‘Shark Tank’ Star Barbara Corcoran: This Is the Most Important Thing for First-Time Homebuyers
Written by
John Csiszar
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Carly Brashears
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Barbara Corcoran is a well-known real estate investor and long-time “shark” on the TV show “Shark Tank.” The outspoken Corcoran strives to motivate people to invest and take action to increase their wealth, whether they are entrepreneurs or everyday working Americans.
In a recent YouTube short, Corcoran spoke about the most important thing for first-time homebuyers to know. Here’s a quick summary of what she said, along with a deeper look into Corcoran’s real estate investment suggestions.
Get Pre-Qualified
Corcoran says the most important thing for first-time homebuyers is to get pre-qualified. Pre-qualification involves working with a bank or lender who will review your finances and provide you with an estimate of how much they would likely be willing to lend you. Most importantly, they’ll issue you a letter showing this pre-qualified amount that you can share with the seller of the home you want to buy.
This accomplishes two main objectives. First, it shows the seller that you’re a serious buyer and not just a local “lookie-loo” that goes to every open house just to gawk. Second, and more importantly, it puts you on the same footing as a cash buyer, according to Corcoran. While some sellers might be dead-set on only dealing with a cash buyer, a pre-qualification letter can make sellers more confident that you are a serious buyer. It shows that there’s a bank likely willing to fork over the full purchase price to the seller if a deal is reached.
Keep in mind that “pre-qualified” is not the same as “pre-approved.” While pre-qualification is an estimate based on financial information you provide the lender, pre-approval requires you to fill out a mortgage application and involves the lender conducting a more thorough review of your finances.
Waiting To Act Doesn’t Make Sense
Corcoran has long espoused that in nearly all cases, waiting to act doesn’t make sense. Corcoran’s a strong advocate of the wealth-building characteristics of real estate, and she believes that if you’re buying a well-located property at a good price, you’ll always regret not making the move as you watch the price keep increasing over the long run. Corcoran built her wealth in the real estate industry, so she understands the value of making moves as soon as you find an opportunity rather than regretting it later when the time for a good deal has passed.
Find a Good Broker
One of Corcoran’s strongest suggestions for first-time homebuyers is to find a good broker. To Corcoran, a good broker is one who is willing to hustle on your behalf and find the best deals available. According to Corcoran, “there is always a deal to be had,” but sometimes it takes a good broker to find it, particularly if you have no experience in the area.
Don’t Let High Prices Scare You Away
The financial press has been full of headlines over the past year or two about rising unaffordability in the housing market. Between runaway home prices and the highest interest rates in decades, there’s no denying that homebuyers today will be shelling out more in monthly costs than they would have two or three years ago.
But according to Corcoran, the best way to deal with this is to think of your monthly housing costs rather than the headline home price. In other words, break down how much you’d be paying in mortgage payments, insurance and taxes and see how that payment fits into your budget. In many cases, even a relatively significant increase in the price of a home won’t translate into a back-breaking adjustment to your monthly payment.
Imagine, for example, you were looking into buying a home for $400,000 two years ago, but now that home price is $500,000. On the surface, you might think that paying an additional $100,000 for a home is beyond your budget. But a $100,000 price increase, all other things being equal, would only bump up your monthly payment from $2,789 to $3,472. While no one wants to pay more for something, that’s only a $683 increase to your monthly budget for a home that’s $100,000 more valuable.
Don’t Take Things Too Seriously
The homebuying process can be stressful, especially for a first-time buyer. In addition to not knowing what to expect, many first-time buyers get caught up in the idea that they are “stuck” with the first home they buy no matter what.
Corcoran says that first-timers need to calm down and take pressure off themselves by realizing that they don’t have to stick with their purchase for the rest of their lives. In most cases, a starter home is just the prelude to a “dream home” down the road, and even if it isn’t, owners can sell and move on at any point they wish. If you’re of the belief that the first home you buy has to make you happy for 40 years, then it can be more stressful than it should be.
Shop Around for the Best Rate
One of Corcoran’s biggest tips for first-time homebuyers is to shop around for the best mortgage rate. Home financing is a competitive market, and you’re likely to get a different rate from every institution you ask. Start first with your home bank and see if there are any interest-rate deals for first-time homebuyers or long-term customers. Oftentimes, you can knock off 0.25% from the standard mortgage rate, which Corcoran says can add up to big savings over the long run.
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