Heed the 10 commandments of buying a home


March 29, 1992|By ELLEN JAMES MARTIN

Are you bewildered by the process of buying a first home? Do all the references to mortgages, brokers, contracts, home inspectors, deeds and surveys leave you baffled? Does your puzzlement keep you from pursuing your housing ambitions?

Then sit down in a comfortable chair for a moment and take a deep breath. While there's much to learn along the way, most people can navigate the process of buying a home to a satisfactory outcome, points out Peter G. Miller, the Silver Spring-based author of "Buy Your First Home Now," a HarperCollins paperback.

"Despite the fact that home buying looks complex and intimidating, there are short-cuts that can make the process more manageable," Mr. Miller says.

Ideally, you'll begin the home-buying process about three months before your lease expires or before you must move. To make optimal use of your time, real estate experts suggest 10 basic steps toward the purchase of the right first home.

Step No. 1: Make your home-buying wish list.

Knowing thyself and thy preferences is an essential element as you embark on your journey to homeownership. An hour of introspection -- or discussion with your mate -- will be time well invested, says Joseph Zick, sales manager for Century 21 real estate offices in Laurel and Columbia.

"Is it more important to you to have a three-bedroom house with no garage or a two-bedroom house with a garage? It's essential to start making decisions on your preferences early," Mr. Zick advises.

Assemble a quick list of qualities you'd like in your first home and then rank them in order of priority. As you'll soon learn, the home-selection process will demand many trade-offs.

Step No. 2: Get the name of a good mortgage lender by asking around at the office.

Why worry about a home loan before you look for a home? Because your borrowing capability will define the boundaries of your search. And with surprising speed and precision, a loan officer can estimate what you can afford and how much cash you'll need by conducting what's known as a "pre-qualification interview."

Remember that mortgage lenders abound and you're not committed to taking out a home loan from the one who pre-qualifies you.

Step No. 3: Gather a little personal financial data for your talk with the lender.

Pull together a few recent pay stubs for information on your salary. Also compile a list of other income sources and any consumer debts, including credit card and car loan balances, that will take a year or longer to pay off. Besides your loan balances, you'll need the monthly mini mum payments on all such debts.

Step No. 4: Phone or visit the lender of your choice for your pre-qualification interview.

Although most lenders will be happy to see you in their offices, you can spare yourself the trip by having your interview conducted by phone, suggests Ric Merrill, a senior executive with the Prudential realty chain.

Mortgage lending has become a remarkably standardized process. That means that, lender to lender, there's little variation on what are known as "underwriting ratios." Given your income and debt level, these ratios will define rather narrowly the limits on your borrowing capacity, Mr. Merrill said.

Step No. 5: Pick a realty agent by calling local sales managers.

Some people agonize over the selection of an agent and others (( pick someone at random. A happy compromise between these two extremes is to make your selection from names given to you by the sales managers who head local realty offices, says Mr. Zick of Century 21.

Look in the Yellow Pages for a couple of established real estate offices as close as possible to the area where you plan to buy. Call managers of the offices, telling them you're searching for an agent who will be energetic yet patient. Then, speak to the

recommended agents and select the one with whom you have the greatest rapport on the phone.

Step No. 6: See your agent for a preliminary tour of the general area that interests you most.

The idea of this tour is to get a feel for various neighborhoods. Not only will you gain a sense of the quality of housing in particular communities, but a good agent will answer an array of questions, says Prudential's Mr. Merrill.

Step No. 7: Go out and kick bricks.

After you've zeroed in on the specific neighborhood of your choice, it's time for the first of several expeditions to look at actual properties, inside and out. Remember that agents work routinely on weekends and you'll find that most any Saturday or Sunday afternoon is a good time to search.

Step No. 8: Plan a "realty day" in the neighborhood you've targeted before you actually buy.

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