ARE YOU READY TO BE A HOME BUYER?

Renting a place to live may give a renter the freedom and flexibility to move and offers relief from the responsibilities of homeownership, but most people aspire to own a home.

Here are ten (10) considerations for the prospective homebuyer:

1. Tired of Rising Rent Prices. Paying rent does not maximize the value of your money. Owning property can be a good long-term investment.

2. Credit Scores. Make sure you have a good credit score. Low credit scores (e.g. late payments and too much debt) are the most common reason people cannot buy a home. Before prospective buyers apply for a mortgage, they need to secure a copy of the mortgage report (aka tri-merge). A FREE credit report is essentially worthless in this situation when evaluating a buyer for a mortgage.

3. Manage Your Debt. Because of the lending about that brought on the "Great Recession" and Dodd-Frank lending reforms, institutional lenders (i.e. banks, credit unions, mortgage bankers, etc.) have "drop-dead" ratio of 43%. Every (responsible) lender will do a pre-qualification interview, but keep in mind most letters are worthless.

4. Buyer Reserves. Having enough reserves is critical to buying a home. In addition to the down payment, a buyer will need to have reserves to cover closing costs - which typically equal 2% of the property's sales price. Closing costs are negotiable, so do not underestimate the importance of selecting the "right" real estate agent to represent you.

5. Down Payment. Required down payment requirements depend on the type of loan. For conventional loans, a 5% down payment is usually required. FHA loans require a 3.5%down payment. VA loans have no down payment requirements.

6. Staying in Place. Often various life events (e.g. children) are the motivation behind investing in a home and "planting roots." While there are always exceptions, real estate typically represents a great long-term investment opportunity.

7. A Major Life Change. Most people consider purchasing a home after a significant life event, such as marriage, divorce, children, job, etc.). If you are relocating with a company make sure to look into the possibility of having your company pay for the closing costs for your relocation. Some companies are willing to cover these costs for up to 1 year.

8. A Clear Vision. Most home buyers have a clear idea of what they are looking for in a new home, but often the "devil is in the details." Make sure your real estate agent takes the time to thoroughly understand your wants and needs. A real estate agent should do more than just "check the boxes." They should be your personal advocate and assistant in helping you bring your dream to life before and after the sale.

9. The Importance of Networking. In addition to the Internet, another great way to educate yourself when looking for a home is to network with family and friends. Social groups and networks can be a great resource to education yourself and learn from other's first-hand experiences.

10. Real Estate Agent. Selecting your real estate agent is one of the most important parts of purchasing a home. Your real estate agent should do more than just "facilitate" the transaction, they should be willing to take the time to thoroughly understand your wants and needs, and educate you (before and after the sale), have intimate knowledge of the surrounding area, have strong inter-personal and negotiating skills, and someone you consider a part of your "team" (like, trust, respect). Take the time to speak to a number of real estate agents, and DO NOT feel pressure to go with anyone, until you feel it is "right" for you.

These ten (10) considerations are only a few of the things prospective home buyers should be aware of and consider before finding a home.