Do Your Homework:

If you are a first time home buyer, then you will definitely need to do your homework. There are many things which need to be done before you can even go out and look for a realtor. You need know what area you are moving to, how much space you need, what you can afford, and how much time you have. Once you know all these things, then it’s time to approach a realtor.

Arrange Financing:

Unless you are wealthy, or extremely lucky, you probably won’t be able to purchase your first home with cash. This means you will need to secure some sort of financing. There are a variety of ways you can go about securing financing. Some of these include:

Taking out your savings (Not generally an option, but if you have the ability, better to use what you have and not go into debt)

Take out a loan from the bank (This is the most common option)

Get a loan from a friend or colleague (If you have friends with money, why not mooch a bit?)

Find a Licensed Real Estate Agent:

As you are a first time home buyer it is important to have a licensed real estate agent help you. This is because there are many legal aspects that won’t be immediately obvious, and also because you will want someone looking out for your interests and not just trying to get the highest price for the seller. Not only that, but a licensed real estate agent can tell you what sort of home you can get for your budget, and also be able to help you analyze the homes you go through and see if it is a good buy or not.

Do your Own Market Comparison:

While your realtor is busy looking for homes for you, you will also need to be doing your own research. Your realtor can help by giving you CMAs (comparative market analysis) of the different properties, but you will also need to do your own research to see if the property fits all your criteria. For example, you will need to find out what kind of neighborhood the home is in, what sorts of services are available, and what schools are around if you have children. Sure, most of this information can be gotten online, or through the CMA, but it is better if you get the information yourself first hand. Before  or after going to showings, you might spend some time in the neighborhood scoping it out. 

Schedule a Showing:

One of the hardest things for first time home buyers to do is schedule a showing. This is because more often than not they are looking for the “perfect home”. The “perfect home” does not exist, and there will always be compromises that will need to be made, no matter where the property is located, how much it costs, or what it is close to. Remember that you aren’t going to find something that meets all your criteria, and you need to decide which criteria are MOST important to you, select the properties which most closely fit those, and go out and see them. You will find that once you walk around a property, all those things you didn’t like about it before, might seem less of a problem up close. 

Pay Close Attention to Detail:

So you have had a showing and you liked the property, and are thinking about buying it. What next? Well, you will want to go over the property again with a fine toothed comb and see if the property is truly what you are looking for. It isn’t only the number of rooms, or the size of the home. You need to check the foundation, roof, plumbing, electrical and other assorted things as well. You will want to keep a list, and get a home inspection done to see what needs to be repaired or replaced. This will allow you to know if you are putting in a fair offer or not, and also if you still want to purchase the property.

Things to Remember for First Time Home Buyers:

• Remember to do your homework. You can never have too much market research!

• Be willing to compromise. You aren’t going to get EVERYTHING you want first time out.

• Don’t reject a good offer just because there are some minor inconveniences with the property. You might need to be willing to roll up those sleeves and do a bit of work.

• Try and negotiate. Remember, a lot of time the list price is not written in stone and can be changed according to many different factors.

• Speak to the owner of the property directly. If it is a short sale or a foreclosure, this might be harder, but only the original property owner will be able to accurately answer important questions about the property.

• Have all your paperwork in order.

• Get a home inspection done by a professional. This is important as it will help determine the final price of the home, and if you really want to buy it or not.

• Try to keep your down payment to a minimum, to help have some extra cash on hand for any repairs you may need to make to the home. 

• Don’t get too emotional. While it is easy to get caught up in the process of buying your first home you will want to keep your emotions in check. You need to be able to analyze the information you get with a cool head, and take your time to check all the little details you may miss the first time through in your excitement.

• Always use a licensed real estate agent to represent you. This what you know you are protected. John  Herman and his team are always ready to help.

Common Mistakes Made by First Time Home Buyers:

• Tunnel Vision: A lot of times first time home buyers tend to focus on the big things, and completely overlook the tiny things such as repairs needed, a distance of the home from a busy highway, location of power lines, etc.

• Cold Feet: While it is always a good idea to take your time in making a decision on your first home, many first time home buyers take too long, and risk having another offer put in on the home they liked and forcing them to start the entire process over again.

• Not having professional help: Some first time home buyers elect not to use the services of attorneys, brokers or licensed real estate agents to save money and it winds up costing them more money in the long run.

• Letting their emotions cloud their judgment: Sometimes they get so caught up in the excitement of buying their first home they don’t see some of the important things. (Like the leak in the basement, or the slight bulge in the foundation by the front door.)

• Look for their ideal house first and then think about getting the loan: This is a big mistake. You will want to be sure to get your loan preapproval first, before going out and looking at houses. You will need your preapproval before submitting any offers on a house, and it can take anywhere from a week to a month to get a preapproval done. In that time, someone else could potentially scoop the house out from under you. So, always have your preapproval done first.

• Waste time at looking at homes outside their budget: If a house is priced a certain way, then they are not likely to drop the price much. Houses can drop as much as $20k, but it should not be counted on, and those cases are extremely rare. So, avoid the frustration, and only look at houses that are a maximum of $5k more than your budget as you might be able to get them down that much.

• Let your agent do the talking: Some people get excited and run off at the mouth and say something that might raise the price of the home. Let your agent do the negotiating for you. If the seller sees your excitement and how much you want it, they might not be willing to budge on the price.

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There are two main places you can go to secure financing for purchasing a new home. Private Sources and Public Sources.

Some private sources of funding include banks, family members, friends, and private lenders.

Some public sources for funding include government grants, housing programs and lending programs.

There are advantages and disadvantages to both sources of securing financing.

For example, if you get funding through private sources, the interest rates are generally higher, but you don’t have as many requirements as public sources and they generally don’t take as long to process.

On the other hand, the public sources have various requirements which need to be met, and take a lot longer to process, however the interest rates are generally much lower than private sources for funding.

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Different From Foreclosure:

There are many people that think that a Short Sale is the same thing as a foreclosure, however that isn’t true. In a foreclosure, the court issues an order for the property owner to sell the property. In a Short Sale the property owner sells the property themselves after getting permission from the bank to do so. 

Things Necessary for a Short Sale:

A Short Sale cannot take place without first getting permission from the bank. If you want to list your property for a Short Sale you will need to talk to the bank first. This is because they need to give the go-ahead to list the property, and may even give you a price that they will accept. (However, this rarely happens, and many Short Sales are approved but then there is a lot of back and forth before they decide on an acceptable price).

Advantages of a Short Sale:

There are a few advantages to a short sale, especially if you are an investor. As an investor, you can benefit from the purchase of a Short Sale because they are generally sold below market value. As a seller, a Short Sale benefits you because you will wind up with more money in your pocket than in a foreclosure situation. In a Short Sale, the extra debt is forgiven, however in a foreclosure, you still are held accountable for that extra debt and don’t see any of the money from the sale.

Disadvantages of a Short Sale:

In the case of a buyer, the main disadvantage of a Short Sale is the time involved. Short Sales generally take a lot more time to close that normal real estate transactions. This is because it is not a simple transaction between the seller and buyer. A Short Sale is between the seller, buyer and the bank which holds the mortgage.

In the case of the seller, the main disadvantage is you will likely suffer a small loss on the sale of the property. However, it should be noted that it is always better than a foreclosure where the chances of the seller having anything left over from the sale are slim to none. 

Steps For Buying a Short Sale:

Below are some steps involved in deciding to purchase a Short Sale:

Know Your Budget:

The first thing you should know before you get involved in a Short Sale is your budget. You need to realize that many Short Sales, while selling for under market value, often need some extra investment to get them the way you want, or in some cases, to be livable. You should plan on setting aside a certain amount for repairs and upgrades you may wish to make to the home. 

Do Your Homework:

You need to be sure of the actual value of the property you are purchasing. You will need to compare the property to other similar properties being sold in the area, what condition it is in and many other factors before deciding if you wish to purchase. This can be a very daunting task if you do it yourself. However, professional real estate agents do this every day. Simply ask us for a CMA (current market analysis) on the property you are interested in, and we can do all the hard work for you and give you an accurate report which will help you decide if the property is a good deal or not.

Listen to Your Agent:

We cannot speak for other agents out there, however our motto is “The client comes first”. This means that we always look out for the best interests of our clients, even if it means telling them to walk away from a property and a commission check for us. We know the ins and outs of the Short Sale process, things to avoid, and tell tale signs of a “good deal”. So take our advice, relax and let us do the dirty work.

Have all Your Paperwork in Order:

One of the most important things to remember during the Short Sale process is to have all your paperwork in order. This means you need to have the offer signed, all disclosures acknowledged, and of course you need your proof of funds or pre approval letter lined up. Without these documents the Short Sale process will take much longer as the process will come to a halt every time one of these things is missing. This can add weeks or even months to the Short Sale process, so always have everything ready when you submit an offer.

Things to Keep in Mind:

• Short Sales take longer than normal real estate transactions, sometimes up to a year.
• Short Sales may not be approved for the amount of money you offer, even if at list price.
• Short Sales may be priced below market value, but you may need to put in more to get the property the way you want it, putting the price above market value.
• All Short Sales require bank approval before closing.
• Short Sales are not a simple process, and you will always need help from an experienced agent to successfully execute them.

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Methods For Buying a Foreclosure:

You can find many different kinds of properties being sold as foreclosures. The properties available vary in size, price and location and are generally not easy for non-agents to get information on.

Find the Original Property Owner:

One thing you will want to do before considering purchasing a foreclosure is to attempt to find and get in touch with the original property owner. This is because the original property owner will have much more pertinent information on the property than the bank that foreclosed on it. Also, in some cases, the original property owner can act as a liaison directly with the bank, and can help smooth over introductions and get the property sold. You will of course want to compensate the original property owner for his time.

Search the Internet:

One of the best ways to get information on foreclosures is online. There are a number of companies online that provide a listing of the different foreclosure properties available. You can take this information to your real estate agent and they can get further information on the properties and assist you in putting in an offer on them.

Look for The Auctions:

Many foreclosures are sold at auction. If you are looking to purchase a foreclosure, then one of the first places to go looking is the auction block. A bank will often put a foreclosure up for auction as it is the quickest way to get the property sold. Many foreclosures which go to auction don’t require the intervention of a licensed real estate agent to find (as they can be found in newspapers and online), however you will want to have a licensed agent looking out for your interests when it comes time to sign all the paperwork and take possession of the property.

Things to Remember:

• Here are some things you should keep in mind if you are thinking of buying a foreclosure:

• Make sure you have all the legal information pertaining to the property (back taxes owed, etc)

• Get a licensed real estate agent to look after your interests

• Go and see the property, and have an inspection done before buying it

• Have a licensed agent do a CMA (comparative market analysis) for the property before putting a bid on it.

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There are lots of Hope for the Best moments in the real estate transaction, especially these days. As a first time home buyer, these Hope for the Best moments can be frustrating.

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Most states use escrow companies or attorneys to complete the transaction. You need to check with your state’s attorney or escrow agent, but lots of this information may below still apply. You can typically request a HUD-1 form a day before closing to see details, however, there have been cases that it was not prepared the day of closing. It is not useful to know how much money you will need the very day of closing, so work with your buyer’s agent to find out your costs. Thinking ahead about your CLOSING COSTS.

There are lots of costs associated with searching for and buying a new home, in addition to the big ticket item itself.

ESCROW and CLOSING COSTS

Let’s talk about the costs associated with your home purchase once you have an accepted offer. While some states use attorneys in the transaction, here in Carlsbad (and California in general) the transaction is handled through a neutral 3^rd party, the escrow company, whose responsibility is to ensure all terms and conditions of the contract are met by the buyer and seller before closing and the transfer of the title to the buyer.

Here are SOME of the costs:

Prorated state property taxes (if your state has one)-   you will either reimburse the seller for taxes paid from the date of closing until the end of the tax period (semi-annual) or pay the portion owed if not already paid by the seller. In addition, if you finance your purchase your lender will require a prorated portion of taxes to be collected in advance at closing. You will typically see the 100% or 110% tax prorated on your contract. What this means if that seller will have to pay 110% of what last tax year bill way to you, so you then can pay the bill when it comes. Yes, you got it, you do not know exactly what that bill going to be. Hence the reason they give you an extra 10% to cover any increase in Tax bill from the prior year.  Don’t count on using this money until the TAX bill comes, your lender most likely will want to hold on to that money and will deposit for your into your escrow account with your bank.

Escrow fee – the fee for the services of the escrow company (typically the seller and buyer split the cost but this may be negotiated). This fee will generally run from around $600 for low-end homes to over $1000 and is determined by the purchase price.

Homeowner’s Insurance – lenders generally require 1 full year paid in advance with proof a policy provided at closing

Pre-paid Interest – interest on your loan from the date of closing until your first mortgage payment

Your down payment – if you have a down payment you will pay the balance due (minus the amount you send with your offer as Ernest Money)

Mortgage fees – those associated with your particular mortgage which may include an application fee, appraisal fee, credit report fee, and loan origination fees/points. Please get a Good Faith Estimate from your lender ahead of time, they will have an estimated amount.

Miscellaneous fees that vary from the transaction – flood certificate, overnight mail, document recording, title preparation,

The post What You Should Know about Buyer’s Closing Costs appeared first on First Time Buyer Central.

1. Clear your home’s surroundings of debris and combustible materials.

2. Maintain your lawn and keep bushes and trees trimmed.

3. Use fire-resistant materials when building or updating your home.

4. Make sure your home has a fully functioning fire alarm system.

5. Keep a shovel and fire extinguisher in an easily accessible place.

6. Practice appropriate fire safety measures with campfires.

7. Prepare a fire safety plan.

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