Buy First Home
Tips for first time home buyers to help buy first home

Buying your first home is both exciting and scary. Before realizing “The American Dream,” you’re going to need to do several things to get in position to buy first home. First, decide if you should buy.

“Make sure buying is for you. Are rents cheap and homes costly in your city? Are you planning to move in the next year or two? Is your job looking iffy? If any of these apply, buying might not be a good move,” writes Morgan Brennan in Forbes Magazine.

If rent is cheap, then continuing to rent can give you time to save even more money for a down payment on a home. The more you can put down when you buy first home, the lower your mortgage payment will be.

Moving in a year or two means reselling the home. Selling a house just after you bought it, unless it is a hot housing market like the Washington D.C. region, is not a good idea. Any equity you have built up may be consumed by a real estate agent’s commission. If the house doesn’t sell quickly, that means you’re making a payment on a home you no longer live in while trying to make a mortgage or rent payment where you do live.

Then, find out how much you can afford. This means talking to a mortgage company or a bank. When computing a mortgage payment, figure in local taxes and insurance. Property taxes and insurance are often rolled into the monthly payment and held in escrow. Shop around for insurance before you buy a house. Insurance premiums, depending on the house, can vary by thousands of dollars a year. These two escrow items are not something a mortgage company is likely to tell someone when the buy first home.

Home owner association (HOA) dues may also be a part of the monthly payment. These generally apply to gated communities, but not always.

CLOSING COSTS ARE ANOTHER OFTEN UNEXPECTED EXPENSE WHEN YOU GO TO BUY FIRST HOME

Closing costs have to be paid at or before closing. Some examples are:

  • Credit report fee
  • Loan application fee
  • Title check
  • Appraisal
  • Title insurance
  • Escrow deposit
  • Recording fee

There may be other fees depending on the loan and local requirements

Get pre-approved for a mortgage if you can. That way you can confidently walk into negotiations to buy first home. The pre-approval also tells the seller that getting his money won’t be a hassle and take a long time. Don’t take the first offer either. Shop around for a mortgage. Several government programs offer low-cost mortgages like the Federal Housing Authority (FHA) have low down payment and low interest programs.

Every state has some sort of program to help a person buy first home with a down payment assistance program. These programs are sometimes linked to the buyer’s income. Sometimes the money can only be used to buy a home where the average income is below a certain level.

With a pre-approved mortgage in hand and a solid idea of what you can spend, it’s time to go shopping. Decide where you want to buy first home. What’s important to you? Does it need to be close to schools? Close to schools? Are close-by recreational opportunities important? How much yard do you want? Is a garage needed?

Many times a real estate agent can help narrow your search down and direct you to houses that fit your requirements for buy first home. This is one of the things you don’t pay for. The person selling the house pays the real estate agent a commission, just as you will pay a commission when you eventually sell the house. The agent will also negotiate on your behalf as well as conduct you through a walkthrough of the house.

Home inspections are an excellent idea. The American Society of Home Inspectors can give you a list of people in the area who professionally examine homes.

One final tip. Don’t buy the first home you look at. Shop around.

Ted Thomas is a Florida-based author and publisher who specializes in distressed properties. Visitors to his website will find 3 must see FREE instructional videos (No credit card required) that will give you everything you ever wanted to learn about government tax defaulted real estate which is sold at public auctions for starting bid 10 cents to 20 cents on the dollar. You’ll also learn the secrets of tax lien certificates which pay guaranteed returns of 16%, 18%, up to 36%.

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