My Top Tips For First Time Homebuyers
Buying A First Home
My Top Tip For How To Buy Your First Home
Buying your first home can be a daunting experience. What should be a fun filled and invigorating time can turn into a nightmare if you are not prepared. My very first and number one tip for first time home buyers is to wait until you are ready.
- Wait Until You Are Ready.
If you are not ready you can be easily overwhelmed. I mean this on more than one level. If you are not prepared mentally the process will be a burden, overly challenging and stress filled. If you are not prepared financially the costs associated with home buying can mount up quickly and possibly prevent you from making your deal.
- Home buying is about making a deal. You, the buyer, will make a deal to buy a home with the seller. In most cases you will both be represented by a skilled professional known as a real estate agent. Because of the size, cost and potential for fraud the deal is also supervised by an escrow agent and a real estate attorney.
Get Your First Time Home Buyers Mortgage
Getting a mortgage is one of several important phases of first time home buying. This is when you find someone or some entity (a bank, credit union or other lending facility) to lend you the money to buy a house. Not many people have the money to pay cash for a house, it is traditionally done by borrowing from a bank and then paying them back over time. There are a lot of ways to get a mortgage. The most common place is the local bank. They will go over all the different types of available mortgages but not all banks lend all kinds of mortgages. The average mortgage is 30 years, this is also the benchmark mortgage for financial reporting and is the one you hear on TV most often. The interest rate now is very low, around 4%, much lower than our parents and grand parents paid. It pays to shop around when looking for a mortgage. In some cases you can get a government subsidized FHA or USDA loan. These are loans meant to help people get into housing but come with restrictions.
2. Get your mortgage first.
Getting your mortgage squared away first will save a lot of time and potential headaches later on. Once approved for a loan your bank will give you an approval letter. This letter is a powerful bargaining tool when it comes time to negotiate price. It lets the seller know you are serious and have the financial strength to pay.
- The price of the home and the amount of the mortgage are rarely the same. There are many factors that go into a home sale including closing costs and earnest money. Some banks and especially credit unions will offer first time home buyers mortgages that allow some or all of the costs to be financed into the mortgage amount.
- After shopping about 5 different sources for mortgages I finally found the one I wanted. i got it from a local credit union. Credit unions are great sources of home and car loans. They operate on different goals and principles than regular banks and have more leeway when it comes to loaning money. I was able to get a first time home buyers mortgage with no money down and had the sellers pay for closing.
My First Dream Home
Finding Your First Home
Finding your first home can be a lot of fun but it also takes a lot of work. I know I looked at about 100 houses before making my pick. That does not include all the properties I looked at on line, those are 100 drive bys. Getting your mortgage taken care of first also helps when looking for your first home. It lets you know how much you can spend and still be within your monthly mortgage payment budget. It does not make any sense to look at houses you can not afford.
3. Go house hunting.
Don't wait for your agent to find houses for you. Yes, they are an invaluable tool and can help you find homes you may not have found otherwise but you do not need them to get started. You can look up MLS Listings online and even search them with your specific needs.
- Always remember that you are buying your HOME. Do not settle on any old thing and do not let your agent talk you into something you are not totally happy with. As a first time buyer there is a good chance you will be in this house for several years, you need to love it.
Buying Your First Home
Once you have found your dream home it is time to negotiate a price and sign a contract. This usually takes a couple of days. You and your agent will draw up an offer to buy that includes the sale price, who pays closing costs and any other pertinent details of your purchasing the house. These include several safeties for you that will allow you to back out of the deal should any negative issues arise. After you submit the offer to buy you may get a counter-offer from the seller asking for more money or allowances for repairs to the property etc. Once both parties agree on terms and sign the contract the property is now termed under contract and is officially off the market pending the close of the sale.
4. Make an offer to buy.
Once the home is under contract the work of closing the deal begins. This is when you, your bank and the seller's agents all perform their due diligence on the property and the deal. For you this means hiring a home inspector to come out and inspect the property. He or she will look at every aspect of the homes construction and condition in an objective manner and then report his findings back to you. The report will list the age of the homes components, any needed repairs and the inspectors recommendations.
- After the home inspection you will be able to request repairs from the seller. They may not wish to spend the money and may offer to lower the price of the home instead. If no agreement can be reached then you will be able to back out of the deal per the details of your contract. In some cases you will get all of your earnest money back and only be out the few hundred dollars it cost to get the home inspection.
- At this time the mortgage company will fund an escrow account. That is a special type of account that holds money intended for a purpose, in this case the purchase of your home. The escrow account protects the seller, the buyer and the bank.
Close The Deal And Move Into Your First Home
Once all the loose ends are tied up it is time to close the deal. This usually happens 45-60 days after the contract is signed. This gives enough time to have the home inspected and repaired, appraised by the bank and cleared by the lawyers. The attorney's will perform a thorough background check on the property and the seller to make sure there are no outstanding debts or liens on the house. When this is all completed both partied meet at the lawyers office to sign the papers and close the deal.
5. Move into your new home.
At the closing the attorney will explain the details of the mortgage and the sale of the home to you. Then you will sign and initial the paperwork about 2 dozen times, assuring that you are you and that you will pay. Once this is all done you will receive your keys and then be able to move into your new home.
- The closing is the convergence of you the buyer, the seller, the bank who lends you money and the escrow agent who holds the money as a middleman until all conditions are met and the deal is signed. The attorney is the legal representative who handles the details of the meeting and processes the transaction of money and home.
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