Buying real estate in Manhattan is like nowhere else in the country -- it's competitive, and in short supply. So, when you make the decision that you'd like to buy a home here, make sure you are well prepared to be a shrewd player in this crazy market. Follow these important steps to keep your dream of homeownership from becoming a nightmare:
Know your FICO and check your credit reports - The first and most important step in preparing to buy a home is to know your FICO score. You can get your FICO score with credit reports directly at myfico.com. Examine your credit report for any errors with payment history, balances on credit cards or loans, accounts that do not belong to you or even inaccurate name or address information. Contact the creditor and credit bureaus to correct the errors and get documentation when issues have been resolved.
Stay on the straight and narrow - For the six months before you apply for a mortgage you need to be mindful that every financial move you make could affect your credit score and the financial profile that your lender will examine. So, make moves that will increase your credit score, like paying down revolving balances to 10 percent or less of your available credit, reducing your debt-to-income ratio, and paying all of your bills on-time. Also, avoid opening new lines of credit and refuse any new credit inquiries. More credit tips from me at credit club.
Once you and your credit are ready for a new home it's time to find a realtor. Hiring a savvy realtor, like Robert Gross of Douglas Elliman Real Estate, is a critical part of finding your dream home in this city. I've asked Robert to share his wisdom in successfully buying a home in New York. He works often with younger buyers that work on Wall Street and have a sizeable budget for their home. Here is how he counsels his buyers: "I tell them that purchasing real estate is a three-dimensional transaction and does not translate to a spreadsheet," he says.
1. Buy with your heart first. Buying a property is like falling in love. You feel it instantly. Even once you get to know someone you realize they're not perfect but you still love them. Make your home perfect by seeing its pluses and accepting the positives with the negatives.
2. Make sure the transaction is financially prudent; that's a big part of our job. Owning real estate is not only a great investment, it's a privilege that many people in the world will never have. How many investments can you live in, build equity and get tax benefits? Plus there is the incalculable pride that comes with saying, "this is mine!"
3. The best properties have "umami" -- that sixth sense in cooking that adds warmth, flavor and distinction. Look for umami in the unit you want to buy.
Yes, buying a home in New York can be a challenging, yet worthwhile undertaking. So be smart, take your time, follow the advice Robert and I offer and you will be rewarded with the privilege of a home in the best city on Earth to love for years to come. Happy home buying!