I have been representing buyers and sellers of homes in New York and New Jersey for more than 20 years and have been involved in hundreds of transactions. But I always tell myself that no transaction is \”routine\” and that every buyer and seller are different. Our office prides itself on the level of communication we create and maintain with our clients, and we always strive to maximize our clients\’ levels of understanding and comfort. Keeping our clients informed is a goal we take very seriously.
This is especially important for first-time homebuyers. Choosing an attorney you are comfortable with and whom you trust is important.
But there are some things you can and should do before you venture into the real estate market for the first time. Here are some steps you can take to help you decide whether you\’re ready to take the plunge.
1. Educate Yourself
(a) About that market. Check the selling prices of comparable homes in the areas where you intend/want to buy. This is relatively easy on the internet, where you can search actual MLS listings, or any number of other real estate focused websites. Talk to reputable Realtors in your targeted areas about the market.
(b) About Costs. Will you need a mortgage to buy your home? What are present interest rates and how much will your monthly mortgage payments be? You can use any one of a number of on-line mortgage calculators to get an idea of what your monthly mortgage payments would be if you bought today. But remember that your mortgage payment is only one part of your total monthly housing cost. You will have to pay taxes and homeowners insurance. In some areas, what you\’ll pay for your taxes and insurance can almost double your mortgage payment. You will also pay closing costs in connection with your purchase. For a more detailed discussion of closing costs, see my related blog post – \”Closing Costs\”.
(c)About Yourself. This doesn\’t mean you need to learn about yourself but does mean you need to assess your current financial circumstances and be realistic. Examine your credit. Your credit-worthiness will determine if you can get a mortgage and at what cost (interest rate). Get a free credit report and examine it carefully for errors and work to correct any mistakes or unresolved issues. Look at your budget and determine how a house fits into it. Fannie Mae recommends that buyers spend no more than 28 percent of their income on housing costs. Go much past 30 percent and you risk becoming house poor. Remember to look at the big picture. Maintaining your home can be labor-intensive and expensive. Especially if you are buying an older home, you should expect the \”unexpected\”, such as costs for new appliances, roof repairs, plumbing problems, etc. Finally, when you are ready, get your documents organized. Collect pay stubs, bank account statements, W-2s, tax returns for the last two years, statements from current loans and credit lines, and names and addresses of your landlords for the past two years. Have them ready to show to your mortgage lender. This may seem like a lot, but in this age of tight credit, don\’t be surprised if your lender needs a lot in the way of documentation.
Buying a home is at the same time a wonderful, stressful, joyful, and nerve-wracking experience. It\’s important to work with professionals who are experienced, reputable and trust-worthy. Since 1992, countless first time homebuyers in New York and New Jersey have trusted us for legal guidance and advice through the home-buying experience. If you are a first-time buyer (or seller) and have any questions, please give us a call.