Is this a good time to buy a first home?
A year ago, a well known financial analyst, Jim Cramer, said on the Today show that you shouldn’t buy a home for the next 12 months. Lots of realtors got very upset with him for saying that. He even got nasty notes at parents’ night at school.
Video: Realtors disagree with pundit Kramer's real estate
assessment
Events since then have given some weight to what he said, but the worst seems to be over. A recent NPR program indicates this could be a great time to buy your first home There are opportunities available now especially through HUD and other programs. Interest rates are at 20 year lows, and real estate prices in most markets are at historic lows as well. That is bad news for sellers, but great news for buyers.
Who should I talk to about buying a first home?
As
a
first time buyer. you should talk to people
you trust who are knowledgeable about real estate. Such people might include
your parents (if they have managed their own real estate transactions
successfully), attorneys who deal with real estate, financial advisers, and
realtors and mortgage brokers. In talking to the last two, it would be best to
talk to family friends in that business. Most realtors or brokers will not
deliberately mislead you, but (1) they see the world through their individual
point of view, and (2) realtors and mortgage brokers are very hungry right now.
It has not been a good year for them. If you keep that in mind they can be a
good source of information you will need.
How do mortgage companies decide who will get home loans?
Video: Understanding the steps to getting a home loan
Mortgage companies look at applicants’ income, length of employment, credit history and credit scores. A realtor or mortgage broker can use this information to “prequalify” you. This is not the same as pre-approval. Pre-qualification involves matching your attributes against known criteria to determine whether you meet general guidelines to purchase property for a certain price. Pre-approval is just that – getting an approved loan which you can then use.
Lenders also look at the property you want to buy. In today’s market they want to be certain that the home (their collateral) is actually worth at least the amount they are lending for your purchase. If it is overpriced they are unlikely to lend money on it. Making that determination can be particularly trying now, since many if not most sellers are losing money, and want to minimize their losses. Consequently, they will resist further price reductions.
What steps do I need to take?
Once you have decided to buy a home, as a first time buyer you should probably use a realtor. He will prequalify you, then ask you to identify the area where you want to buy. He or she will then suggest a selection of homes for you to look at. (Hint: Hold the realtor's feet to the fire. Make sure you are seeing the type of home you want to buy, not merely the kind he wants to sell. They may not be the same.)
When you find the home you want, at the price you are willing to pay, you will put together an offer to the sellers. There may be some negotiation back and forth. Once you have a deal everyone is willing to live with, put it in writing. You then actually apply for the loan. There may be some things you have to do to satisfy the mortgage company. Assuming everything goes well you’ll set up a closing and finalize the deal.
Here are the top 10 Mortgage Companies nationwide with their telephone numbers.
Citigroup - 800-667-8424
Bank of America - 512-396-5733
Wells Fargo Bank - 800-869-3557
Wachovia - 800-922-6267
Golden West Financial Corporation - 510-446-3420
BB & T - 800-295-5744
Popular - 800-273-3973
M & T - 303-779-8858
Marshall - 407-740-6338
ILSLEY - 920-748-3161
Amsouth Bancorp - 334-874-5432
Synovus Financial - 706-649-2311