When you’re ready to talk to a mortgage banker in Michigan and buy your first home, there’s all kinds of excitement – and at the same time there’s that knot in your stomach.  First time home financing can be a daunting and unnerving process for some.

With all the talk about the housing market being “up” and “down” and “a mess” creates unease for first time home buyers.

If you can secure financing and preapproval through a mortgage banker, and you can find the right house for you and your family, then the market is not a mess.  You just need a bit of guidance to get you through the process.  Much of that will come not only from your mortgage banker but also the real estate agent you use.

In addition, follow this simple checklist to help guide you through the process of first time home financing.

Get Preapproved

Before you start looking at homes, you should get pre-approved (as opposed to being pre-qualified) for your mortgage.  When you’ve secured mortgage pre-approval in Michigan, you know for certain that you’re set to buy a home.  You know how much house you can afford and how much you’ll need to spend.  This also helps you calculate your monthly expense in repaying your mortgage.

Determine your needs and wants with a house

This is really important, and should be done before you start trying to look at homes in Michigan.  If you sit down with a mortgage banker and determine that you’re pre-approved for a $175,000 home but you set out with a real estate agent to view homes in the range of $225-250,000 you’ll discover that it’s hard to “settle” for a $175,000 home – even though that’s probably a pretty attractive home.

If you know what you need and establish the little extras that you want, you can quickly find a home to suit your needs and some of your desirables that’s within your budget.

Talk to a Realtor

A real estate agent can lead you in the right direction toward a home that fits your needs and wants.  This includes the neighborhoods and communities that would be a good fit for your family.  Remember though that just because you’re approved for X amount of mortgage financing doesn’t mean you should find a house at the amount.  If you max out your mortgage potential then you become house rich and lifestyle poor.

Explain to your real estate agent that you want to see houses in a variety of price ranges that match your needs and interests, even if only partially.

A good agent can keep you informed of expenses, help you through the closing process and help you get a better handle on the buying process.  I maintain a network of real estate agents to which I refer approved customers based on their target home location and who I think can best serve them.

But Do Your Research

Just because you have a real estate agent working for you doesn’t mean you can skip the homework.  If you’re a first time home buyer, you should put your time in to gather information.  For starters, realtors aren’t permitted to tell you information about school systems or crime rates because of Fair Housing Laws

You’ll also want to check the closing numbers of comparable homes in the community and surrounding neighborhoods to make sure that you’re getting the best value.  You can use sites like Zillow for research, just remember that data available online will typically trail the market by a few months, that’s why it’s a good practice to negotiate.

Look at Communities, Not Just Homes

If you’re buying your first home in Michigan, it’s extremely easy to get preoccupied by the amenities and certain aspects of the homes you view.  So preoccupied in fact that you don’t think about the surrounding community.

“Location, location location” is as true today as it was 20 years ago.  Try to decide where you want to live based on demographics and local stats.  That includes crime rates, school system info, flood maps, drought information, traffic data, shopping, road access, emergency response times and natural disaster info, etc.

Always Negotiate

As mentioned, data online for first time home buyers is often several months (or more) behind.  When you make an offer, keep it 10-15% below the market value of the home.  Consider that some homes sit for months or longer before a seller gets an offer.  Don’t just take the listing price.  Make a fair offer and negotiate.  The seller may jump at your offer in order to get a home sold, or they may counter-offer at a still-lower-than asking price.

Arrange a home inspection

Shoot for a home inspection before the closing process begins.  Go with an inspector who has a degree in engineering.  Expect a higher expense but it’s worth – anyone who has ever seen “Holmes on Homes” knows what kind of surprised you can find in what looks like a great home.  Part of this process is a request for the seller to provide written verification of potential problems or known problems in the home.

Best to know ahead of time than at the last minute in the final home inspection to discover there’s a problem in the home that locks of financing and forces you to start the process all over again after weeks of hunting and then added closing paperwork.

Don’t Buy Furniture Before you Close and Move In

If you find a home you love, it’s hard not to start doing mental decoration and deciding what kind of furniture you want.  First time home buyers should hold off on making purchases like this.  For one, any mortgage banker in Michigan will advise you not to do anything that could mess with your credit score before you actually close and it’s a done deal.  To do so could jeopardize your pre-approved mortgage rate.

Also, you never know if that beautiful solid oak entertainment center will fit.