First Steps toward Homeownership

Mortgages
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Manhattan-realestate

When Jane moved into her new Midtown Manhattan apartment – the first home she’d ever purchased – she was a grad student by day and hit the grind at night, trying to pay the bills. She was busy. She’d landed in a dreary neighborhood, too, and, worse, an expensive one.

Dreary and expensive enough that, within a year of moving, Jane sold her apartment prematurely. She even lost money on the place, thanks to apartment fix-ups and improvements, closing costs, commissions and the cost of moving – many expenses that homeowners often are able to recoup if they wait for their property’s value to appreciate. That’s a good 5 or 10 years in a healthy market, at a minimum.

Why she moved

Jane hated the neighborhood, though. At first, she had sought out a unit around a college or university – more up-and-coming areas – with all the benefits of that college-town feel: cool coffee shops, great restaurants and grocery stores and supermarkets aplenty.

Where she ended up was much different. It was too high-end. And her surroundings weren’t exactly Urban Bohemia – they were stale: office buildings, tourist attractions, high-end hotels and commercial properties. These were her neighbors, and they didn’t exactly welcome her into the community.

Rather, after 6 months, Jane realized she hadn’t integrated at all. She would even venture outside the neighborhood for more affordable restaurants and coffee shops, and, generally, she found prices too high.

Picking the right apartment and the right neighborhood

Hence the move-out and why it was worth it to lose money on the apartment. Hence her new neighborhood, too, where she now rents: her neighbors are now her friends, and she’s happy enough that soon she’ll be back in the buyer’s market, for a place in this same neighborhood.

The first steps toward homeownership

You don’t want Jane’s topsy-turvy experience for your first home purchase, and so your first step is this, courtesy of Linette Semino, an associate broker with Warburg Realty: “I would recommend that first-time homebuyers speak with current residents of that community to understand the advantages and disadvantages of living there – stopping someone on the street to inquire about the neighborhood is not a bad idea.”

If you like what you hear, and if you find yourself invested in that neighborhood, there’s plenty more to do, and Semino is here to suggest exactly how. And so, without further ado, we’ll let the expert speak for herself:

1. Set your budget
The first step a first-time homebuyer should take is analyzing how the monthly payment of their new mortgage and common charges affect monthly expenses and disposable income.

2. Know the market
The second step is becoming familiar with real estate websites where buyers obtain educational information on market trends, and where they can share questions and information with other first-time homebuyers.

3. Hire an agent
After becoming familiar with the real estate market and the types of properties available, the buyer should hire a professional real estate agent. A first-time home buyer will benefit from the expert advice and guidance of a broker, so I always recommend working with an agent.

-OR-

If a buyer decides to purchase without an agent, then I would recommend the following steps:

3. Become pre-approved for a loan
Contacting a mortgage broker or lender to understand how much down payment will be required and what the targeted purchase price would be, as well as the documentation required for obtaining a mortgage. Once the lender provides the pre-approval letter, the buyer can begin lining up appointments to view properties. When visiting properties, the buyer should take a camera to document the condition of the properties or any special features the home offers.

4. Get an outside perspective
Bringing a friend or family member for a second look and discussing the pros & cons of the home with them. Friends and family members are less emotional about the property and are of great help when it comes to selecting the correct property.

5. Decide on an offer
Analyzing recent sales in the neighborhood to come up with the right offer. It’s important to understand the similarities or differences between the properties being used and the property being considered. Finding properties with the same square footage or dimensions that have similar finishes and appliances is the key when coming up with the right offer.

6. Find an attorney
Interviewing real estate attorneys to understand the closing costs and the legal process of purchasing a home for the first-time. I’d recommend selecting an attorney who has closed on a similar property or someone who has been recommended by friends. The attorney’s contact information will be provided to the listing broker upon acceptance of the offer.

7. Make the offer
Submitting the offer along with the pre-approval letter and employment letter. The buyer will have to show the listing broker that he/she has money to purchase the property and income to pay for month expenses. I even recommend submitting a letter of personal introduction along with the offer – tell the seller how much you love the home and your neighbors will love you. Once the offer is accepted, the buyer will work with the attorney on the contract of sales and documents for the closing and with the listing broker on any applications or coop board packages required for the purchase.