Thursday, February 9, 2012

First-time home-buyer's class and why you should take them

(originally written June 24)

I'm convinced that buying a home is not for the faint of heart, weak-nerved or folks who just can't handle the roller-coaster that is purchasing a home. Not to discourage folks who are, but you might want to get a stock of anti-anxiety medication if day-to-day life can sometimes wind you into a ball of crazy.

I've been told many things about purchasing a home and how it relates to other life-experiences. I've heard it's the absolute hardest thing Garry and I will ever do next to having/raising a child. At this point, I would have to agree, but only because we are the type of people that make things more difficult than they need to be. That, and our only experience with anything remotely close to having a child are our two cats.
You never saw us here

However, despite how emotionally crazy the process is, the actual step-by-step process of buying a home isn't awful so long as you are organized and honest with yourself and everyone involved. 

If you're thinking of buying a home for the first time, I would say your absolute first step is to check for local first-time home-buyer programs and counseling services. No, I don't mean lay on a couch while the counselor asks you about your childhood, I mean trained professionals that will sit down with you and actually listen to what you have to say. If a first-time home-buyer course is available, take it. I can't emphasize that enough. Sure, it may suck away some of your time and a lot of the material might seem to be "common sense," but the information you will get is worth every second of your time. 

The best part of a first-time home-buyer class, is that unlike a broker or banker (who really just wants your money) the teachers involved are impartial. Since these programs are generally funded through grants (or you may have to pay for the class) they are not dependent on you purchasing a home while brokers and bankers are. These teachers will also help you determine how much of a house you can really afford. The banks and brokers will more often than not lend you more than what you might want to pay. While they may say your debt-to-income ratio (how much debt you have compared to your income) may say you can afford an $800/month mortgage, you may not want to spend that much. 

The next best part to a first-time home-buyer class is after you get all of this really helpful information (which again, is worth every second of your time) chances are you will qualify for first-time home-buyer grants (aka: free money) if they are available in your area. 

Programs vary across the country, but a few of the options that are out there include help covering closing costs (which are crazy expensive - especially here in NY), down-payment assistance and sometimes even repairs on the home. You will be really amazed at what these grants cover and how much you may be able to receive. 

Like most things that sound too good to be true, there is usually a catch. Some programs (like the one Garry and I applied to) require that you live in the home for a certain amount of time, or you have to pay the grant back. In our case, the grant was really a diminishing lien, where the longer we live there - the less we pay back. If we live in our home for 10 years, we pay nothing back. 

Make sure you read any and all of the fine print on any legal agreement before signing, even if they do want to give you free money.