First Time Home Buyers Need to Understand All the Details (Watch Video)

Understand All the Details When Buying Your First Home

The unknown is scary.  When you are a first time home buyer, a great deal of  the home buying process is unknown.  So, having a Realtor who will explain everything, then review all the documents in detail removes the “scary factor” from the purchase. 

It is important that the Realtor focus on what is important to the first time home buyer.  You will notice in this interview that Chris focuses on reviewing all of the papers in detail, because that is what made him comfortable.  As a part of his purchase of a Short Sale, his agents had to get the approval of Wells Fargo for a short payoff on the existing loan on the house in record time.  Otherwise, Chris might not have received the tax credit for first time home buyers.  Next, the Realtors had to get the tenant to move out of the home well before the end of the lease.  Finding another property to rent, getting the existing lease terminated took extensive negotiation.  Then, the Realtors even helped the tenant move to meet the time table for the closing.  So, the Realtors took care of all of this without making it seem difficult, making Chris so comfortable that they would take care of everything that he was free to focus on what was important to him: understanding all the materials in detail.  In other words, a good Realtor takes care of everything that needs to be done, then focuses on what is important to the first time home buyer.

Here is Chris’ description of the process:

What is important to you? Be sure to find a Realtor who will focus on what makes you comfortable as well as take care of everything else.

Should First Time Homebuyers Buy Now?

first-home-christmas70Is This The Right Time To Buy Your First Home?

 

The old saying “Buy Low, Sell High” sure sounds like obvious advice.  But haven’t you heard Wall Street commentators talk about how hard it is to “time” the market?  The same is true for buying a home.  By the time you know when the market was at a “bottom”, it isn’t any more.   All of the signs indicate that once this market hits bottom, everyone is going to jump in, so that the bidding by buyers will make the prices go up rapidly.   And mortgage loan rates fluctuate, sometimes rapidly.  So how can a first time homebuyer tell when to buy real estate?  

 

There are two fundamental considerations, for all buyers:

-         Can you afford the home now?

-         Will you stay in it long enough to justify the initial costs?

The first point includes consideration of mortgage rates, which in the Triangle have been great for some time now and look like they will continue to be very good in the short run.  But they’ve been really high before and could get there again – we can’t predict them far out. 

This point also means you need to consider your income, assets, and other debt – can you make the commitment to buy and maintain a home now?  The second point recognizes that there are some significant one-time costs when you buy, and when you sell, so doing both quickly is a bad idea.  I typically recommend that a buyer feel sure they will stay in the home 2-3 years, minimum, but situations do vary.  For example, if you will be able to sell with relocation benefits that cover many of your selling costs, it may be easier to buy a home and stay in it a short time.  Both points suggest that you should have a high degree of confidence in your income security.

 

First time homebuyers have two huge advantages right now:

-         You don’t have to sell another home first!

-          You can get up to $8,000 from the government!  Not a loan, but free money!

We are in a slower market than we are used to, meaning there are more homes for sale now than usual, and fewer qualified buyers.  That, combined with the low interest rates available, defines this as a Buyers Market.  As a non-homeowner, that means you get the benefit of buying in a Buyers Market without the penalty of selling in one too.  And, it gives you some clout in negotiations as the sellers don’t have to worry about you being able to sell first.  The second point strongly suggests that now, right now, is the time to buy real estate.  The program requires that you close by Dec. 1, 2009.  Still, the two fundamental considerations apply.  For example, the rules require that you live in the home as your primary residence for three years, or you have to return the $8,000. 

 

So, if you can buy now, should you?

-         Larger than usual inventory of homes for sale means more to choose between

-         Low interest rates mean you can get more home for the same money

-         A Buyers Market means you have more clout than in a Sellers Market

-         The government’s $8,000 gift expires Dec. 1

That adds up to making this an unusually good time to buy a home anywhere from Cary to Wake Forest or any other part of the Triangle in North Carolina.

 

 

Getting a First Time Homebuyer From Contract to Closing

contract-to-closing70The Steps a First Time Homebuyer Takes From Signing a Contract to Getting the Keys 

 

Congratulations – you have a North Carolina Real Estate contract!  What’s next?  As a first time homebuyer, the process will be new to you, and it can be stressful.  A good Buyers Agent can review the main steps and options with you before you go under contract.  The key areas are loan approval, repair negotiations, legal arrangements, utilities/insurance setup, and funding.  We will give you some guidelines here, but every transaction is different, so ask questions!

 

As the buyer, you must stay on top of gaining loan approval, providing required information quickly, paying required bank fees, and keeping in touch with your lender.  If the home does not appraise for at least the purchase price, or if you cannot get a loan as described in the contract, you may be able to walk away from the deal with a refund of your earnest money.  However, you will not get a refund of what you paid the lender to appraise the property.

 

Your agent will schedule the inspections called for by the contract and help you draft a repairs request.  The seller may or may not agree to make all requested repairs, so be prepared for another negotiation.  And depending on several factors (contract alternative 1 vs. 2, cost of repair contingency, repairs needed, seller’s response to repair request, and more) you may be able to walk away from the deal and get your earnest money deposit back if things do not work out as specified in the contract.  Again, you will not get a refund for what you paid the inspectors.

 

You will need a closing attorney, who will review the contract, initiate a title search, order a survey (optional), work with you to schedule the closing meeting, work you’re your lender to properly record all related costs, conduct the closing meeting including explaining lots of documents, record the deed, answer questions, and a abundance of other services.  You may have special needs, such as if you need to be out of town and need to grant Power of Attorney to someone else to attend closing and sign for you.  Discuss those needs with your agent and your attorney well in advance of closing.  Again, if the deal falls apart, you may still incur some expenses, such as for the title search and survey services.

 

You will need to select a company to provide home owner’s insurance a couple weeks before closing, in order to allow the attorney and the insurance agent to communicate.  At least a week before closing you will need to contact appropriate utilities and arrange for the electric, water, gas, cable, and other services to be turned on in your name.

 

No surprise here – buyers usually have to bring some money to the closing meeting!  How much?  The attorney will provide a document, called a HUD Statement, detailing all your costs and all the funds available to you – and you’ll have to pay the rest, with a certified check typically.  But you get that right before closing.  So you need to have an estimate of how much you will need in advance, and make sure you have the funds in a checking account well in advance.  Don’t expect to move money from a stock account or other source just before closing – the bank may insist on a few days to let a deposit clear before letting you use the funds for a certified check.  And don’t expect the Good Faith Estimate you lender gives you to be an exact estimate of what you will need – those documents typically have to leave off several non-bank costs and credits.  Talk with your agent to get the best picture of the amount of money you need to bring to the closing.  Then, bring your checkbook, just in case there are some extra charges.

 

the bottom line is that when you are buying real estate, think of moving from the point of signing the contract to a successful closing as a project, and select a Buyers Agent who will act as a good project manager – one with the communication skills, work ethic, and attention to detail to handle all the things that come up. 

 

I Have No Kids, So Schools Are Not Improtant- Right?

kids-walking-to-school70Schools are Important to First Time Homebuyers

If you have children and are moving into a new home, one of the things you are often most concerned about are the schools.  You will make it your business to find out about the schools and the school district.  You may even rule out certain homes based on the schools your children would go to.

Often first time homebuyer are young, and have no children.  Or, the first time homebuyers have young children that are not in school yet.   When this is the case, they assume that the  school district is not an important part of the process of locating a home.  This may not be true, especially for the first time home buyers. 

 Statistics say that a first time home buyer will purchase another home within 5 yrs.  So, resale value of the first home will be an important factor.  With this in mind school districts will matter to you whether or not you have children.  Finding out about the school district or districts in the area you are searching can be easy especially if you use local Realtor.   A local Realtor should have the names and contact information for all the school districts in the area that you are searching.  Or, the Realtor may have set up a website just to provide information about schools, like our http://www.FreeSchoolinfo.com

Contacting the school administration or at least looking at their websites will give you valuable information on test scores, school calendars and other vital statistics about the schools.  For example, Wake Count Public School System maintains http://www.WCPSS.net that will tell you everything about the schools .  Frequently, there will be more than one school district and they each will work differently.  For example, in the Triangle, Orange County has its own schools, Durham County has its own schools and Johnston County has its own schools.  So, if you want to live in Cary, check the Wake County schools for that area.

First Time Homebuyers Using the Internet

internet70First Time Homebuyers Can get Good, and Bad, Information on the Internet

After deciding that you are ready to buy a home the first place most of us turn to is the Internet. The Internet can be a very useful tool to help, especially for first time homebuyers. Home buying is a daunting task and one of the largest purchases most of will make. So, you are looking for answers to a large number of questions.

Almost all the information you can imagine is at our finger tips online. However, the Internet is full of misinformation and advice from people who do not know what they are talking about. Weeding through his information can be overwhelming so using a qualified Realtor to help you is the best and easiest way the slog through all the information out there. For example, your Realtor can recommend websites with accurate information that is organized in an easy to read manner.

For example, there are a number of lenders who operate online. Some of them will give you a pre-qualification letter to say that you are qualified for a loan with only the slightest amount of information. If you select a Realtor who is not fully aware of the problems that can be created by Internet lenders, you may proceed with a purchase thinking that you can get a certain kind of loan, when you cannot. You need to use lenders that have a proven track record of success, because there are few things worse than getting right up to the time of closing, with all your possessions on a moving van, only to find out that you are not buying anything or that your purchase may be substantially delayed until financing can be obtained.

Some of the best resources to use are mega sites like realtor.com to find homes that are listed on the MLS systems of all areas of the country. Also using a search engine, such as Google, can also be very helpful. If using a search engine be as specific as possible in your search. Decide exactly what information it is you want and use all the key words in your description. Another great resource is to use a Realtor’s website. Often you will need to give some information to access the full site, but a Realtor’s site like www.TeamForYOUrDreams.com , will contain links to every home that is available in the local MLS, and will usually contain other links to information about the area like schools, city and county websites, and many others. Using a site like this will also give you access to a Realtor in the area that will be able to help you answer any questions you may have about home buying in general and about the specific real estate market in the area you are searching.

First time homebuyers can find a great deal of information on the Internet. However, they need to be able to determine what information is reliable and what is not.

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