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Top 7
Tips for First Time Homebuyers
by Eric
Bramlett
Purchasing
your first home is a big
step, that comes with some very serious decisions. Many homebuyers
are intimidated by the process, and continue renting much longer
than they should, or need to. However, if you break the homebuying
process down into these simple steps, and follow these important
tips, you will find the process less intimidating, and much more
manageable.
1) Before
You Begin, Ask Yourself One Question
Will you
live in your next home for at least 3 years? If the answer is "Yes,"
you should probably purchase, rather than continue renting. With
average appreciation, you'll break even on your closing costs after
2 years, and start making money at year three. Every year after that
will put more money in your pocket! The most expensive aspect of
real estate is buying & selling, so the longer you can live in
the home the better. However, purchasing makes sense if you can make
as little as a 36 month commitment.
2) You
Don't Need a Down Payment!
It always
surprises me how many people want to purchase a home, but don't
because they believe that a hefty down payment is required. Zero
down programs are very common, and are quickly becoming the norm,
rather than the exception to the rule. Because your new home is
collateral for the loan, there are many banks that will jump at
the chance to loan you 100% of its value. Perfect credit isn't a
requirement, either. Because real estate typically appreciates in
value, it's often easier to be approved for a 100% mortgage than it
is to borrow 100% for a car!
3) Get
Pre-Qualified
Pre-qualification
is a very important
step, and the step that first time home buyers dread the most.
Qualifying to buy a home is pretty easy and requires relatively
little work for you. Pre-qualification is what gives you buying
power and allows you to make an offer on your dream home when you've
found it. More importantly, pre-qualification will let you know how
much your new home will REALLY cost - in monthly payments. A
$150,000 or $300,000 home doesn't mean a lot to most buyers - but
$1200 per month and $2500 per month are tangibles that everyone can
understand. After your lender pre-qualifies you, ask them for a
"payment table" that shows you a rough estimate of TOTAL monthly
payment based on purchase price. Pick your payment, and you know the
price range to shop in.
4)
Consult a Real Estate Professional ASAP
Many
first time home buyers avoid contacting a Real Estate Agent because
they dislike high pressure sales. However, Real Estate Agents have
an advantage over traditional salespeople because they have access
to the Multiple Listing Service, which is a database that lists
roughly 99% of the homes for sale in a given market. This means that
your Real Estate Agent doesn't have to sell - he/she merely presents
your options. The most important qualities to look for in your Real
Estate Agent are his/her knowledge of your specific market and their
willingness to help. Interview a few agents and choose one that will
help guide you through the process. You'll find the help &
insight will be invaluable - and you'll be glad you contacted your
Real Estate Agent sooner, rather than
later.
5) Make a
List of "Must Haves" & "Wants"
Many new
home buyers mistakenly think that they will "just know" when they
"walk into the one." While some buyers DO fall instantly in love
with a home, this is not the norm. You'll find your search is
easier, and you will be more confident in your decision, if you take
a systematic approach to your search. The best way to organize your
search is to make two lists: Your "must haves" and your "wants."
Your "must haves" are the absolute necessities in your new home - in
fact, you don't even need to view a home if it doesn't have every
"must have." Great examples of your "must haves" are price, school
district, size, etc... Your "wants" are the qualities that you would
like for your new home to have, but it's not a necessity. Great
examples of "wants" are color, flooring, kitchen appliances,
surround sound, and type of exterior. By taking the time to
articulate what you need and want in your new home, you will know
exactly what to look for when viewing prospective
homes.
6) Pick
Your Favorite Neighborhoods
You can
always make changes to your house, but you can never change its
location. Most home buyers already have a good idea of where they
would like to live because of school districts, work, or other
factors. However, neighborhoods can be pretty different, even in the
same area of the city. Ask your Real Estate Agent to email you a
list of homes in the specific area of town you're interested in.
Take a drive through the different neighborhoods on the list your
Real Estate Agent sends you, and choose your favorites. Pay
attention to area amenities, how well the yards & common areas
are kept, and if you see a lot of "for lease" signs - which can be
an indication of a heavy rental area, and lacking in "pride of
ownership." After you have picked your favorite neighborhoods, and
you know your "must haves" and "wants," you can literally make a
list of EVERY home available that meets your criteria, and view
those homes.
7) Make
Your Decision!!!
Homebuyers
often hesitate after they've found the right home because they're
not confident about their decision, or their decision-making
process. Your home is probably the largest investment of your life,
and it's normal to feel butterflies in your stomach before putting
your first home under contract. However, if you do your due
diligence - and you have if you followed the steps above - then you
will have your bases covered. If you've found a home that meets all
of your "must haves," most of your "wants," is in the right
neighborhood, and in your budget - it's the home for you! Don't wait
and let another buyer take YOUR home!
Buying
your first home can seem
very intimidating, but can be extremely exciting. If you think that
buying a home is right for you, it probably is. Make sure and follow
these important tips and you'll know you made the right decision
when you find your first home. |