Who's on the team?
Before you seriously start shopping for a home, you first need to know where you are going to get your loan and who is going to show you homes. In other words, you need to select a lender and a real estate agent.
Forming your team can be trickier than it sounds because nearly all the loan officers and real estate agents you will meet will say something like, " I work with first-time buyers all the time." Since some of them are experts and some are not, it can be tricky to tell the difference.
Once you have sorted out your lender and real estate agent, then you need to pick a closing agent, home inspector, insurance agent, and a title insurance company to be on your home team as well.
Mortgage Loan Officer or Mortgage Broker
For most homebuyers it makes sense to start by finding a loan officer and loan program that best meets your needs. If you can't get or qualify for a loan that meets your needs, then most likely you won't need to find anyone else on this list.
It also makes sense to start by selecting a mortgage lender because you need to get
pre-approved for a loan before you go shopping for your first home. How else will you know how much you can afford to finance or how much cash you are going to need to close on the loan? In fact, many real estate agents won't even show you properties until you have been pre-approved for a loan.
If you decide to start with a real estate agent, you should expect them to refer you to their preferred lenders. These lenders may or may not be able to offer you the best first-time homebuyer loan and assistance programs.
If you find yourself half way to closing and then learn you are not getting the best homeownership programs, it can be very difficult, uncomfortable, and may not even be possible to switch lenders this late in the game. So that is why we advise you to carefully select your mortgage lender first.
Real Estate Agent
Choosing the right real estate agent is one of the most important decisions you are going to make during the homebuying process. It is a good idea to narrow your search to real estate agents who are affiliated with the local chapter of the National Association of Realtors® and therefore refer to themselves as a Realtor®.
When shopping for a real estate agent you not only must be able to trust them, but you also need to be confident that they know their real estate market and have a proven track record of helping clients just like you. You will want to know about what types of homeownership programs they have worked with in the past and get to know their personality to make sure it is a good fit for you.
Getting a licensed and experienced home inspector on your homebuying team is a must. A good home inspector is critical to helping you understand the quality and condition of the property you intend to buy before you buy and become responsible for its' repair. As a homebuyer, unless you are purchasing a newly constructed home with a warranty, you are usually buying the home in an "as is" condition. Anything wrong with the property becomes your responsibility once you own it. For this reason it is strongly advised that you hire a home inspector even if it is not a requirement of your homeownership program.
As you approach the final steps of the homebuying process, if not sooner, your lender is going to need to know who your insurance agent is and what company will provide your homeowner's or hazard insurance coverage on your home. Make sure to get a quote from the insurance agent who already provides your car insurance. Most insurance companies will provide you substantial discounts if you get both your car and homeowner's insurance together.
Of course you can always change your car insurance company too if that means getting a better overall rate and comparable coverage on your home and your car.
Closing Agent or Escrow Officer
States differ on the specifics of who and how you will close your loan to finance and purchase your first home. Many states use escrow officers, while others use either a real estate attorney or other type of closing agents. The closing agent or escrow company helps facilitate the closing of your transaction once you, your lender and the seller are ready to complete the purchase and financing. While you can choose the closing agent, very often it is your real estate agent who selects the closing agent. This makes good sense as they have the most experience working with the various companies and individuals who perform this important service.
Title Insurance Company
Unless you want to get stuck paying off old debts the seller forgot to pay, you need to obtain a title insurance policy when you obtain a mortgage. The policy is provided by a title insurance company. In many states the title insurance company is affiliated with the closing agent, but in other states it is not. The seller is typically required to pay the cost of a title insurance policy that protects you and you are typically required to obtain a separate title insurance policy for the benefit of the lender.
The title insurance policy makes sure that you don't have to pay any past debts left by previous homeowners. In addition, the policy ensures the lender is getting free and clear title to the property they are investing in.
To learn more about YOUR homebuyer team, sign up for a class today HERE.