A buyer resource

Your First Home: The House Has to Qualify Too

Most first-time buyers think the loan is about them: their credit, their income, their savings. It is. But the loan also has to approve the house. A house can stop a loan even when your credit is fine. Knowing that before you tour saves a lot of heartbreak.

Step 1: Talk to a lender before you look

Get pre-approved first. When you do, ask one question most buyers never ask:

“Which loans would work on a house that needs a new roof, new heat or a lot of updating?”

The answer tells you which houses you can realistically buy. I’m happy to share my list of lenders. It’s unranked, and I’m not paid for referrals.

Step 2: Know what can stop a loan

Many loan programs have property requirements. An appraiser may flag a roof near the end of its life, peeling paint on an older house, missing handrails, or a heating system that doesn’t work. Some loans can include money for repairs; others need them done before closing. Your lender can tell you which applies to the loan you’re using.

Step 3: Check the Big Five at every showing

Paint, carpet and kitchens are easy to price. These five aren’t:

1. Roof
2. Foundation and floors
3. Water and moisture
4. Electrical
5. Heat, air and plumbing

I bring a one-page Tour Notes sheet to every showing so you can rate each house on these five before they all run together.

Step 4: Plan for every cost, not just the down payment

• Down payment
• Closing costs
• Inspections, plus a well and septic inspection on a rural property
• Money left in savings after closing
• Repairs, if the house needs any

Step 5: Make your offer from the numbers

The asking price is the seller’s number. For a house that needs work, I’ll run Fixer Math with you: the value after repairs, minus the repairs, a cushion, holding costs and closing costs. That’s the most the house is worth to you.

Why I watch the loan

Between my years in real estate, I spent nine years on the marketing and business-development side of the mortgage business. I’m not a lender and I don’t quote rates. But I know how lenders and appraisers look at a house, and I check that before you write an offer.

Melissa Harmel, Realtor®, CRS, ABR · eXp Realty, LLC · AL # 000164573-0 · GA # 451015 · Equal Housing Opportunity. Melissa Harmel is a Realtor®, not a mortgage lender, and receives no compensation for lender, inspector or contractor referrals. If you’re already working with an agent under a written agreement, please disregard.