First time house buyer tips can help people make educated decisions about real estate purchases. Surveys suggest people are beginning to think about purchasing houses. Many buyers are developing their purchase strategies now because they realize housing prices will eventually increase. Do you want to learn more? Visit house buyers.
It is important to obtain first time house buyer tips from reputable sources. One of the most credible sources is the U.S. Department of Housing and Urban Development. The HUD website offers valuable information and resources including assistance programs, approved housing counseling agencies, homeownership vouchers and incentives for buying HUD properties.
The first thing buyers should do is determine how much they can afford. It is important to factor in the down payment, loan origination fee, closing costs, realtor commissions and homeowners insurance.
A quick way to determine how much you can afford is by multiplying your gross annual income by three. If your annual income is $60,000 and you can provide a 20-percent down payment, housing prices should be no higher than $180,000.
First time home buyers should obtain pre-qualified mortgage loan approval before scouting out houses. Prequalification lets you know exactly how much money can be borrowed and what the monthly payment will be. Obtaining approval beforehand provides additional negotiation leverage with sellers. Many property owners will lower the sale price if the buyer is already qualified for a loan.
Oftentimes, first time buyers are caught off-guard by closing costs. Closing fees range between 1- and 10-percent of the sale price. Fees encompass property appraisals, surveys, inspections, title search, loan application, loan origination, recording fees, transfer taxes and escrow deposits.
Some sellers agree to pay part or all of closing costs in order to close a deal. Lenders might offer to pay related fees, but usually charge a higher interest rate for the loan duration. Take time to calculate the true cost before agreeing to a higher rate of interest. An additional ¼-percent over the course of the loan can be substantial.
Most first time buyers find it best to work with a realtor. One of the most trusted sources is the National Association of Realtors website at Realtor.org. Also ask friends, family or co-workers for realtor referrals. Not only can you discover who to use, you might also find out which realtors to avoid.
Once a property is located, buyers must make an offer. The seller is required to provide a disclosure report stating any known defects. If the offer is accepted, both seller and buyer must sign a contract. The buyer must provide earnest money to the seller to secure the deal. This usually amounts to between $500 and $1000.
The buyer should obtain a house inspection to ensure the property is in the condition the seller claims. If problems arise during inspection, the buyer can either renegotiate the purchase price or walk away from the deal.
If everything is okay with the inspection, the buyer will need to obtain an appraisal and property survey.
The final step of buying a house involves closing. During this meeting the buyer pays the down payment to the seller, along with closing costs. The mortgage lender wire transfers funds to the seller and initiates real estate transfer documents. Once mortgage loan documents are signed, the buyer becomes a homeowner.