Tips For First Time Home Buyers

It seems that everyone loves a good real estate story. The media is filled with reports about soaring property values and home owners of modest means becoming instant millionaires when they sell. As a result, many first time home buyers, afraid of missing out, will rush into buying decisions and achieve less-than-spectacular results. As a first time buyer, your biggest challenge is to balance livability and profitability in a way that makes sense for you and your family. You may want to check out Homepage for more. Remember, you are buying a home first and an investment second. Of course, there’s no foolproof formula for buyer success, but there are steps you can take to stack the odds in your favor:

Tip 1: Don’t bet on market timing

If you’re waiting for prices to drop in places like Southern California, Washington D.C. or Miami, you may be waiting a very long time. In regions that are built out with limited room to expand, it’s not realistic to assume property values will fall dramatically. Of course, prices in the nation’s super-heated residential markets  should cool down at some point, but there’s no guarantee that higher interest rates won’t eat up any savings from a price correction.

Tip 2: Leverage free and low-cost resources

There’s an abundance of free and low-cost resources for homebuyers on the Web. A Web search can turn up helpful articles, buyer guides, online tools and purchase/ refinance calculators. Keep an eye out for helpful tools like step-by-step guides and checklists to help organize your search. Some Web sites now offer online tools to help you estimate home prices and search for undervalued properties. Many offers on the Web for free property valuations actually are come-ons from real estate brokers looking for seller listings, so check first to see what strings are attached.

Tip 3: Check out the new models

Real estate’s old guard seems to be under assault at every turn today as traditional brokers battle competition from discount and Web-based brokers. Today, buyers have more options than ever before. You can use a full-service broker, discount broker or buy without a broker. To make buying more affordable, consider the homebuyer rebate programs that are becoming more popular. Rebates can help offset closing costs, which are a real obstacle for many first-time buyers.

Tip 4: Lock in a realistic budget

To save time and trouble, first time buyers should have a realistic budget in mind before they shop for homes. One way to determine how much house you can afford is to get “pre-approved” by a lender. Pre-approval means you know exactly how much of a loan you’ll qualify for, so you can limit your search to homes in the right price range. Pre-approval also boosts your credibility and negotiation position with sellers.

Tip 5: Buying — personal decision, business transaction

The Department of Housing and Urban Development (HUD) advises home buyers to create a wish list to help focus priorities. That way, you’ll remember that a spectacular foyer is nice-to-have, but safety and services are essential. Having clear goals will help keep you from getting carried away with emotional factors. Sellers who love their homes tend to ask too much, and buyers who fall in love can end up overpaying.

Tip 6: Don’t let closing costs surprise you

Once you understand the buying process, you should understand and budget for transaction costs. In addition to your down payment, buyers pay most of the closing costs when purchasing a home, including things like inspection fees, title insurance, taxes and more. Closing fees can add up to 5-7 percent of purchase price, and must be paid before you get the keys. Your lender can provide what’s called a “good faith” estimate of your closing costs.

Tip 7: Build a support team

Buying a home is a big investment and a big decision, but you don’t have to go it alone. Remember, at each step of the way, there are people and resources to help you. Use the Internet and ask friends for referrals. Don’t be afraid to pick up the phone and call real estate professionals, mortgage providers, title companies and insurers to ask questions.

Tip 8: Clean up your credit

Low credit ratings mean that buyers won’t qualify for the best available interest rates and fees, which could mean considerable extra expense each month for the life of the loan. Most financial institutions today offer risk-based lending – lower credit risk for lenders means better mortgage deals for customers. Credit reports frequently contain inaccurate information, which can hurt a buyer’s purchasing power. First-time buyers should check their credit scores and fix any problems before applying for financing.

Tip 9: Begin with the end in mind

Author Stephen Covey’s advice for effective living also applies to effective home buying. Resale may not your primary consideration, but it’s an important factor. Can you buy in an up-and-coming neighborhood or region? How is the “commutability” from your new home to local employers? How good are the local schools? A few queries to your favorite search engine will turn up free or inexpensive school rating services.

Home Buyer Negotiating Power – You Have It

One of the most interesting phenomena I have experienced with home buyers is that, almost across the board, they assume they possess limited negotiating power. Buyers generally assume that the seller has the property and the bank has the money so they must have all the power, right? Nope. this content

Buyers enjoy a substantial amount of power in both home-price negotiations and mortgage negotiations. But they never believe they do. Let’s examine negotiating the price of your home. Buyers assume that sellers have multiple qualified prospects considering their home. Crafty real estate listing agents lead buyers to believe that if they don’t move on this home in the next couple of hours, they could lose it. And because of all this “interest,” the seller certainly won’t consider anything less than the full asking price.

In my experience, there are very few hot markets in which sellers have their pick of several pre-approved buyers who are prepared to close. I live in Baton Rouge, a city that was flooded with several hundred thousand people after Hurricane Katrina. At the time, Baton Rouge was such a hot market. But barring a catastrophic event that sends hundreds of thousands to your town looking for housing, almost no market is that hot.

If you are a pre-approved buyer that will be purchasing in the next few weeks, you are gold to the seller of a property. Most “interested” buyers are what we in real estate call “tire kickers.” These are buyers that have the inclination that they might buy in the next six months or ten years and decide to start looking. They don’t have their current home for sale, have not talked to a bank to see if they can afford the house, and are simply trying to get an idea of what’s out there. You on the other hand, have gotten a bank to agree to lend you money for a house, you have determined the neighborhoods you want to live in, and have a list of other houses you are considering. The seller will be thinking, “We better not let this one get away, because then we have to start all over doing open houses every weekend.” This situation affords you as a buyer substantial negotiating power.

Make sure the seller and seller’s agent know you are pre-approved by a bank and that you will be buying in the next couple of weeks. Let them know you have several attractive options you are considering and have to be able to get the home at a price you consider to be fair. Spend some time with the seller and agent going thorough the house and ask a lot of questions. There is a rule in negotiation that sellers become more negotiable in relation to the time they spend with a buyer.

Now, consider the facts. The seller has to sell their house to move on with their life. A house is not an easy item to convert to cash quickly. You have cash (or the promise of cash from the bank), and you are going to be making a decision among multiple attractive options in the next couple of weeks. Make sure the seller and seller’s agent know these facts, and watch the perception of power shift in your favor.