Are You A First Time Homebuyer?

Are you taking your first look at being a homeowner? Did you find just the right area and think you have the funds and the time that it takes to search for just the right house? There are several steps to take to find out if you should take that step now or wait another six months. Following these steps will make the process simpler and much more manageable.

Make sure you are ready to take this step by thinking about the advantages of buying a home in the situation in which you find yourself. Do you know for sure that you will be moving out of the area in one or two years? It may be better to wait - escrow fees, real estate fees, reselling costs may actually make it more expensive to buy than to rent for those one to two years. If, however, you are planning to stay where you are, think about the cost of keeping up a home and the time and financial resources it takes to maintain the home. Think about whether this will be for a good move for the lifestyle you want to maintain. For the most part, it is better to begin to build equity by buying your own home than continuing to rent, but you do have to be willing to sacrifice time, effort, and money to keep your investment looking up-to-date and free of problems.

Begin to take the first steps to get out of consumer debt. Avoid using credit cards and make sure that your credit score is good. The better your credit score, the more affordable your loan will be. Pay down your credit cards and begin to set aside savings for your down payment.

You should also begin to calculate how much you can afford to pay in loans, insurance, and house maintenance costs. Experts in the financial field indicate that you should pay no more than 28-30% of your annual income for your loan payments, property taxes and homeowners insurance. Others suggest up to 38% of you yearly spendable income should cover house payment, taxes, insurance, as well as maintenance and utility costs. Figure your budget carefully so that you will know how much you can afford. Don't forget the escrow costs - they need to be figured with your down payment as up front costs.

When you have thought through these issues and have decided to move forward with the purchase, you need to get pre-approved by a lender. This is a valuable piece of paper when you begin to look at homes and think about making an offer. There are now some homeowners who only want ‘pre-approved' clients looking at their home. When you start to make an offer, pre-approval status goes a long way toward making the homeowner comfortable in thinking about your offer. If you are pre-approved, they know they won't get half way through the sales process only to find out that they have to start all over again with a new buyer because you can not get approval for a loan.

Understand the types of loans and programs that are available to help your purchase go smoothly. There are government backed loans, Fannie Mae and Freddie Mac, bank or credit union loans as well as private loans. All of these offer competitive interest rates and various first-time buyer options. Also, take the time to learn about programs for first time home buyers that exist in your state.

Unless you are really good at reading the fine print, you might need to choose a real-estate agent or broker to help you with the purchase of your house, especially if you are a first-time buyer. Choose a real estate agent who is a good fit for your personality but also choose according to how well they know the market and the real estate laws in your area. If you go with a new real estate agent, make sure that they are working closely with a seasoned veteran of real estate. There are lots of things they might miss and you need someone on your side who will work the system with you in mind.

Make a wish list for the features you want in a home. Do you want indoor laundry or are laundry facilities in the garage acceptable? Do you want two bedrooms or will you only accept a three bedroom house? Is a condominium acceptable or do you want a single-family dwelling? Let your realtor see your wish list - they can help you find what you are looking for in your price range. Are you up for a “fixer-upper,” a manufactured home, or a HUD home? Let him or her know that as well.

When you find the home you feel that you and your family will be comfortable in, make an offer on the home. Don't look at a home unless it is in you price range and make reasonable offers that will be acceptable for your loan and the seller's needs.

Once the offer has been accepted, set up a home inspection, get homeowner's insurance, and get ready to sign the papers. And don't forget to find some great friends or a moving company to help you move in. A comfortable home is an item worth having - take the steps to start the process for yourself today.