Buying a home can be stressful, especially if it’s your first home purchase. CPA Michael Trickey, managing director of The Berkshire Group in Lake Zurich, Illinois, hopes his new book, Finding Home: Everything You Need to Know - and Do - For Home Buying Success, will help first time homebuyers navigate the complicated homebuying process.
Below is a Q&A with Trickey about the book.
Tell us about “Finding Home” – what sets it apart from other homebuying books?
Finding Home brings the homebuying process to life by following a young couple, Jack and Eva, through all the steps of finding and buying the right home for them. Throughout the book, Jack and Eva interact with family and friends, asking and answering the same types of questions first-time homebuyers will have in their searches. This conversational style provides a comfortable way of learning the vocabulary and key concepts necessary for successful homebuying.
Along the way, checklists, questionnaires and forms are filled in for the young couple, providing the reader with examples and ideas. Blank versions of the checklists, questionnaires and forms are available for download on Finding Home’s companion website.
Finding Home is segmented into five main sections:
- Qualifying yourself
- Knowing your priorities
- Understanding mortgage loans
- Finding the right location and home for you
- Buying the home.
What makes the homebuying process so intimidating?
The homebuying process has many steps unfamiliar to new homebuyers.
- There is specialized jargon to learn.
- Buying a home requires commitment of time and money, and intent to remain in one place. There is a fear of making a costly mistake.
- Buyers need to depend on help, advice and services from many people they’ve never met before. It is unclear who to trust.
- There is uncertainty about how much the buyer can afford and homes they want may seem beyond their reach.
- Even a good bid might be rejected if someone else offers a better price or more favorable terms.
- Most new buyers need to qualify for a mortgage loan. There are many forms and documents to complete and provide.
- Timelines can be frustrating. The buyer will be evaluated according to lender’s criteria and they may be denied.
What causes the most confusion for homebuyers?
Buyers are often confused about the amount of money they will need before and at the time they close on their home, especially if they are financing the purchase. Lenders require homebuyers to put some of their own money towards the purchase price as a down payment. The lender may charge points and/or fees. Depending on the day of the month on which the loan closes, the buyer may have to prepay interest to the lender for the remaining days in the month.
Even if the homebuyer is not using a mortgage loan to finance the purchase of their home, they will still have closing costs in excess of the down payment. These include the fees for appraisals, inspections, title insurance, document preparation and a host of other items.
What is the biggest mistake homebuyers make? How can they avoid it?
The biggest mistake homebuyers make is jumping in without being adequately prepared. Buying a home requires preparation, knowledge, reliance on professionals and time. Homebuyers can avoid many mistakes by educating themselves before they begin the process. Investing time reading books, articles, blogs and other sources of information will pay dividends many times over in savings of time, money, anxiety and frustration.
Common mistakes made due to lack of preparation include:
- Borrowing more money than the buyer can afford
- Failing to consider closing costs
- Buying a home in a neighborhood that does not meet the buyer’s needs and wants
- Obtaining a loan with terms that can lead to significant payment shock
- Providing partially filled-in forms to mortgage brokers or lenders, who say they will fill in the blanks for the buyer
- Not checking out and comparing loan programs and terms offered by multiple lenders
The housing market is very competitive for buyers right now. What can they do to make sure they get their dream home?
Buyers need to figure out and prioritize what they really want and need in a home and the general location of the home. Then they need to figure out what they can comfortably afford to pay, both upfront and on a monthly basis.
Knowing those parameters is the starting point for their home search. It helps them to focus their efforts and maximizes their chance for success. They will be able to more effectively use online search tools and set preferences and filters to help locate homes in desired locations that fit their parameters. They can then research and walk the neighborhoods to gain a feel for each one. By doing this type of preparation, buyers can be ready to jump on affordable homes for sale that meet their needs and fit their budget.
What do homebuyers worry about that isn’t such a big deal?
Homebuyers should not worry about purely cosmetic features of a home that can easily be changed. If the home otherwise fits their needs and wants, they should factor in the cost of making cosmetic changes, but not let those items prevent them from moving forward on a transaction. It is amazing how much simple changes to paint, flooring, fixtures, cabinets, countertops, and landscaping can impact a home’s look and feel.
Cosmetic features outside of your control, such as a next door neighbor’s ugly, ill-maintained house or trashed yard is a big deal, however, and should factor into decision-making.
What’s the one thing you want people to take away from reading “Finding Home”?
The homebuying process may seem intimidating, but it does not have to be so. Just prepare yourself before you begin and don’t get discouraged if you encounter setbacks. You can find and buy an affordable home that has what you want and need, in a location that is right for you.