You want to buy your first home. There has never been a better time to be a first time home buyer! There are many homes on the market to choose from. Home prices have moderated. Interest rates are at historic lows. And you may be eligible for a tax credit of up to $8000 if you purchase a home in 2009.
What steps should you take to make your home buying dream come true?
Create a team of professionals who will help you find the perfect home to meet your needs and wishes and guide you to make informed decisions in the home buying process.
- The first of these professionals is a real estate agent. Purchasing your first home may be the largest and most important financial transaction you undertake and going it alone can be risky. A professional real estate agent will help you find the right home and neighborhood, provide you with expert buyer representation throughout the purchase process, and handle all the details of the transaction to make your move as easy as possible. Look for a full-time agent who has a number of years of experience in the geographic area that you want to live in, who is a member of the National Association of Realtors and adheres to the REALTOR Code of Ethics, and who is an Accredited Buyer Representative (ABR). An agent with an ABR designation has additional education specializing in working with and representing home buyers.
- The second professional on your team is a mortgage loan officer. Today's turbulent mortgage and credit markets require that you consult with a mortgage professional at the beginning of the process to determine the best mortgage program for you. A good loan officer will discuss your options, based on your credit score, income and debt, and help you make an informed decision. Your buyer's agent can give you recommendations for loan officers who give excellent service.
Assess your credit and finances and determine the right home price range for you.
- Begin the loan approval process with your chosen loan officer. Discuss the monthly mortgage payment you feel comfortable with and compare that with the monthly payment for which you are qualified by the loan officer. With the assistance of the loan officer, identify the funds needed for a down payment and closing costs and which mortgage programs best suit your situation.
- Ask your loan officer for guidance if the credit check shows that you need to work on repairing your credit report or improving your credit score. Improving your credit score, if needed, can save you thousands of dollars in payments over the life of the loan. Beginning the loan approval and credit check process early will help you determine a timetable for purchasing and closing your first home.
Determine the home and neighborhood features that you want and those that you really need in your first home.
- It is important to prioritize your wants and needs in a home. Don't forget to include the neighborhood features that are important to you. The perfect home in a neighborhood that you don't like will make you unhappy with your purchase decision in the future.
- Make two lists of features: those that you can't live without and those that would be nice. Remember that no matter your price range, no home is 100% perfect. You will always have some trade-offs and you will refine the lists as you shop for a home.
- Ask your real estate agent for input as you view homes. Remember that the agent has walked through thousands of homes with buyers and can provide valuable advice on the livability of a home's floor plan, pluses and minus of the lot, and things you should consider for future resale.
Shop for a home.
- Looking at homes is the most fun and exciting part of the process for first time home buyers. You will be well-prepared for this step because you've already found a good buyer's agent and you've been pre-qualified for a mortgage and know what you can afford and how you will finance it. You've also created a clear set of goals for the features in your new home and neighborhood. Your agent will schedule as many sessions for house hunting as you need to identify potential home candidates and to make you feel comfortable with your decision.
- You probably have been looking online for homes as you worked through the beginning stages of your search. Your Charlotte area agent can now refine the online search for you by setting up a listings web page for you with a search or searches that are targeted to your price range and home features. Nearly every home for sale is available through the Charlotte Multiple Listing Service and will be included in your listings web page. You will be notified of new listings and price reductions on a daily basis.
- Remember to call your agent when you identify a home that you want to see. If you drive by a home and are tempted to call the agent listed on the For Sale sign, remember that the listing agent represents the seller and will not watch out for your best interests as your own buyer's agent will.
Negotiate an offer to purchase for your first home.
- You've found the home you want to purchase. At this point, you will want to rely on the experience and expertise of your buyer's agent to guide you through the paperwork and negotiations. The agent will prepare a professional opinion of value for the property to help you determine a price to offer. An estimate of closing expenses and total funds needed prepared by the agent in consultation with the mortgage loan officer will give you the confidence to proceed.
- You and the agent will complete an Offer to Purchase and Contract form with the agent explaining the various conditions in the form and the process. Your buyer's agent will recommend a negotiating strategy and will act as your advocate in the negotiation process.
Complete the process for closing your first home.
- You and the sellers have now agreed on the terms of purchase and your new home is under contract. Your buyer's agent will provide professional management of your transaction from contract to closing and will recommend other service providers needed for closing.
- A home inspection will be performed on the property within the first two weeks after the contract is executed. You should plan to attend this inspection so that you can ask questions and understand what the inspector has found. Your agent will help you identify repairs that you want to request of the sellers for completion prior to closing. Remember that a seller may or may not be willing to address everything on the inspection report. Repairs are another negotiation that your agent will guide you through.
- Continue to work with your mortgage loan officer to process your loan. You may be asked to provide additional documentation as the loan goes through underwriting. Provide all requested documentation in a timely fashion and understand that such requests are a normal part of the loan approval process.
- Your buyer's agent will help you select a closing attorney and a closing date will be set. The attorney will check the property title and order a survey.
- You will order hazard insurance to cover your home in the event of fire or other natural disaster.
- A day or two prior to closing, the closing attorney will receive a closing package from the lender and will prepare a Settlement Statement or HUD. This form will spell out exactly the funds that you will bring to closing. Your agent and loan officer will review the HUD for correctness and review it with you prior to closing.
Go to closing, get the keys and celebrate your first home!