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First Time House Buyer Tips

First time house buyer tips help individuals make informed decisions about their real estate purchase. Real estate polls suggest people are at least beginning to think about buying a house. Most people realize prices will eventually start going back up and are planning their strategy of when to buy.

Today, I'm happy to share the following first time house buyer tips and hope you find them beneficial. This post focuses on the required steps for buying houses and what you can expect along the way.

The first step to buying a house is to determine how much you can afford. This amount should include the monthly mortgage payment, along with the down payment, closing costs, loan origination fee, property insurance, and other expenses.

One way to determine how much house you can afford is to multiply your annual household income by three. If your income is $70,000, and you can put down 20-percent toward the purchase price, you will want to look for homes priced no higher than $210,000.

Real estate experts recommend obtaining pre-qualification from mortgage lenders prior to looking at houses. Doing so let's you know upfront how much you can afford and what your payments will be. Pre-qualification provides additional leverage in negotiating with sellers. Most sellers will reduce the sale price if they know the sale will proceed quickly.

If you can't qualify for a mortgage loan you will need to look into other financing options such as lease-to-own or seller carry back mortgages.

First time house buyers are oftentimes caught off-guard by closing costs. These fees can take range from 1- to 10-percent of the purchase price. Closing costs can include loan application fees, loan origination fees, property appraisals, title search, lender and buyer legal fees, homeowner's insurance, recording fees, surveys, inspections, transfer taxes and escrow deposit for taxes.

Some sellers will agree to pay all or part of closing costs to close a deal. Lenders might offer to pay closing costs, but generally charge a higher rate of interest for the duration of the loan. Before agreeing to a higher interest rate, take time to calculate the true cost. An additional Ā½- percent over the course of 15 or 30 years can be substantial.

Now it's time to locate a realtor. It's important to work with a trustworthy and honest realtor. Start by searching the realtor database at Realtor.org">Realtor.org. This website is managed by the National Association of RealtorsĀ®.

Another good source is asking family, friends or co-workers for referrals. Not only will you discover who to use, you might also discover which realtors to avoid.

First time house buyers might also want to look at For Sale by Owner (FSBO) properties. FSBO real estate does not require the involvement of a realtor and can save buyers thousands in realtor commissions. However, unless you have a solid understanding of real estate laws, it is best to hire an attorney to handle the transaction.

Once you find a house you can afford, it's time to make an offer. The seller needs to provide a disclosure report outlining any known defects. If the seller accepts the offer, both parties will sign a contract. The buyer provides the seller with earnest money to secure the deal. This typically amounts to between $500 and $1000.

The buyer should obtain an inspection to ensure the house is in the condition the seller claims it to be. If problems arise during inspection, the buyer can either back out of the deal or renegotiate the purchase price.

Most lenders require an appraisal and property survey. Once these items are obtained, the buyer must obtain homeowners insurance.

Finally, closing takes place. During this meeting the buyer pays the down payment to the seller, along with any closing costs. The bank wire transfers the money to the seller and initiates realestate transfer documents. Once mortgage payments are signed, the buyer instantly becomes a homeowner.


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Published on May 20, 2009 at 02:06 AM

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