. You’ve probably heard this once or twice already, but a
first-time homebuyer class starts with the basics – and the most basic thing
you can know about buying a home is that your credit matters when you apply for
Alexandra Conigliaro Biega, a Realtor with
Coldwell Banker Residential Services in Bostonwho
also hosts first-time buyer workshops with colleagues, says the stress put on
knowing your credit score and available credit leads a lot of workshop
attendees to determine whether they can buy now or if it’s better to wait and
improve their credit.
Preapproval is a must. Beyond your credit,
mortgage preapproval is key to both setting a budget and looking good to
sellers. Being preapproved means a loan underwriter has examined your financial
credentials and, barring any issues with the home's condition or appraised
value, confirms you qualify for a certain mortgage amount.
“The first step is to get preapproved – we
don’t know what to look at without knowing the budget,” Diaz says.
You may qualify for assistance
programs. Lenders often offer or are able to be a part of larger
mortgage programs that make it easier for you to purchase a home – whether it’s
payment assistance program, a grant for the purchase price of your
home or another form of monetary assistance.
A lender representative is often present in
a first-time homebuyer workshop and will help guide you as you search for the
mortgage program or low down-payment program that can best help you, but the
organization that hosts the seminar may assist as well.
Belair-Edison Neighborhoods Inc., for
example, works with homebuyers to apply for the right grants or programs, many
of which actually require attendance of a homebuyer boot camp, among other
requirements, before you’re considered eligible.
House hunting comes after
mortgage prep. Securing your financing is certainly a big step, but it’s
just the beginning – once you’re preapproved for a loan, it’s time to start
At your first-time homebuyer workshop,
you’ll likely get an overview of how you can begin searching online for
available properties, as well as your real estate agent’s role in finding
houses, touring them and narrowing your options.
Conigliaro Biega says she often includes a
housing market report in her course materials, which can help homebuyers narrow
the area they’re looking to buy in based on affordability and other personal
factors the buyer has to weigh, such as commute
time, schools and safety.
Next are offers, going under
contract and due diligence. Once you’ve found the right house,
naturally it comes time to make an offer and begin negotiations. Those leading
the boot camp can provide details about this part of the process that are
specific to your state or city, as local laws can have a significant impact on
each part of the process.
One part in particular is due diligence –
when the buyer has a certain period of time under contract to inspect the home
and conduct research to reveal any potential problems. Laws vary by state as to
what the seller is required to tell you, so it’s imperative that you move
quickly to discover any code violations, cracks or leaks that need fixing or
unseemly past that could make you rethink buying the house.
Closing and beyond. In
an overview of homebuying, the natural end seems to be when you close
on your home and take possession of the property. But there’s
so much more to homeownership that can serve as an unpleasant surprise if
you’re not ready.
In addition to lenders, agents, appraisers,
inspectors and more discussing their role in the purchase process, Bharath says
a representative from a title and escrow company is typically in attendance, as
well as a homeowners insurance representative to discuss coverage once the home
There may be one-on-one
options. Most professionals putting on the class welcome more personal
questions about the homebuying process, and at HUD-approved counseling
agencies, there are typically one-on-one meeting options to go
in depth about your own qualifications for homeownership. For some programs,
completing the workshop and a one-on-one session is required to be approved for
a mortgage- or down payment-assistance program.
“Once the client comes in to schedule a
one-on-one interview, we’ll address their individual situations, so we’ll look
at their pay stubs, income tax returns, bank statements and things of that sort
to determine how much of a house they can afford to purchase, as well as what
grant they would be eligible for,” Watkins says.
There will likely be more than one pro. Many
first-time homebuyer workshops bring in additional real estate professionals to
help explain certain parts of the process – a lender, home
inspector, title representative and more. For Diaz, one of the
biggest takeaways from the class is that a homebuyer won’t be working alone or
just with one agent, but an entire team of people to successfully make a
“There’s so much that people don’t know,
they don’t even know where to begin,” she says. “And I think it’s helpful for
these people to learn that it’s not just the agent that you’re dealing with,
but it’s a whole team of people.”
By Devon Thorsby - To view the original article click here