Portland Home Buyers! Congratulations! You’re making the first step towards buying a new home. Whether this is your first time buying or you are a repeat buyer, most of us don’t do this on a daily basis so it the process may be a little rusty. I want my clients to be fully aware of how to buy and sell real estate and knowledge is power so understanding the process will make you feel more confident in your purchase.
The Portland real estate markets are hot right now. People are buying and selling and the real estate market has not been too affected by the recent political and environmental climate. People still need to buy and sell homes and the process remains relatively the same. While safety measures are in place just about everywhere we go, real estate is still that essential business and industry that must carry on.
Here are the basic steps to buying a home for Portland Home Buyers.
Are you planning on buying with cash, financing, or using the equity in your existing home as a down payment for your next? Regardless, it’s important to have your financing squared away before looking at homes. There’s nothing more discouraging than finding a home you love only to discover you can’t afford it simply because you have not on the financial homework necessary ahead of time.
If you are financing a property, even if you’re using some equity from your existing home and rolling it into the new home, you’ll need to sit down with a mortgage officer or lender to figure out exactly how much home you can afford. Lenders will evaluate your income, assets, liabilities, and your debt to income ratio to determine how much in a monthly mortgage payment your income can support.
That payment will include much more than simply the mortgage payment; it will typically include the property taxes, homeowner’s insurance, principal, and interest. So while the principal payment might be $1000, add in all the other fees and you’re looking at about a $1900 monthly mortgage payment. This is why it is crucial to have a real estate agent, as well as a lender, work closely together to determine the right amount of home you should be looking for.
Once you’ve figured out exactly how much you can afford, your lender or mortgage officer will offer you a preapproval letter. This is valuable ammunition when it comes to making an offer. Sellers want to see that you’ve done the financial homework necessary and can actually afford the home.
There are several different mortgage providers for Portland home buyers:
- Credit Unions
- Mortgage Officers
- Private Loans
- Owner Financing
Each of these has pros and cons, advantages, and disadvantages. I always recommend going with a mortgage officer over a lender or a bank or credit union. The mortgage officer is a little bit more upfront in costs and fees, but they have access to many more mortgage options and programs. Typically, banks and credit unions have their own specific loan with rates and programs whereas a mortgage officer has access to hundreds of different banks and lender options. You typically end up paying fewer fees and costs over the life of the loan.
Private mortgages, loans, and owner financing are not common in most real estate transactions but that doesn’t mean that they cannot be used. In buyer’s markets, owners may opt to finance the property if they’re able to, but this really only works for buyers that either have poor credit, cannot obtain a traditional mortgage, and the rates are typically higher.
Using a buyers agent
Aside from financing, using your own agent is probably the top suggestion and piece of advice I can give. When buyers head out looking at homes often times they will contact the listing agent of that property for advice and information. However, that agent’s sole responsibility is selling that property, not necessarily finding the best home for the buyer. The seller contacted that agent first and therefore that agent works for the seller first and foremost. The buyer’s finances, personal negotiation strategies, and interests are all known to the agent, making it a kind of awkward situation. It’s like the other party knowing all the cards in your hand.
This is why it is crucial to have your own representation when buying a property. Buyers don’t pay the buyer’s agent commission. That agent gets half the commission of whichever home the buyer chooses so the goal is really to find the right home for the buyer, not necessarily sell in new one particular property. I urge you to have your own representation when purchasing a property, which means that your needs, finances, and goals are the top of the priority list for that agent, not the listing agent. Buyers agents can literally save a buyer thousands of dollars in negotiations and can help the buyer understand the entire process along the way.
When you’re ready to look at homes, start your search online here. I know the entire Portland Metro area including Southwest Washington, the luxury market, and downtown Portland condos. Whether you’re buying a condo in Pearl District, a single-family home out in Tigard and Tualatin, or a luxury estate on Lake Oswego, remember to call the Matin Real Estate Group for expert real estate representation and service.