By Michael Gold
It all started in June, a few years back, shortly after the market collapsed. Things were really bad for a lot of people, and although the financial tornado had cleared out most of America, a new opportunity began to rise out of the ashes for me and my family.
I was in the process of moving out of my parents’ house for the second time, as I had lived elsewhere before, but came back to save money on rent while attending a nearby college. After a few weeks of scouring the market for apartments, my dad had a brilliant idea. “What if, instead of signing into a contract and paying somebody else 2k/month to live in an apartment that we won’t ever own, what if we put a down payment on a house, and spent 2k/month to own it ourselves?” “Wow! Brilliant idea dad, but how on earth are we going to find the money for a down payment? And how much would we need?” The thoughts raced through my head as I had never even considered purchasing a home before.
“There are all sorts of programs being implemented by the government right now, where in some cases you only need to put down 5% to buy a home…” My dad adamantly expressed to me. “5% down with our budget would mean we might only need to come up with a few thousand dollars.”
It was a no-brainer. I was eager to start the search, and find out what it took for a millennial like me to own a home…
Step 1: How Much Can You Spend?
Determining what I could spend was really important in deciding where I would be able to buy the house. As they say in real estate, “location, location, location”. It’s very important. As you might imagine, nicer neighborhoods cost a lot more, but that didn’t mean we couldn’t find a home in a nice neighborhood that was within our budget. We quickly found out what kind of homes were on the market by searching Zillow, Redfin, and many other popular real estate websites. Once we determined our budget, it was important to lock down our credit situation.
One of the crucial factors in the purchase of any home, is a line of credit. Like any other major purchase you will make in your life, having a solid line of credit will make a huge difference as to what kind of rate you will get on your loan.
If you find that you don’t have a great line of credit, and you can discover this quite easily using a quick Google search for a trusted service that will give you your credit score, then it might be smart to consider co-signing with a parent, or someone you trust who has a better credit score than you. That’s what I did. This is important because it tells the banks how trustworthy you are. The higher your credit score, the more likely the banks are to trust you with their money. Signing with a parent or someone you trust who has a better credit score, makes you a much more appealing candidate for a loan.
You can then use this picture of your credit status to find out what kind of loan you might qualify for. Go to your local bank and get an idea from them, or go through a mortgage broker who can scour the entire market for you. Once you have a pretty good idea of what you can spend/what kind of credit you have, then you can begin searching for the right agent.
Step 2: Finding the Right Agent
The real estate industry isn’t something I would have ever been able to navigate without the help of a trusted, knowledgeable, and personable agent. For me, this person came in the form of a neighbor, someone my parents knew and trusted, and therefore it was a very easy decision for me to make him my real estate agent. Luckily, Mr. Clint Patterson also happened to be one of the most dedicated, responsive, and helpful real estate agents in the business.
Finding the right agent is critical, because he/she will become your best friend/advisor over the course of the months that it takes to find and buy a home. You will need to be able to trust their opinion, value their work ethic, and be confident that they are knowledgeable enough to get you into your dream home (or at least the best one for your budget).
In the beginning, I just assumed that he was going to help us search for houses that met our criteria, perhaps even drive around and visit them with us, which he definitely did. But more than that, he served as a vital translator for the enormous beast of a language that the real estate industry speaks. The paperwork, legal documents that seemingly never ended, and myriad of regulatory minutia that got thrown our way, never would have seemed manageable without Clint.
I can’t say enough about his help in the process, and therefore I want to stress this: FIND A GREAT REAL ESTATE AGENT. If you know someone personally I would definitely start there, otherwise the internet is ripe with reviews and recommendations for real estate agents in your area.
More to come in Part II… Stay tuned to RE-Insider for the next chapter of my story!