Top 10 Must Do List For First Time Home Buyers

Buying your first home is an exciting step but it can also be stressful. To minimize stress, don’t start looking until you’re ready to buy – when you’re free of your lease, you’re financially able to take on a mortgage and you’re ready for home ownership. To ease the process, there are steps you should take in preparation that will save you time, money and aggravation.

Before you even start looking at houses, get pre-approved for a loan. It will indicate what your price range is, saving valuable time and potential disappointment when you do start looking. It will also impress sellers, adding weight to your offer. You can choose to finance a home through a bank, savings and loan company, credit union, private mortgage company or other government lender. Each offers different interest rates and loan fees, so shop around. Because the loan approval process can take 3-6 weeks, get started as soon as you decide you’re ready to purchase a home. First, get a copy of your free annual credit report and check for errors and unresolved issues. Consider getting your FICO score for a small fee. Next, start gathering the necessary documents for the loan approval: pay stubs, bank account statements, W-2s, tax returns for the past two years, statements from current loans and credit lines and addresses of your landlord for the past two years. Consider an FHA loan from the government through their program that insures the mortgages of many first-time homebuyers. This guarantee can increase the chances of your offer being accepted by a seller. Another plus is that an FHA loan requires only a 3 percent down payment.
With your financing in order, define your search parameters. In addition to price, you should have a clear idea of what you’re looking for in a house: number of bedrooms; one story or two; style and age of a house; features, such as a big yard, basement, attached garage, etc. What kind of neighborhood do you want to live in? Consider safety, traffic volume, proximity to amenities, etc. Nearly 80 percent of all home searches start on the Internet. This is an excellent way to narrow down the focus of your search.
Work with a real estate professional. Try to find one who specializes in working with first-time home buyers or one who is familiar with the neighborhoods you’ve chosen. A professional can guide you through the entire process and save you valuable search time by identifying homes matching your criteria on the multiple listing service. Once you find a house, the broker can help write the offer. Since the broker’s fee comes from the seller instead of the buyer, it’s a wise investment.
Evaluate the options. Take a camera along to showings so you can review and compare features later. Take notes. Look beyond the property boundaries at things that will affect you: other buildings, businesses, neighbors, etc.
Request a second showing. If you’ve seen one or two houses that you like, ask to see them again. This time, look at specific issues and concerns. But be realistic. You won’t find everything you want in one home. Look for a home below your top price that has 90 percent of the things on your list and be prepared to pay fair market value for it.
Think about resale. The average person moves every seven years, so it’s unlikely that your first home will be your last. Consider how a home’s location, size and features will appeal to buyers when it’s your turn to sell.
Do your homework. Check the selling prices of comparable homes in the area to see what you should expect to pay. Your real estate broker will help with this. Drive around the neighborhood to see what it looks like and what amenities it has to offer. Talk to neighbors.
Do the math. Find out what your total monthly housing costs will be, including taxes and insurance. Fannie Mae recommends spending no more than 28 percent of your income on housing costs. You’ll need to put down earnest money with your offer to let the seller know you’re serious. If your offer is accepted, it will be applied to the down payment; if the offer is rejected, the money will be returned. Depending on your financing, you may also need money for a down payment, which could range from 10 to 20 percent of the purchase price – except for FHA loans, which require only 3 percent. The upside is that the bigger the down payment, the smaller the mortgage payments will be. Depending on the contract, you could be responsible for some or all of the closing costs. These typically run 3 to 4 percent of the purchase price and can include origination fees charged by the lender, title and settlement fees, taxes and prepaid items such as homeowners insurance and association fees.
Ask questions. Don’t be afraid to consult family, friends, your real estate broker and mortgage broker. Their experience and advice can be helpful. Remember, however, that it is your decision to make and your money to spend.
Remember the advantages of home ownership, such as the enhanced first-time homebuyer tax credit. Home ownership requires responsibility but offers many rewards.

Lori Lovely is a real estate contributor for the Indianapolis real estate website of ICON Realty Partners, LLC. The website, located at www.indyhomespecialist.com, features helpful information about buying and selling homes in any market.

Buying

Search for Homes

Market Statistics

Distressed Properties

Home Builders

Carmel Real Estate

Fishers Real Estate

Noblesville Real Estate

Zionsville Real Estate

Westfield Real Estate

Brownsburg Real Estate

Greenwood Real Estate