With the spring buying season in full swing, first-time home buyers are driving much of the current sale activity - lured in part by low prices, interest rates around 5%, and a federal tax credit of up to $8,000 for those who can sign a contract by April 30 and close by June 30.
But it can be a confusing process, even for veteran buyers. Below are five tasks that REALTORS, brokers, and other housing experts say first-time home buyers should know how to do before getting into the market:
Get the financials in order. Buyers should check their credit score, taxes, 401k's and other aspects of their financial situation to determine the maximum they're comfortable affording for their monthly mortgage, utilities, maintenance, taxes, and insurance.
"If your credit score is a mess, clean it up before applying for a mortgage," says Ed Mermelstein, a New York-based real estate lawyer and developer. "A bad credit score may not just affect your rates, but may prevent you from getting a mortgage."
Buyers need to get preapproved by a mortgage broker or lender - that means they get an agreement by a bank to lend the buyer up to a specific amount for a home. This tells sellers that financing in already lined up.
Find a REALTOR to represent you, and start looking. Make sure your choice in a REALTOR is someone who has experience, and is a good negitiator.
Before buyers start looking, it is important to make a pro and con list of things they must have in a house and prioritize what is most important. I encourage my clients to make a list of "wants and needs" to define direction.
"Try not to treat your home like you're living in the stock market," Diann Patton, a consumer real estate specialist, says. "It's a lifestyle, not about flipping. Don't try to time the market. We never know if it's going to go up or down."
Investigate, Investigate, Investigate. When in contract on a home, be sure to conduct your buyer investigations. Research the homeowner's association, when applicable. Home inspectors are highly encouraged.
"Definitely do an inspection. A lot of homes are sold 'as is' now, but you can get a credit from the seller is there is something big," says Cindy Royall a REALTOR with Sotheby's International Realty.
To help determine an offering price, your REALTOR will assist you with looking at comparable home sales.
Make an Offer and Apply for a Mortgage. Have enough cash for a down payment, and extra funds for closing costs, including appraisal costs and deposit (traditionally 3%).
Prepare for Closing. Upon closing, buyers get the keys to their new home. But there's a lot to prepare first. They'll have to get certified funds to cover closing costs and down payments (a settlement statement provided a day or two before closing will tell the buyer how much is needed). Homeowners insurance policies must be secured prior to closing as well.
(Adapted from an article by Stephanie Armour, USA TODAY)
All of this information can be overwhelming...especially if it is your first time. That is why I am happy to guide you through every step of the process and make your experience enjoyable. Buying your first home is a big deal....and should be memorable and exciting!
Contact me for any questions, or for a "Getting Started" package.
Thank you....and very sincerely,