Hi there, I’m Marcie Billen with Rüya Team Realty and Keller Williams Mulinix here in Norman, Oklahoma and today I want to share my top 3 tips for first time home buyers. My top three tips for first time home buyers are centered around:
1) Debt
2) Down payments
3) Your realtor
Debt
Alright, so the first thing I want to go over with you is debt. We’ve all heard of Dave Ramsey, right? Well, he teaches that you need to go and pay off all your debt before you go and purchase a house. And that may be the route that you want to take – or you may want to take a different one. So the other route I’m talking about is going ahead and purchasing a home so that you can build equity in a house while you are paying off your other debt. Now, do you need to pay off all your debt in order to purchase? Absolutely not! Each loan has a specific debt to income ratio and there’s a specific amount that you can have, depending on the price of the house that you’re wanting to purchase, depending on how much debt you have, and of course, where you feel comfortable with your payments.
So how are you going to know if you need to pay of any of your debt, some debt, all of your debt? Well, you’ll know after you speak to a lender. You can actually watch this video – this is me and my friend, Paul. He’s a mortgage lender and he’s talked to me about different loans and what that means in terms of down payment, debt and all sorts of other things. What you really want to take into account, is of course how much debt you have, what your payments are, and where you feel comfortable.
How do you do that? How do you know where you feel comfortable if you don’t know how much it actually costs to purchase a house or what your monthly payment’s going to be? Well, you’re going to talk to a lender in order to figure that out. Because each different loan has a different debt to income ratio, you need to see what’s going to work best for you and if your credit score’s where you need it to be so that you can get the best interest rate possible. Okay, I wanted to talk about debt first, because it’s literally the least fun topic.
Down Payment
Alright, so next is down payment. You may have heard, from relatives, from other people that you may need 20% down in order to purchase a house. Well, we’re going to kill that myth right now. But how much do you actually NEED to put down on a house? Well, of course, I’m going to direct you right back towards the lender so that you can get an accurate amount that you actually need, depending on what you type of loan you’re getting. However, if you’re not going to go talk to a lender, and you know, I kind of get it, you’re not thinking about purchasing in the next six months, then sometimes it can seem cumbersome to go and talk to a lender – I still highly suggest that! Please talk to a lender. However, if you’re not going to talk to a lender, I really suggest saving 5%.
So, what does that mean? Well, if you’re going to buy in Norman, Oklahoma, then you need to think about the amount of house that you want to buy. The average amount of house, or average price, here in Norman is $200,000. So, in order to save 5%, you need $10,000. Honestly, if you’re a first time home buyer in Norman, and you have $10,000 saved for your purchase, then I can get you a pretty sweet house. You can score an amazing house for just $10,000 down. Of course you’re going to have closing costs and all of those other fun things, but starting off with that amount is going to put you in a pretty good spot…as long as you can get a loan – so you may as well go and talk to that lender! Do you want an overview of the home buying process? Download my FREE home buyers guide that outlines the 6 steps to buying a home!
Realtor
Alright, the last point I wanted to make in my three tips for first time home buyers is about a realtor. I love meeting with first time home buyers. You guys are a blast; the reason is because it’s a rite of passage to buy your first home, right? You have a ton of questions and they’re always really good questions. There really aren’t any stupid questions when it comes to buying a home because it can be a really complicated process. So, in finding a realtor, what would I tell you to do? You want to find a realtor that you can trust, right? The first step of course, is seeing what your gut says (gut check!) about the realtor that you’re talking to. And then I have a couple of really good questions that I would tell you to ask.
One of those questions is “how many homes have you sold this year?” This question is really going to help you understand how experienced the agent is. Most experienced agents know almost exactly how many homes they’ve sold in one year. And if they skirt around the question or if they say 1 or 2 or 5, depending on where you are in the year, of course, then they might not have the experience that you’re wanting as you purchase your first home. Across the nation, um kind of the average is realtors sell 5-9 houses a year. Does that equal a lot of experience? That’s the question you have to ask yourself and typically the answer is no. So 80% of the realtors sell 5-9 houses a year, while 20% do of course, anywhere from 10 all the way up to 1,000 houses per year. Oh, you’re asking me how many homes I’ve sold this year? Well, it’s July, so I’ve sold 25 homes so far this year.
Another really great question to ask your perspective realtor is how do you negotiate? What you’re listening for here is that they have a strategy and really good, experienced realtors will tell you examples of their strategy and how it worked. Whether it’s winning in a multiple offer situation, or getting a great price for their client, or getting a lot of closing costs paid, or the closing costs that their clients needed paid for them to purchase that house because sellers; they can sometimes pay for some of your closing costs, but that’s another video for another day.
