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You've made the decision to make one of the largest investments you'll ever make in your life-buying your first home. You're excited, but at the same time anxious. Some of the questions you may be asking are: Will I be able to afford the home of my dreams? Do I have enough money for a down payment? Can I get a home inspected before I make an offer?
Rest assured, you are not alone. According to a National Association of REALTORS Profile of Home Buyers and Sellers, first-time homebuyers recently accounted for 40 percent of the homes purchased. The home buying process can be overwhelming, but if you go into it prepared, your first purchase can be a good experience. Here are some things to consider before making the plunge.
- Getting a mortgage
Fear of being rejected for a home loan is one of the main concerns for first-time homebuyers. To lessen the stress, you may want to get pre-approved for a loan before looking at prospective homes. This will not only help you feel more confident, it will also give you an advantage when there are multiple offers for a specific home. The fact that your loan has already been approved is of great value to the seller: because it shortens the purchase process and there is less of a chance that the buyer will back out of the sale.
- Mortgage Payments
The costs involved in the purchase of a home can be overwhelming to first-time buyers. However, with the help of a real estate professional, you can calculate out how much they you be able to pay each month in mortgage payments, and from there, what prospective homes offer a feasible payment plan.
- Down-Payment
The down-payment amount varies depending on the value of the home you choose and your mortgage lender. And in some cases, first-time home buyers can purchase a home with no money down. Although it varies from state to state, most offer government-funded programs for first-time buyers that help people buy a home with no down-payment. Your Prudential Atlanta/Georgia Realty agent will be able to explain the different options available to you.
- Closing Costs
First-time buyers often forget to consider the closing costs when making an offer on a home. Paying closing fees of up to 10 percent of the home sale amount is not unusual. Add that to the down-payment and you'll have quite a sum to raise before the final papers can be signed. However, a smart first-time buyer takes this into account before making an offer, and with some professional help, the costs can be estimated in advance.
- Making offers
Don't feel pressured into making an offer on the first home you see. This is a common mistake of many first-time homebuyers. Make sure you view different homes to get a feel for the marketplace. When you do decide on a home to make a bid on, work with your real estate professional to get all of your questions answered first before making an offer. But don't wait too long to make an offer. The longer you wait, the greater the chance other prospective buyers may place offers, making it harder for you to negotiate a good deal.
- Condition of the Home
Buying a "problem" home is another fear of first-timers. A home that needs major repairs can become a costly venture. And, unless the asking price is adjusted to reflect the hidden repairs needed, chances are the home is not worth as much as the seller is asking for it. To avoid unfortunate surprises, your real estate professional may advise you to hire a home inspector before making a serious offer. That way, you know what you are getting into.
Above all, remember that there are no silly questions. Make sure you understand and are comfortable with every aspect of the transaction. Your Prudential Atlanta/Georgia real estate professional can be an invaluable asset in helping you make educated decisions so that your first-home purchase is a rewarding experience.
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This page is located on the U.S. Department of Housing and Urban Development's Homes and Communities Web site at http://www.hud.gov/buying/index.cfm. |
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The homebuying process can seem complicated, but if you take things step-by-step, you will soon be holding the keys to your own home!
Nine steps to buying a home
- Figure out how much you can afford
- Know your rights
- Shop for a loan
- Learn about homebuying programs
- Shop for a home
- Make an offer
- Get a home inspection
- Shop for homeowners insurance
- Sign papers
Step 1: Figure out how much you can afford
What you can afford depends on your income, credit rating, current monthly expenses, downpayment and the interest rate. The calculators below can help, but it is best to visit a lender to find out for sure.
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How much home can you afford? |
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Buying vs. Renting |
Need help with your downpayment and/or closing costs?
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Homebuying programs in your state |
A housing counselor can help you figure out how to manage and pay off your debt, and start saving for that downpayment!
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Find a housing counselor near you |
Step 2: Know your rights
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Fair Housing: Equal Opportunity for All - brochure |
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Real Estate Settlement Procedures Act (RESPA) |
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Borrower's rights |
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Predatory lending |
Step 3: Shop for a loan
Save money by doing your homework. Talk to several lenders, compare costs and interest rates, negotiate to get a better deal. Consider getting pre-approved for a loan.
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Looking for the best mortgage: shop, compare, negotiate - brochure |
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Let FHA help you |
Step 4: Learn about homebuying programs
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Homebuying programs in your state |
FHA loan programs offer lower downpayments and are a good option for first-time homebuyers.
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Let FHA help you |
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HUD's special homebuying programs
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Good Neighbor Next Door Program - for police officers, teachers, firefighters and emergency medical technicians |
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Homeownership for public housing residents |
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Indian Home Loan Guarantee Program (Section 184) | |
Step 5: Shop for a home
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Choose a real estate agent |
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Wish list - what features do you want? |
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Home-shopping checklist take this list with you when comparing homes |
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Homes for sale (including HUD homes) |
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"Fixer-uppers" - home purchase and repair programs |
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Manufactured (mobile) homes |
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Build a home |
If you choose a home in a neighborhood with a Home Owners Association (HOA), be sure to request a copy of the HOA packet, so you can review before closing.
Step 6: Make an offer
Discuss the process with your real estate agent. If the seller counters your offer, you may need to negotiate until you both agree to the terms of the sale.
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Making an offer |
Step 7: Get a home inspection
Make your offer contingent on a home inspection. An inspection will tell you about the condition of the home, and can help you avoid buying a home that needs major repairs.
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For Your Protection Get a Home Inspection |
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10 Questions to ask a home inspector |
Step 8: Shop for homeowners insurance
Lenders require that you have homeowners insurance. Be sure to shop around.
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Homeowners insurance |
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12 ways to lower your homeowners insurance costs |
Step 9: Sign papers
You're finally ready to go to "settlement" or "closing." Be sure to read everything before you sign!
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Settlement Costs and Helpful Information |
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We are always happy to answer any questions. For immediate assistance, please contact:
Beth Copenhaver CRS,GRI
Residential & Corporate Relocation Specialist
Coldwell Banker Residential Real Estate Inc.
800-755-2895
813-962-6345ext. 239
Bethcop@coldwellbanker.com |