For some, making the decision to become a homebuyer is one filled with sleepless nights, endless research and plenty of angst. Not so with my own experience. A promotion at work suddenly triggered the idea that maybe it was time to buy. Finances were better, I was happy at work (particularly now) and confident that Dallas would remain my home for many years to come.

The following series of events happened at a whirlwind pace: I was promoted on a Wednesday, told a Realtor friend on Friday that I was "thinking about buying," we began our home search the next week, and within a few weeks, we'd found the right place. That's when the real whirlwind started: We found the place during my lunch hour, put down a contract that night and received a verbal agreement from the listing agent over a celebratory dinner (the celebration may have been a bit premature, but we were keeping our fingers crossed, and ultimately, the news was good). I left dinner that evening with spinning head and slightly queasy stomach -- perfectly normal reactions for a first-time homebuyer, I was assured.

Later, I wondered if other homebuyers were putting me to shame. You know the kind: buyers who pour through books on the subject, who spend months doing their homework before taking the plunge. Like Nike says, I just did it. "I'm reviewing the top 100 questions every homebuyer should ask," my friend informed me recently. "I'm on number 34. When I get to number 100, I'll call your Realtor."

"Are there 100 questions?" my Realtor asked when I recounted the story. "I wasn't aware." Perhaps some of us take the responsibility of doing our homework a bit too seriously, but nevertheless, we homebuyers -- especially first-timers -- should bring a laundry list of questions to the transaction. You don't have to have 100 of them (and of course, if you do, your Realtor should be prepared to answer them), but there are some questions you can't afford not to ask yourself and/or your Realtor before you commit yourself to homeownership, and most of them are related to the mortgage application process.

1. How do I become pre-qualified? Can you recommend a trusted loan officer? How long have you worked with him/her?

Despite what first-time buyers expect, pre-qualification is often a snap. It's often free and quick to confirm; and yet, it greatly increases your bargaining position when it comes time to put a contract down on a home. The fact of the matter is that if I hadn't sought pre-qualification first, I probably would have lost out on my house, even my contract reached the listing agent's hands first, and even though the price offered on my contract matched that of other interested buyers.

2. What are my assets -- primary and supplementary sources of income, investments, etc. -- all of which will convey to my loan officer that I'll be able to make the monthly mortgage payments on my home?

Consider such sources as overtime pay, bonuses, commissions, alimony, child support, disability, weekend jobs, etc. You'll also need to prove to your loan officer that you've established a steady history at work -- that you've remained at your current and previous places of employment for a respectable period, and that your income is steady and not subject to cyclical or seasonal factors.

3. Can I obtain a copy of my credit report?

It's almost frightening how detailed our credit reports are. Your objective is to put before your loan officer a two-year history of prompt payments on all of your debts. If you're young, you might very well have an immaculate credit history (restricting yourself to a single credit card is a good start); although young people certainly have been known to charge their way to bankruptcy. If you've ever fallen behind on your payments for a legitimate reason such as illness, speak to your loan officer and work together to make sure you provide a thorough explanation. Being forthright could result in your credit history being cleared, paving the way toward loan approval.

4. What are my options for loan programs and downpayment terms?

Many first-time buyers are opting to take advantage of the increasingly popular 3% down bare minimum. Twenty percent is great if you can swing it, but particularly for first-time buyers, coming up with 20 percent of the sale price can be an impossible dream. Today more than ever, it's becoming easier for first-timers to become qualified and obtain reduced closing cost options. Investigate your options concerning interest rates -- either fixed, remaining the same for the life of the loan (15 or 30 years) or adjustable (fluctuating or reducing according to national interest rates).

In an accompanying piece, we'll discuss a few more critical questions first-time homebuyers should ask themselves, their Realtors and/or their loan officers.

Published: August 16, 2000

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