Help me start the home buying process

INTERVIEWER: Return now to our series on Minnesota Now called Professional Help. Now, we all need a little help to get through life sometimes from everyday questions to more complex problems. We're asking the experts to lend us a hand. Throughout the series, we are hearing from, well, some direct advice for us, not so direct Minnesotans. Here's Minnesota Now senior producer Aleesa Kuznetsov.

ALEESA KUZNETSOV: Buying your first home, condo, or townhome is an intimidating process. It's one that I've just started myself. But the housing market is unpredictable. You never know when it will turn in your favor or maybe against you. I knew I was financially ready to buy. But besides looking on Zillow and fantasizing about properties I couldn't really afford, I didn't exactly know the first steps. So I turned to get some professional help. Hello.

DAN SCHNEIDER: Hi there.

ALEESA KUZNETSOV: How are you?

DAN SCHNEIDER: Good, how are you?

ALEESA KUZNETSOV: The first step is finding a realtor. I suggest asking around family and friends who their realtor is. I went with my sister's realtor, Dan Schneider with Vibe Realty.

DAN SCHNEIDER: Nice to meet you by the way.

ALEESA KUZNETSOV: You too. Right away. We got to the fun stuff.

DAN SCHNEIDER: But I definitely want to do condo or townhome. I'd prefer a townhome.

ALEESA KUZNETSOV: Two bedrooms.

DAN SCHNEIDER: One bath is fine, but I want to have--

ALEESA KUZNETSOV: 100 to 1,000 square feet.

DAN SCHNEIDER: I would Love the look of a brownstone. But what I found--

ALEESA KUZNETSOV: I met with Dan about six months before my current lease was up. Dan told me it was too early to start seriously searching, but good to start getting a feel for things.

DAN SCHNEIDER: I think that I would start looking in November and just have an open mind about it because you'll have an idea of what's going on then too. There's going to be less inventory at that time of year. So that's the tricky part. But don't think you're probably smart to buy it three or four months early.

ALEESA KUZNETSOV: That's the bad news about my home search. Winter is not a great time to buy a home in Minnesota. But there is a silver lining.

DAN SCHNEIDER: It is the slowest time. And it's when a buyer, in my opinion, has an opportunity to get a deal sometimes.

ALEESA KUZNETSOV: Another downside of my buying window that I was surprised to learn about was the impact of an election year.

DAN SCHNEIDER: So lots of times there are shifts in the whole financial scene around election times for various reasons. And there's also different sentiments about buying and selling houses when people might be feeling some angst about what's coming up.

ALEESA KUZNETSOV: Dan says the housing market is hard to predict during an election year. And as the economy recovers from the pandemic, interest rates have been hard to predict too. But as of right now, I seem to be in luck with the average rate on a 30-year mortgage at its lowest level in more than a year. It's around 6.3%. A year ago, it was above seven. In my mind, even above 6% feels high compared to the people I know who have 2% or 3% interest rates. But Dan says it's actually pretty average.

DAN SCHNEIDER: They've never been as low as what they were recently. So where they're at now is what many people would consider a normal interest rate.

ALEESA KUZNETSOV: Really?

DAN SCHNEIDER: Mm-hmm.

ALEESA KUZNETSOV: OK.

DAN SCHNEIDER: Yeah, if you look back historically, this is not historically a high interest rate. But it really does feel that way because of recent history.

ALEESA KUZNETSOV: And of course, if things do change, there's always an option to refinance your loan to a lower interest rate. Now, that takes us to what I really wanted to know. OK, so budget-wise, if I tell you how much I can put down, would you be able to tell me? And how much I want to spend monthly.

DAN SCHNEIDER: So it's funny you say that because you are saying exactly what I always encourage people to do. Is not to say I want to buy a house that costs $300,000, but to say my comfortable payment for a house is this much monthly payment. And so the person who can help you with that and also help you to understand what all of the costs that were purchase are separate from the monthly costs, the one time fees associated with the purchase is going to be a lender.

ALEESA KUZNETSOV: So it turns out your realtor doesn't really do too much with your budget and costs, but rather a lender who gets you set up with a mortgage. Dan set me up with a lender that he works with, which is what most realtors will do.

DAN SCHNEIDER: So they do the backend part of this making sure you are smart about your approach and have your ducks in a row financially so that you can pounce when the time comes. And on the front end, we help you to see how this is match with the ones that are most likely to fit and help you structure an offer that's going to be competitive when the time comes.

ALEESA KUZNETSOV: After my first meeting with my realtor, I felt ready and confident to start my search. I got a timeline, got the pre-approval process going, met with a lender, and felt like I had a better understanding of my budget. So now, it's just a waiting game for me. My realtor has started sending me condos and townhomes and I've been sending him ones I like. So as they say, happy house hunting. For professional help, I'm Aleesa Kuznetsov.

SUBJECT: And you can hear our new series called Professional Help every other Thursday here on Minnesota Now. If you missed one, you can find the whole collection on mprnews.org.

[MUSIC PLAYING]