First Time Home Buyer

Before You Buy Your First Home - Tips for a First-time Home Buyer

Buying a Home

It's not uncommon for a first-time home buyer to say to me, "Gosh, just last week I called you about buying a home and now I'm in escrow! How did this happen so fast?"

The answer is it didn't. First-time home buyers start the search long before most even realize it.

Here's what you can expect from your home shopping experience.

Benefits for a First-Time Home Buyer

You should buy a home. That's what you've been hearing from friends and family, right? So, by now you have likely already weighed the benefits and decided that home ownership was the best decision for you. That's a major hurdle now passed. You are focused and certain. Good.

Defining Search Parameters for a First-Time Home Buyer

Almost 80% of all home searches today begin on the Internet. With just a few clicks of the mouse, home buyers can search through hundreds of online listings, view virtual tours, and sort through dozens of photographs and aerial shots of neighborhoods and homes. You've probably defined your goals and have a pretty good idea of the type of home and neighborhood you want. By the time you reach your real estate agent's office, you are halfway to home ownership.

How Long Should It Take to Buy Your First Home?

In seller's markets, often I show only one home. After all, how many homes does one family need? A few buyers will look for years, but buyers who do that aren't motivated. A motivated buyer will find a home within two weeks. Most of my buyers find a home within two days.

Good real estate agents will listen to your wants and needs and arrange to show only those homes that fit your particular parameters. Your agent should preview homes before showing them to you as well.

How Many Homes Will a Home Buyer See?

Studies show that your memory dramatically improves after consumption of carbs and slows upon consuming sugar. So, lay off the soft drinks and have a hearty meal of carbs before venturing out to tour homes. The average number of homes that I show to a buyer in one day is seven. Any more than that, and the brain is on overload. Therefore, don't expect to see 20 or 30 homes; although it's physically possible to do so, you probably will not remember specific details about any of them.

The "Red Shoes" Experience for a Home Buyer

Women will relate to this. Say, you need a new pair of red shoes. You go to the mall. At the first shoe store, you find a fabulous pair of red shoes. You try them on. They fit perfectly. They are glamorous. Priced right, too. Do you buy them? Of course not! You go to every other store in the mall trying on red shoes until you are ready to drop from exhaustion. Then you return to the first store and buy those red shoes. Do not shop for a home this way. When you find the perfect home, buy it.

How a First-Time Home Buyer Can Rate Inventory

  • Bring a digital camera and begin each series of photos with a close-up of the house number to identify where each group of home photos start and end.
  • Take copious notes of unusual features, colors and design elements.
  • Pay attention to the home's surroundings. What is next door? Do 2-story homes tower over your single story?
  • Do you like the location? Is it near a park or a power plant?
  • Immediately after leaving, rate each home on a scale of 1 to 10, with 10 being the highest.

View Top Choices a Second Time Before Buying That First Home

After touring homes for a few days, you will probably instinctively know which one or two homes you would like to buy. Ask to see them again. You will see them with different eyes and notice elements that were overlooked the first go-around.

At this point, your agent should call the listing agents to find out more about the sellers' motivation and to double-check that an offer hasn't come in, making sure these homes are still available to purchase.

Making the Selection To Buy a Home

I'll let you in on a little secret. I generally know which home a buyer is going to choose, and I suspect most other agents operate the same way. It's an intuition. But I make it a practice not to steer buyers, and I insist that buyers choose the home without interference from me. It's not my choice to make.

Real estate agents are required, however, to point out defects and should help buyers feel confident that the home selected meets the buyer's search parameters.

Home Buying Tips, Tricks and Techniques

Whether you're a first-time home buyer or a veteran, buying a home is a complex process. This home buying guide will help you to figure out what kind of home you might like, which amenities are most important to you and how to estimate your price range so you don't fall in love with a home that is too expensive, which you later regret.

Tips for Buying Your First Home

How to buy a home. The five essential steps to buying your first home. Tips for first-time home buyers. How to avoid mistakes when buying a home.

 have written a ton of articles about the home buying path and gone into excruciating detail about every single step involved in buying a home. It dawned on me that buyers really need a basic overview. Especially for first-time home buyers who aren't familiar with the process.

Bear in mind that the steps in the process can vary from state to state, depending on local custom. However, when you strip away all of the crap, which may or may not happen to you, there are really only 5 basic steps to buying a home. You can do these 5 steps in any order you want.

Hire an Agent

Because I am an agent, I believe in hiring a buyer's agent first. But you don't have to if you prefer to go to open houses and look through a mumbo jumbo of homes online. Mostly, an agent will save you time.

·         An agent can send you listings directly from MLS that

          fit your parameters, and you won't waste time looking

          aactive short contingent listings that are under

          contract.

·         Agents often know of new listings coming up that are

          not yet on the market.

·         You can waste the agent's gas and not your own when

          you tour homes.

·         Some agents wilpreview homes for you.

·         An agent can generally spot overpriced listings and 

          advise you accordingly.

Find a Home to Buy

Buying a home can be an overwhelming process and emotionally draining. Finding the right home is not always an easy task. I advise buyers to look at a maximum of 7 homes at a time because any more than that will make a buyer's head spin.

Most buyers conduct a lot of research online before ever stepping foot in a home. Buyers spend an average of 6 to 8 weeks, according to the National Association of REALTORS, trying to figure out where they want to live. But once the neighborhood is selected, most buyers end up buying a home after 2 or 3 home tours.

Get a Loan

It's not always necessary to have a mortgage broker or bank in your back pocket before buying a home, but it's smarter to get loan pre-approval in advance. This way you know for certain how much home to buy.

I once bought a home without financing in place when I made the offer. I was just lucky. Many sellers won't look at an offer if the seller doesn't have assurance that the buyer can get a loan.

Popular first-time buyer loans are FHA loans because the minimum down payment requirement is much less than a conventional loan. However, if you are thinking aboubuying foreclosures, for example, conventional buyers tend to get priority with REO banks.

You can ask your agent for a referral to a mortgage broker or check with your own bank / credit union. Compare the types of mortgages available to you.

Negotiate the Offer

Buyers sometimes make the mistake of comparing the sales price of a home to other homes they have seen. It's a mistake to compare sales prices among homes for sale. That's because sellers can ask any price they want. It doesn't mean the home will sell at that price.

An agent can provide comparable sales and examine the pending sales. Comparable sales are similar type homes in the same condition and location that have sold within the past 3 months. Pending sales will become the comparable sales by the time your home closes.

You may need to pay over list price in a seller's market, especially if many buyers are vying for the same inventory. Your agent can give you a reasonable price range and help to manage your expectations. An good buyer's agent knows there is always more to an offer than its price, but price is paramount.

Do a Home Inspection

Never buy a home without getting a home inspection. In some states, home inspection is conducted before buyers make a purchase offer. In other states, a home inspection is a contract contingency. A contract contingency means a buyer has the right to cancel the contract. You might not want to be locked in to buying a home that has a faulty foundation, for example.

Sellers are generally not required to make repairs if problems are discovered during a home inspection. A home inspection is for the buyer's edification. However, sometimes when a buyer gives a Request for Repair to the seller, rather than blow the deal, the seller will often agree to make a repair.

Read Disclosures

Most states have laws about the types of disclosures you are entitled to receive.

  • Material Facts
    Besides disclosing lead-based paint, which any home built before 1978 can contain, sellers should notify you of major defects.
  • Do a Final Walk-Through
    Always do a final inspection a few days before closing to make sure the property is in the same condition as when you agreed to buy it.

Closing on Your Home

Transactions generally close within 30 to 60 days after your offer has been accepted. Remember to reserve movers or a moving truck early because many people move at the end of the month.

  • Home Insurance
    Shop for insurance rates carefully. Often, the company that insures your automobiles may offer you the best policy rates.
  • Title Insurance Policy
    You might think you don't need a title policy, but it's the cheapest form of insurance you can buy, and you pay the premium only once.
  • Home Buying Closing Process
    This covers every step of the home closing process, from the beginning to the end.

 

The Escrow Closing Process

Depending on where you live, any number of entities can handle the closing process. The closing agent could be an escrow officer, a closer, the title company or a real estate lawyer.

Closing processes can vary widely even within the same state. In California, for example, the escrow process is different in northern California versus southern California. The primary difference between the two is escrow instructions are drawn and signed on the front end in southern Cal and on the back end in northern Cal.

Before any escrow can close, however, all the terms of the purchase contract must be met; then the seller deposits the deed and the buyer deposits the funds. Here are sample types of conditions required in California. Your state closing process may vary.

 

  • Fully executed purchase agreement and addendum's.
  • Deposit of earnest money deposit.
  • Home inspection or waiver.
  • Fulfillment of seller obligations such as submission of pest inspection report and / or completion, roof certification, home warranty, preliminary title policy, beneficiary demand receipt, repairs, if any, according to the Request for Repairs.
  • Completion of buyer inspections, including release of contingencies, if demanded.
  • Buyer's final walk-through inspection or waiver.
  • Appraisal of property by lender's appraiser.
  • Lender's loan approval and satisfaction of loan conditions by buyer such as depositing evidence of a homeowner insurance policy.
  • Seller's and Buyer's signed escrow instructions.
  • Seller's signed and notarized deed conveying title.
  • Buyer's signed and notarized deed of trust and executed promissory note.
  • Buyer's signatures on all loan documents.
  • Deposit of buyer's funds from lender.
  • Deposit of balance of buyer's down payment and buyer's closing costs.

How Long Does a Home Closing Take?

Buyers who have received loan pre-approval versus loan pre-qualification are often in a position to close sooner. The pre-approval process involves verification of certain items upfront, before signing the purchase contract, moving the borrower a few steps closer to closing.

If a lender has verified the borrower's employment, bank accounts and credit report, closing can take place as quickly as underwriters can process the paperwork and review the appraisal, generally within a week or two. However, if a document is missing from the file such as a preliminary title report or a seller's condition of sale, the closing may be delayed.

Most federally related mortgage loans can close within 30 days. Special first-time home buyer programs, particularly those involving help with the buyer's down payment, might take 35 to 45 days to close. These special loans typically require approval from two underwriting processes.