FIRST TIME HOMEBUYER
- What are the Benefits of Homeownership for First Time Homebuyers?
- How can I get started as a First Time Homebuyer?
- How can I estimate what I might be able to borrow?
- How can I find a home that meets my needs?
- What can I expect during the homebuying process?
- 10 Tips for First Time Homebuyers
What are the Benefits of Homeownership for First Time Homebuyers?
Homeownership brings many benefits. When you buy your first home, you’ll become part of a community and experience the security of owning the roof over your head.
As a homeowner, you may also be able to:
How can I get started as a First Time Homebuyer?
You can prepare to buy your first home by:
|Creating a financial plan||
|Estimating what you can spend||
|Setting a time frame||Determine when you’d like to buy your home. Take into consideration your credit, cash flow, and savings.|
**Closing costs include the origination charge, discount points, out-of-pocket expenses, and prepaid items.
- Origination charge – the amount that includes all charges (other than discount points) that all loan originators (lenders and brokers) involved will receive for originating the loan. This charge covers items including fees, document preparation, underwriting costs, and other expenses. If you qualify, you may be able to finance the origination charge as part of your mortgage amount.
- Discount Points – which are calculated as a percent of your loan amount – are an option if you want to pay to reduce your interest rate. Discount points are charges paid to the lender voluntarily, usually at closing by the borrower or the seller. One point is equal to 1 percent of the loan amount.
- Out-of-pocket expenses cover third-party services, such as fees for appraisals, attorneys, credit reports, deed recording, and tax services.
- Prepaid items include homeowners insurance, private mortgage insurance, and deposits for establishing an escrow account.
- Depending on the closing date, you may prepay some interest and pay property taxes at closing.
- An escrow account is established by the lender to help you to save toward your property tax and homeowners insurance instead of paying the entire amount at once.
How can I estimate what I might be able to borrow?
There are different ways to estimate a price range that’s appropriate for you.
- A free mortgage prequalification lets you estimate how much you can borrow, based on basic financial data you provide.
- A preapproval letter tells sellers that you’ve been preapproved for a specific amount based on a preliminary review of your credit information.
A preapproval isn’t a commitment to lend. A commitment is contingent on checking application information, satisfying all underwriting requirements and conditions, and getting an acceptable property appraisal and title.
Verification of this information, satisfying underwriting conditions, plus a satisfactory title search and appraisal are required for final loan approval.
Remember: Neither a preapproval nor a prequalification obligates you to borrow from that specific lender.
How can I find a home that meets my needs?
Darcy can help you find properties for sale that meet your needs. Keep the following elements in mind.
|Needs and wants||
|Types of homes||
Sometimes finding your ideal home involves compromise. You may want to consider “a diamond in the rough” — a place you can transform with a bit of ingenuity or some renovations. Ask your mortgage broker about specific programs that fund purchase and repairs.
What can I expect during the homebuying process?
Darcy Weber, REALTOR®, can help you through each stage of the homebuying process.
|Have a preapproval for maximum leverage||A preapproval tells real estate agents and home sellers that you have been preapproved for a specific mortgage amount. Real estate agents and sellers increasingly rely on preapprovals to identify serious offers.|
|Make an offer||Working with Darcy, determine the appropriate amount for your initial offer based on comparable home sales, market value, condition of the home, and your closing date.|
|Put your offer in writing||Handle all negotiations in writing to make sure both parties understand the terms of the agreement. If you do negotiate verbally, follow up in writing.|
|Submit a deposit||This “good faith” deposit demonstrates commitment to the transaction.|
|Finalize your purchase contract||
10 Tips for First-Time Homebuyers
1. Be picky, but don’t be unrealistic. There is no perfect home.
2. Do your homework before you start looking. Decide specifically what features you want in a home and which are most important to you.
3. Get your finances in order. Review your credit report and be sure you have enough money to cover your downpayment and your closing costs
4. Don’t wait to get a loan. Talk to a lender and get prequalified for a mortgage before you start looking.
5. Don’t ask too many people for opinions. It will drive you crazy. Select one or two people to turn to if you feel you need a second opinion.
6. Decide when you could move. When is your lease up? Are you allowed to sublet? How tight is the rental market in your area?
7. Think long-term. Are you looking for a starter house with the idea of moving up in a few years or do you hope to stay in this home longer? This decision may dictate what type of home you’ll buy as well as type of mortgage terms that suit you best.
8. Don’t let yourself be house poor. If you max yourself out to buy the biggest home you can afford, you’ll have no money left for maintenance or decoration or to save money for other financial goals.
9. Don’t be naïve. Insist on a home inspection and if possible get a warranty from the seller to cover defects within one year.
10. Get help. Consider hiring a REALTOR® as a buyer’s representative. Unlike a listing agent, whose first duty is to the seller, a buyer’s representative is working only for you. And often, buyer’s reps are paid out of the seller’s commission payment.
|www.REALTOR.org/realtormagReprinted from REALTOR® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS® . Copyright 2004. All rights reserved.|