The 8 Most Important Tips Every First Time Home Buyer Needs

Buying a home is a big deal, whether you’ve purchased five homes or this is your first one. But the big difference for first-time home buyers is not knowing all of the details and processes involved in making this first, big purchase. From purchase financing to house inspections, here are the eight most important things that first time home buyers need to know to make the right decision. Understanding “How Much House Can I Afford” – Before You LookPaying for a home may seem as straightforward as renting, but nothing could be further from the truth. There are a number of factors that you should consider when thinking about your price range for a home. First, keep in mind that you may qualify for a much larger mortgage than you can realistically afford. Depending on your lifestyle, other bills, and so forth, your income may indicate you qualify for a large mortgage, but your budget may not agree. A mortgage calculator, like this one, can help you understand what you can afford. Also, keep in mind that a rent payment is all inclusive with the (occasional) exception of utilities. However, mortgage payments against your home loan are only part of your monthly payment. You may also have to add in escrow payments for property taxes and homeowner's insurance as well as other expenses like home owner’s association (HOA) fees. Know the Difference Between Pre-Qualified and Pre-ApprovedVisiting a mortgage lender before beginning house hunting is a wise move. But be cautious. A home lender may tell you that you are pre-qualified for a mortgage, but that is completely different than being pre-approved for one. Pre-qualification takes the bare minimum of your financial information into consideration and is more or less a suggested amount. A mortgage pre-approval, on the other hand, uses your income and credit score, along with other financial information, to provide you with a more concrete number. Comparing Home Mortgage LoansThe kind of mortgage you get can have significant consequences on your payments later on. For instance, a fixed rate mortgage means that the interest you pay won’t change over time. Your monthly payments may be more than another type, but if interest rates go up later, you won’t have to deal with an increased payment amount. Variable rate mortgages, however, are exactly that – the interest rate associated with your mortgage can fluctuate over time. This might be a good option if interest rates are currently high and you anticipate they will drop. In addition to these, there are 0 down loans, loans through various organizations like the VA or FHA, conventional loans, government loans, and so forth. Getting a handle on these different types can help you navigate the mortgage landscape when you’re ready to buy. Gather Your Financial DocumentsYour home lender will want to look closely at your financial situation and credit score before agreeing to underwrite a mortgage loan for your new home. When you’re ready to apply for your mortgage, make sure you have the following documents at hand: ·       W-2s·       Pay stubs·       Bank and/or other asset statements Purchase Agreements and Earnest MoneyWhen you finally find the home you want, you’ll place a bid on that home, most likely with the assistance of a Realtor. At that time you’ll also fill out a purchase agreement, stating what you’re offering to pay and including details such as household items you’d like included with the home, such as curtains or appliances. In addition, you’ll leave with the agent what is called earnest money. This is money that you set out to show you are serious about purchasing the home. The money is held in escrow by the agent, and is either applied toward the down payment at closing or refunded to you at that time. If you decide to pull out of the agreement without a qualifying reason as outlined in the purchase agreement, you lose your earnest money. However, the purchase agreement generally has several reasonable opportunities for the buyer to leave the deal and still retain their earnest money. Yes, You Need a Home InspectionSome lenders require a home inspection, but whether yours does or not, you should get one. A home inspection can tell you the systems that are in good condition in the home, and those that either need immediate repair, or ones that may need to be addressed in the near future. While no house is perfect, you may find after an inspection that a home’s systems are in worse shape than you suspected when you offered to buy it. In many purchase agreements the buyer has an opportunity to pull out of the purchase and have their earnest money returned to them after the inspection. Read your agreement carefully to be sure you have this option. Closing Costs are ExtraFirst time home buyers are often surprised that closing costs are not only required to be paid at the closing, but that they are an additional expense over and above the down payment, appraisal, and home inspection. In some cases, the seller may agree to pay a portion of the closing costs, but this must be negotiated at the outset of the purchase agreement. Your lender will provide you with an estimate of your closing costs early in the process, and a more concrete amount closer to the closing date, so you know how much to bring with to cover these costs. Take that Final Walk ThruHome buyers are offered a final walk thru immediately before closing and taking possession of the home, usually the day before closing. While some people waive the walk thru, it’s a right you should exercise. The final walk thru ensures that you are receiving the home in the condition you’re expecting to, and that no significant damage has been done when the previous owners moved out.  It also gives you the opportunity to ensure that all items that were contracted to be included with the home – such as appliances – are still there. Once the paperwork is signed, the home is yours, whether damage was done or not.   Property Listings Reviews on Zillow 2936191 "We have known David Caracausa for over 2 decades. The marketing and eventual sale of our house was quick, efficient and painless. It only took about ... more "5.0/5.0 by coachjane122869426 "David is the consummate professional. We selected him as our realtor after interviewing other well regarded realtors in our market. He distinguished ... more "5.0/5.0 by meheister2435509 "David Caracausa was an outstanding personal representative for my recent home sale in North Wales, Pa. He was excellent in all areas from staging of ... more "5.0/5.0 by allan truant
The post The 8 Most Important Tips Every First Time Home Buyer Needs originally appeared on David Caracausa's ActiveRain Blog

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