Buying Your First Home in Virginia Beach

by Katie Zarpas January 05, 2016 0 comments
Chesapeake, Norfolk, Real Estate Advice, Real Estate News, Virginia Beach

If you’re buying your first home, you’re probably feeling overwhelmed.  This is a huge step, and there are so many things you have to get right: finding the right house, in the right location, with the right financing.  Do you know where to start?

People will tell you that this process is difficult… but they’re wrong.  It doesn’t have to be hard.  With the right help, it’s easy!  Here is my guide to buying your first home.

Buying Your First Home

Credit

To purchase a home, your credit should be above 600.  The higher the credit score, the better the interest rate you will get.  Why is that interest rate important?  Because a lower interest rate means you pay the bank less over the life of the loan.  That puts more money in your pocket every month.  (Already have great credit?  Good – skip down to Pre-Approval.)  BUYING YOUR FIRST HOME

Is your score lower than you’d like?  No worries – you can fix that.  It might even be a good idea to spend a few months working on increasing your credit score.  There are free online tools you can use to help you measure your credit progress.  Mint will help you track your money, and Credit Karma has a simulator that will tell you how various conditions affect your credit score.

After your credit has risen, revisit the home buying process with the confidence that you are getting a better deal for you and your family.

Pre-Approval

Now that you’re proud of your credit score, the home buying process can really begin.  Before you meet with an agent, before you go online hunting houses, before you do anything else, you MUST get a mortgage pre-approval.

If you’ve already selected an agent you like, a good agent will send you to a lender.  If you’ve already found a house you like, the home owners are going to demand proof of your funds.  So don’t waste your time: visit a mortgage lender first!

When you find a mortgage lender you trust, ask them to give you a pre-approval letter.  Do not get a pre-qualification.  What’s the difference?

  • Pre-Approval Letter: lender verifies your income, job history, and credit
  • Pre-Qual Letter: lender verifies nothing

See what I mean?  Home owners and their agents will be much more receptive to you when they see that you have your financing in place.

More importantly, that pre-approval letter will tell you your budget.  You’ll know how much house you can afford, which will help you and your agent narrow the focus of your home search.

Loan Type

There are several different kinds of loans.  Each one has its advantages and disadvantages, and some will be better suited to your needs.  Here are brief descriptions of the most popular kinds of mortgages:

  • Conventional – You make a down payment (usually 5% or more of the purchase price) and you pay the same interest rate every year for the life of the loan.  These are a good idea if you plan on staying in one place for a long time.
  • ARM – “Adjustable Rate Mortgage.”  Your interest rate will change based on financial market conditions.  Often, interest rates start very small and then become much bigger after a few years.
  • VA – A loan guaranteed by the Department of Veterans Affairs, and only available to current or previous members of the military (or a qualifying surviving spouse).  Advantages include no down payment.
  • VHDA – “Virginia Housing Development Authority.”  Only available in the state of the Virginia, this loan is mainly designed for first time home buyers.  VHDA offers several flexible options to help people buy homes.
  • FHA – A loan insured by the Federal Housing Administration.  FHA loans were designed to help otherwise undesirable borrowers to get loans from banks.

Of course, there are other loan programs that may apply to you.  Your best option is to sit down with a lender you trust and have a candid discussion about your finances and needs.  Don’t be shy about the fact that you are buying your first home – they do this for a living, and their expertise will help you.  If at any time you don’t feel comfortable with the lender, leave.  Lenders are a dime a dozen, and you are entitled to shop around until you find one you like.

Loan Amount

Your lender might offer you a bigger loan than you expect.  That doesn’t mean you have to take them up on the deal.

If you ignore everything else in this article, do not ignore this: DO NOT MAX OUT YOUR MORTGAGE.  This is the biggest mistake first time home buyers make.   Take care of yourself first, and make sure you save money every month.  You might need it for an emergency, or to repair your fence, or to visit your sick mother.  Trust me on this: do not take on more debt than you can afford when buying your first home. 

Searching for a Home

Now that the financing is squared away, you can start searching for your dream home.  But there are a few things to keep in mind while you hunt.

First, read up about the problems with Zillow and Trulia.  Zillow’s information is notoriously out of date – I don’t want you to get your heart set on a house that sold 6 months ago.  But more importantly, do you know what you’re worth to Should I Buy a Condo or a House in Virginia Beach?Zillow?  Zillow charges agents $1000/month or more in the 23451 zip code to get your contact info.

Your best bet (especially in Hampton Roads) is to ask for an automatic MLS search.  That means that you get a little email every day with all the houses that match your interests.  If you see one you like, you can call your agent and go see it.

By the way, did you know that a buyer’s agent services are free to you – let me repeat that, FREE – and paid for by the sellers of the property you buy?  It costs you nothing to get an agent to represent you, so give it a shot.

Second, do you know what kind of house you want?  Do you want a single family home?  Are you interested in condos? How do you feel about Property Owner Associations?   I discuss the pros and cons of each here.

Third and last, what’s the market like in that neighborhood?  Some neighborhoods experience more demand than others, and sellers can increase prices accordingly.  Conversely, if you see a lot of properties going up for sale in one area at the same time, that could raise some red flags.  Talk to your agent about events in that area that are convincing people to leave.

Home Inspections

You did it!  You fixed your credit, you got a good loan pre-approval with the perfect loan program, and you found the home of your dreams.  Yay!

Now let’s be sure the home of your dreams is going to stay that way.  Get a home inspection.  Do it.  It will cost you a few hundred dollars out of pocket.  Do it anyway.

You need to thoroughly inspect this house before you buy it.  Here are some of the things you should look at:

  • Roof
  • Chimney
  • Foundation
  • Windows
  • Doors
  • Trim
  • Moisture damage
  • Leaking pipes
  • Exposed wires
  • Adequate heating and cooling
  • I could go on and on.

This is too big a job for your buddy’s friend’s landscaper.  Pay a professional.

Contingencies

What’s a contingency?  A contingency is an escape button.  It’s a clause we can write into your purchase contract to get you out of a nasty situation.  A home inspection is a kind of contingency.  Other types of contingency include:

  • POA/HOA – Property Owner’s Association/Home Owner’s Association.  Before you purchase a house, you get the right to read all the POA/HOA rules.  If you see something in there you hate (like not being able to work on your truck in your driveway), you can punch your escape button and leave the contract.
  • Condo – Very similar to POA/HOA.  Before you purchase a condo, you are given the condo rules and (usually) their financial documents.  If you see anything unacceptable, out you go.
  • Home Sale – Let’s say you already have a home and don’t want to pay two mortgages at once.  This contingency guarantees that you aren’t obligated to buy the new home until you sell the first one.
  • Custom – Often we can tailor a contingency designed just for your circumstances.  Tell me your needs and we can plan accordingly.

Update in April 2016

This just in – WalletHub did a ranking of the best cities for First Time Home Buyers in 2015.  Virginia Beach ranked #4 among all large cities, and Chesapeake ranked #9 among medium sized cities.  No other Hampton Roads community comes close.  Virginia Beach and Chesapeake came in above major cities like Houston, Nashville, Scottsdale, Denver, Dallas, Memphis, Jacksonville, Atlanta, New Orleans, and Minneapolis, just to name a few.

Curious about buying your first home in Virginia Beach? Take a peek at current listings:

 

 


 

Are you thinking about selling your home and you’re not sure what your home is worth?  Thinking about buying your first home but not sure about your earning power?

Contact me today for a complimentary marketing analysis of your home’s value, or to learn about the buying process.  There is no obligation, and you might be pleasantly surprised!

Katie Zarpas

Luxury Homes Specialist
Certified Real Estate Negotiator
Accredited Buyers Representative
Certified Distress Property Expert
HRRA Circle of Excellence Gold Recipient

Long & Foster Real Estate and
Christie’s International Real Estate
800 Laskin Road
Virginia Beach, VA 23451
757-685-4400 cell
757-428-4600 office
katie@katiezarpas.com
http://katiezarpas.com/

by Katie Zarpas January 05, 2016 0 comments