Course helps first-time homeowners avoid pitfalls

By Matt Bewley | The Daily Journal

Published Wednesday, April 4, 2007

Location, location, location. This homebuyer’s motto has been handed down since the days when people chose a cave for its proximity to fishing streams and protection from the wind. Today’s potential homebuyer still considers location, but now they also must consider mortgage financing, variable interest rates and property values.

“Location is definitely important” Real Estate Broker Vern Johnson of Enstad-Mann-Johnson Realtors, Inc., he said. “They should decide first if being close to places like schools is important, as it is for a lot of new couples. It depends on what they’re looking for. It may be out of town.”

But before today’s home buyer even begins looking at houses, they should know what they can afford. Real estate professionals recommend sitting with a mortgage broker to pre-arrange financing.

“There are a number of government-backed mortgages out there now, that are basically zero-down (payment),” he said. “Each lender has a different set of these programs.”

Good Earth Real Estate Broker Pete Piekarski cautioned new homebuyers to beware high-risk mortgages based on variable interest rates that may seem attractive at the outset, but may jump to a point beyond the buyer’s means later.

“Interest rates are fairly low, right now, so (buyers) are better off locking in a fixed rate,” he said. “I’d be very cautious getting drawn into an adjustable rate plan. I would steer clear, because it will probably end up costing.”

With financing procured, buyers are ready to house-hunt.

“What they have to keep in mind is that they’re not going to find the same home their parents have,” said /// They may not have a sun room or a deck. They shouldn’t go in with any preconceived notions.”

Once an affordable home is located, and thoroughly examined, the next big step is to have it inspected.

“I recommend getting an inspection on the house,” Piekarski said. “Even experienced people can miss things on the house, like the age of the shingles.”

With the inspection results in hand, buyers can make an informed offer on the property.

If all of this seems like a lot to learn, it is. But there is help.

The Otter Tail-Wadena Community Action Council hosts workshops for first-time home buyers and those seeking state-backed funding assistance with down payments and closing costs. Those seeking assistance can not have owned a home in the last three years.

“This is a mandatory workshop, if you want this assistance,” Home Stretch educator and counselor Cookie Nelson said. “But we encourage everyone to come to it because a lot of people don’t understand the process. There are people who own homes right now who don’t understand how the process worked.”

Home Stretch consists of two four-hour sessions providing information on how to find and purchase the right home, also the advantages and disadvantages of owning a home.

Nelson encourages people to register ahead of time (see sidebar), to bring a recent credit report, if possible, and to arrange for a free, first-time homebuyer counseling session, which enables them to fully understand financial options available through these funding programs.

For more information on the workshops, call 218-739-3011.

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