The First Time Home Buyers Guide

The First Time Home Buyers Guide

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The super-duper easy to understand

First Time Home Buyer’s Survival Guide

approval process for first time home buyers

    1. Understand the Loan process.

      Before you even start looking at homes, you will need to have a loan ready to go. The average loan approval process can take anywhere between 45 and 60 days. But, the very first thing you need to know is, there is a big difference between pre-qualified, pre-approved, and approved.

      Everyone is pre-qualified; this is a nonsense title used just to get you in the door. Pre-approved on the other hand, means that they know a little bit about you, but for the most part still trying to get you in the door. When you are approved for a loan, this should mean that you are actually approved and can begin looking for a house. However, many banks have some very tricky tactics when it comes to the loan process. Sometimes they will change the rules mid game. Therefore, make sure that you are 100% approved for the loan, have it put into writing, read the fine print, and get ready for the world’s worst roller coaster.


    1. Know your budget and do not over extend yourself.

      One of the biggest mistakes that first time home buyers make is buying a home that budgeting for home buyersthey really cannot afford. You never know what life is going to throw your way, it is better to plan accordingly. Take the time to go over your budget thoroughly. As a homeowner, there will be unforeseen expenses that arise. A good rule of thumb is for your mortgage payment not to exceed 1/3 of your monthly pay. Just because you qualify for a $200,000 loan does not mean you should look at $200,000 homes.


    1. programs for homeownersLook into first time Homeowner Programs.

      Make sure that you look into and take full advantage of all available grants and homeowner programs. Some programs can help you guarantee a loan, get a better rate, or help with the down payment. You can see a list of the programs and resources along with links here.

as-is or move-in-ready home buying decision


    1. Decide if you want “as-is” or  “move-in-ready”.

      Sometimes doing the work yourself can really be a better way to go however, you really need some experience with this or have someone close to you that is handy, and knowledgeable with real estate. A pro to buying a home that needs some work is every upgrade that you do will be suited to your particular tastes. Done properly, you can add a lot more equity to your home than the money you spent. However, some cons are (if you do not know what you are doing) you can end up spending a great deal of time and more money than the house is actually worth. If you do decide to purchase a fixer upper just make sure that you get a certificate of occupancy, which states that the home is at the very least up to code.  Fixer Uppers are tricky, if you would like to learn more check out our article here.

dont rush and make panicked decisions


    1. Do not rush into buying a home.

      Buying a home is nothing like finding a place to rent. If you rush the process, you could find yourself making big mistakes and might wind up stuck with a home worth much less than you paid. Remember that this is probably the biggest purchase you will ever make so, take your time, be thorough, and be as fussy as you want.


    1. Be very cautious of auctions.

      I would not recommend a first time homeowner to purchase a property through an auction, unless it is absolutely beware of bidding on auctionsguaranteed to have a clear title. There are many auction websites and different types of auctions lumped together. Unless you are experienced with researching titles and have a deep understanding of the auction process and liens, it is better to avoid auctions all together. Time and time again I have seen people spend upwards of 80,000 on a house that they thought they would own, but it turns out they just bought the junior lien. Owning the junior lien will only give you ownership of the house until the bank forecloses. SO, be very careful.

do not buy a house for its appearance only

    1. Do not judge a book by its cover and, do not judge a house by its facade.

      Try not to buy a house for its looks and square footage. Just because a house is large, and looks new, does not mean that it was well built, using quality materials. In addition, it is a good idea to make sure you are not paying an extra 40 thousand for a home, simply because of the 10 thousand dollar upgrade. Doing the upgrades yourself, or hiring a contractor, can be cheaper in some cases and might help to build you some equity in the end. You will have to take the time to carefully weigh the situation with each house. The bottom line is, use your imagination and don’t pass up on a great deal because you hate the wallpaper. Minor improvements are part of the homeowner experience and a big part of the process of making it your home.


    1. Consider the neighborhood.know the type of neighborhood you are considering buying

      The neighborhood is just as important as the actual house you are considering. You need to research the type of neighborhood it is, the schools that it zoned for, and the type people who live there. Speak with the neighbors and get a feel for the neighborhood before you buy. This is going to be your home; those who live next to you should not make or break the sale. However, your likes and dislikes should be something that you add to your pros and cons list. It is also a good idea to visit the neighborhood in the evening to see if “the freaks come out at night”.

      More so than the people who live in the neighborhood, you need to be fully aware of the type of neighborhood you are considering. Homeowners Association (or Deed-Restricted neighborhoods) in most cases are much more than the “mow your lawn” people. If you want to buy a house in a HOA neighborhood, you need to KNOW what an HOA’s rights are where you live.  In many states, a Homeowners Association can take possession of your home if you do not pay your association dues or fines for not mowing your lawn. This would leave you with a mortgage payment on a property that you no longer own. There are some pros and some very serious cons to living in a Homeowners Association Neighborhood. Personally, I would never buy in one of these neighborhoods. However, you are the one who need to carefully weigh your options and do the research on the neighborhood. If you want to read more about HOA’s check out this article.

    1. is the housing market rising or declining Consider the market.

      The real estate market fluctuates and is very hard to predict ever since the housing bust. It seems there is always a new scam to get the next generation buying homes that they cannot afford. These scams drive the price of homes up until the next crash. The market can quickly turn from a sellers’ market to a buyers’ market. Try to research a little and see if waiting might be in your best interests.


find a trust worthy real estate agent


    1. Be cautious when choosing a realtor.

      I remember when I was a kid a real estate agent was a respectable and kind of a classy profession. But, ever since the housing bust things have changed. Some realtors are not your friend. The best advice when looking for a realtor is to avoid a dual agency aka transaction broker realtor. They do not owe you fiduciary duties such as confidentiality. They are working for the seller and buyer at the same time. A single agent will not tell the seller your bottom line.Some of these realtors have many homes, many clients, and do not make the same percentage that they used to. It is a numbers game at this point; they want to flip as many homes, as quickly as they can.

Find your own house and do not rely on realtors

    1. Do not rely entirely on the realtor.

      Once you find a realtor you trust, it is important for you to understand that they cannot magically find your dream home in a week and you are not their only client. Generally, realtors have a list of homes available to them. By using your specifications, they can narrow the list down to find homes you may want .However, not every available home the area will be in their list, for example homes that are for sale by owner. It is very easy for them to miss the perfect home for you because it simply was not in there list. You have to take the extra initiative, and find some homes on your own time as well. If you do find one your realtor can then take over from there.


    1. Beware of what you are asked to sign.question everything you are asked to sign

      Although this is common sense, it needs to be said: do not sign anything without reading and understanding it first. Even if the realtor or bank say its boiler plate or common practice that everyone uses. One of the most successful realtors in our area tried to convince one of my clients to sign over power of attorney! We are not saying that all realtors are bad; just make sure they have your best interests in mind. Some realtors can be very shady, manipulative, and pushy (A used car salesman on steroids if you will). Making home buyers believe that a home  is worth more than it actually is, and having an in house home inspector lie about problems with the home, or tell you several other buyers are waiting to grab the property so you have to decide right now. Home buying should not be a high-pressure tactic.


understand home inspections

    1. Home inspections.

      Hire your own home inspector. Every state has different standards. However, depending on where you live sometimes you can use a residential contractor for home inspections. A residential contractor will be helpful on several levels. First, they build homes so they really know how to scrutinize, determine the quality of the home, and how up to code it is. Second, a working contractor in your area knows what homes are selling for, which neighborhoods hold their value, and they know how to spot a good deal. Hiring your own contractor ensures that the inspection is not skewed to favor one side of the deal. Finally, starting a working relationship with a trustworthy contractor will be beneficial later when and if you ever decide to do any upgrades.


    1. Be aware and beware of Hidden costs.understand every fee you are asked to pay

      Diligently ask your realtor and loan agent about the hidden fees and expenses. When you purchase a home there are going to be some added costs. For example, the closing costs and title insurance are quite pricey. Be aware of every expense that is being tacked on to your bill, sometimes these costs can be negotiated at closing.


do not believe it unless it is in writting


    1. Do not believe verbal agreements.

      Unless it is written down and signed, chances are it will not happen. During negotiations, a lot is said in order to get the buyer hyped up for a house. The realtor and seller may tell you they will put on a new roof, or move in all your stuff for you. But, unless it is written down its null.

short sales take a long time to negotiate

    1. Short Sales are an oxymoron.

      Short sales can take sometimes up to a year to finalize. They are anything but short. Many people pass up on some great opportunities while waiting on a short sale.

appliances and even ceiling fans may not be included


    1. Know what will actually be included.

      When a house is listed for sale, they are usually ‘staged’ with appliances. Find out if the appliances will be included, and how much extra they plan to add for them. Many times, it is cheaper to simply purchase your own appliances and have them delivered before you move in. Many companies will deliver and install the appliances for you at good price.


    1. Do the renovations before you move your painting before moving in

      Once everything is finalized, and you finally have the keys it is very exciting and you can’t wait to sleep in your new home. However, any remodeling you want to do should be done first. It is much easier to paint and lay down new floor etc. when you do not have to maneuver around furniture. I even went as far to hang all my curtains before I moved in to my home.



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