First Time Home Buyers
Guide For First Time Home Buyers
Most people when buying their first home will avoid using the services of a Realtor® given the misconception that hiring one will cost them more money than its worth, or that they’ll be able to negotiate a better deal by dealing directly with the seller. Well, the reality to this is, buying your first home without the advice of an experienced Realtor® can be a costly mistake and one you will certainly not want to make.
Negotiating directly with the seller or a selling agent does not allow you the advantage of having someone in your corner who has the knowledge and experience gained from closing successful negotiations. Realtor’s® are free to the buyer, so you definitely should be represented!
Are You Ready to Buy a Home?
Each year, millions of people consider buying their first home or buying another home. When the interest rates are low, it makes it more affordable to buy a home.
If you are planning to buy a home, you need to start saving your money and have enough for a down payment and closing costs. It’s never too early to start. The down payment is can range from 3% to 20% of the price or the value of the house, but your mortgage agent will be able to help you with the best deal for you. If you do not have a mortgage agent or bank you are working with, just ask us. With our experience as an Orlando property management company along with other local dealings, we can assist as well as recommend top banks in Orlando.
Closing costs normally run around 3.5% of the purchase price. You will receive an preliminary HUD which will be an estimate of the costs before closing. In some situations your Realtor® will be able to negotiate that some of the closing costs are paid for by the seller!
When you start your search for your first home, you and your Realtor® will need to do some research. You will need to speak with a mortgage agent first. They will be able to provide you with a pre-approval letter for the amount you qualify. You can then determine the amount you are willing to spend on a home based off the monthly payments.
Look at your credit report before you fill out an application. Check for any errors and get them corrected. Errors on your credit report can mean an increased rate of interest on your mortgage loan. If you have any other credit problems, you should try to get them resolved before you make an application for a loan. Low credit scores can be the cause for denial of a loan.
When you are ready to buy, work out a realistic budget that includes your mortgage payment, utilities, homeowners insurance, property taxes, and maintenance on your home. Buying a home is a huge responsibility.
Look for a Realtor®. The right person will help you to get the right home and the right mortgage. Find out if they know of reputable home inspectors and what lenders they work with. When you talk to your Realtor®, there will be terms used in real estate that you may not know the meaning. Ask questions. Take notes. Make sure you understand the process.
Being prepared by saving money for your down payment and extra money for closing costs will allow you to buy the home of your choice. Having the right people to assist you in your home buying process will make finding a new home exciting and challenging.
Shopping for Your New Home
When shopping for your new home, it is easy to fall in love with the houses you see. Developments featuring new homes have them perfectly decorated and they are clean and smell new. Older homes are clean and though they may not be decorated to your taste, they can be enticing.
Look around when you walk in the door. Usually the first room you see will be the living room. As you walk through the house, think about your own furniture and how it will fit. Some homes are built such that furniture will only fit a certain way. You want to make sure you can place your furniture and accessories so that the room is comfortable for you and your family. You do not want to have to place the sofa in a way that everyone keeps bumping into it. Or, place the television at a weird angle and not everyone can view the program. Also, make sure your furniture can fit through the door when you move in.
Make sure there is enough room for you and your possessions. If you do not have a family, you may want to think about having space for additional household members. You also want to make sure you can put your things away or display them in the manner you want. If you buy a small house that does not have the space you need, it will be cluttered and you will feel anxious when you are home.
Are there extras on your wish list? Can you afford a home with a swimming pool and/or a hot tub? You will need to budget extra costs for maintenance.
Where do you want to live? Are you looking for acreage? Is there a particular school district you have in mind? It is important that you decide on the location of your home. This will also have an impact on the cost of your home. Living in the city can be expensive depending on the neighborhood. Living in the suburbs or country can also be costly depending on the acreage of the property and the cost to commute to work.
Carefully consider the items you want most in a home. You should include the cost of any extras in your budget. Make a list of these items and share them with your real estate agent/broker. You do not want to rush into buying your home without careful consideration of your needs. If you take the time, you will end up with the home of your dreams.
Home Buying Tips
The process of buying a home, especially for a first-time buyer, can be overwhelming. If you take the time to research real estate basics, it will prove to be a simple process. Working with a good Realtor® will also make the process easier for you.
You should establish a budget before your start looking at homes
- Determine how much you are qualified to spend.
- Do you want to spend that amount for a monthly mortgage payment?
- How much can you afford as a down payment?
- Do you have enough money to cover the 3.5% of closing costs?
If you are interested in an Adjustable Rate Mortgage (ARM), you should look for the best one available. With a good ARM, your interest rate and monthly payment will adjust at the same time. This should ensure that your interest rate does not affect your monthly payment. However, if the interest rate does affect your payment, it will be reflected in the overall amount of your loan balance.
You should try to get pre-approved for your mortgage loan. If several people are looking at the same house, you will have an advantage. A pre-qualification letter is required when making an offer. You will also know whether it is feasible for you to purchase a house. This will save you time and heartache if you find out later that you will not be approved for a loan.
There are other items that you should be aware of such as private mortgage insurance, special loan programs, and fixed rate mortgages. Researching real estate basics can make the home buying process easier for you. In the end, find a qualified Realtor® to help you with the process, you will not regret it!