First Time House Buyer Tips: Be Prepared Before Purchasing a Home
First time house buyer tips are essential in helping buyers make smarter decisions. Buying real estate is a major investment. Knowing how to look for hidden defects and understanding the market can save buyers time, money and frustration. Going in blind could cost buyers a fortune in unexpected costs.
The following first time house buyer tips can help newbie buyers enjoy a smooth transaction. Understanding the purchasing process and available options can allow buyers to locate and capitalize on the numerous real estate deals on the market.
Before buying a house it is important to determine how much you can afford. Many first time buyers make the mistake of only calculating the mortgage payment. However, there are other costs associated that can quickly eat up your monthly budget. These include homeowners insurance, property taxes, homeowner association fees, and fees associated with purchasing the property.
A simple way to determine how much house you can afford is to multiple your total annual gross income by three. For example, if you are married with a combined income of $120,000, you will want to confine your search to homes prices no higher than $360,000.
Before you begin house hunting, pay a visit to your lender and apply for a prequalified home loan. Lenders will process your application and let you know exactly how much they will lend towards the purchase of a home.
Prequalification lets you know exactly how much your monthly mortgage payment will be and how much is required for a down payment. Prequalification also provides buyers with additional bargaining power.
Sellers will oftentimes reduce the sale price if the buyer is prequalified. Many home sales fall apart because the buyer is unable to obtain financing. Obtaining a mortgage loan can take two or more weeks. This leaves the seller on hold while waiting for the buyer to become approved. If buyers place an offer on the home and a prequalified buyer comes along and bids on the home, chances are you will lose out on the deal.
Many first time buyers fail to calculate closing costs. These fees range from 1- to 10-percent of the purchase price. Closing costs include application fees, loan origination fees, title search, property appraisal, property inspection, surveys, recording fees, transfer fees, escrow deposit, legal fees and realtor commissions.
Some sellers will pay all or part of closing costs to assist buyers in purchasing the house. Occasionally, lenders will agree to pay closing costs. However, lenders typically charge a higher rate of interest over the duration of the loan. Although it is tempting to roll closing costs into the mortgage note, it is important to calculate the true cost. An additional 1/4-percent can amount to several thousand dollars over the term of the loan.
After obtaining prequalification, the next step to purchasing a house involves locating a realtor. A good place to start is to search the National Association of Realtors database at Realtor.org. Additionally, ask friends and family for a referral.
Realtors can help first time house buyers locate properties within their price range. Realtors have access to databases and can enter parameters to quickly locate homes that are suitable for your needs.
Once you find a home you like and can afford, it is time to make an offer. The seller must provide a disclosure report outlining known property defects. If the seller accepts the offer, a contract is signed and you must pay earnest money to hold the property. This deposit usually amounts to between $500 and $1000.
Next, the buyer must obtain a property inspection. If the inspector discovers problems not covered in the disclosure statement, the buyer can either retract the offer or negotiate the purchase price.
Mortgage lenders require a property appraisal and survey to ensure the home is actually worth the purchase price. Once these items are obtained, the buyer must purchase homeowners insurance.
The final step to purchasing real estate involves closing the sale. During closing, the buyer provides the agreed upon down payment to the seller and pays the lender any remaining closing costs. The lender transfers funds to the seller and commences with real estate transfer documents. Once the mortgage loan documents are signed, the buyer is officially a homeowner.
These are just a few first time house buyer tips. It's always best to consult with a realtor or mortgage broker to locate first time home buying programs or to assist in locating cheap homes for sale such as foreclosure or short sale homes.
The following first time house buyer tips can help newbie buyers enjoy a smooth transaction. Understanding the purchasing process and available options can allow buyers to locate and capitalize on the numerous real estate deals on the market.
Before buying a house it is important to determine how much you can afford. Many first time buyers make the mistake of only calculating the mortgage payment. However, there are other costs associated that can quickly eat up your monthly budget. These include homeowners insurance, property taxes, homeowner association fees, and fees associated with purchasing the property.
A simple way to determine how much house you can afford is to multiple your total annual gross income by three. For example, if you are married with a combined income of $120,000, you will want to confine your search to homes prices no higher than $360,000.
Before you begin house hunting, pay a visit to your lender and apply for a prequalified home loan. Lenders will process your application and let you know exactly how much they will lend towards the purchase of a home.
Prequalification lets you know exactly how much your monthly mortgage payment will be and how much is required for a down payment. Prequalification also provides buyers with additional bargaining power.
Sellers will oftentimes reduce the sale price if the buyer is prequalified. Many home sales fall apart because the buyer is unable to obtain financing. Obtaining a mortgage loan can take two or more weeks. This leaves the seller on hold while waiting for the buyer to become approved. If buyers place an offer on the home and a prequalified buyer comes along and bids on the home, chances are you will lose out on the deal.
Many first time buyers fail to calculate closing costs. These fees range from 1- to 10-percent of the purchase price. Closing costs include application fees, loan origination fees, title search, property appraisal, property inspection, surveys, recording fees, transfer fees, escrow deposit, legal fees and realtor commissions.
Some sellers will pay all or part of closing costs to assist buyers in purchasing the house. Occasionally, lenders will agree to pay closing costs. However, lenders typically charge a higher rate of interest over the duration of the loan. Although it is tempting to roll closing costs into the mortgage note, it is important to calculate the true cost. An additional 1/4-percent can amount to several thousand dollars over the term of the loan.
After obtaining prequalification, the next step to purchasing a house involves locating a realtor. A good place to start is to search the National Association of Realtors database at Realtor.org. Additionally, ask friends and family for a referral.
Realtors can help first time house buyers locate properties within their price range. Realtors have access to databases and can enter parameters to quickly locate homes that are suitable for your needs.
Once you find a home you like and can afford, it is time to make an offer. The seller must provide a disclosure report outlining known property defects. If the seller accepts the offer, a contract is signed and you must pay earnest money to hold the property. This deposit usually amounts to between $500 and $1000.
Next, the buyer must obtain a property inspection. If the inspector discovers problems not covered in the disclosure statement, the buyer can either retract the offer or negotiate the purchase price.
Mortgage lenders require a property appraisal and survey to ensure the home is actually worth the purchase price. Once these items are obtained, the buyer must purchase homeowners insurance.
The final step to purchasing real estate involves closing the sale. During closing, the buyer provides the agreed upon down payment to the seller and pays the lender any remaining closing costs. The lender transfers funds to the seller and commences with real estate transfer documents. Once the mortgage loan documents are signed, the buyer is officially a homeowner.
These are just a few first time house buyer tips. It's always best to consult with a realtor or mortgage broker to locate first time home buying programs or to assist in locating cheap homes for sale such as foreclosure or short sale homes.
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