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Making the decision to buy your first home is one of the largest investment decisions you’ll ever make. You are probably excited, but at the same time anxious and may be asking some of these questions: Will I be able to afford the home of my dreams? Do I have enough money for a down payment? Can I get a home inspected before I make an offer? You are not alone. Most first time buyers ask these and many other questions, and there are lots of first time home buyers. According to the 2000 National Association of Realtors Profile of Home Buyers and Sellers, first-time homebuyers accounted for 40% of the homes purchased in 1999. The homebuying process can be overwhelming, but if you go into it prepared, your first purchase can be a good experience. Here are some things to consider before making the plunge.
Getting a loan. Fear of being rejected for a home loan is one of the main concerns for first-time homebuyers. To lessen the stress, you may want to get pre-approved for a loan before looking at prospective homes. This will help you feel more confident, and it will also give you an advantage when there are multiple offers for a specific home. The fact that your loan has already been approved is of great value to the seller because it shortens the purchase process and there is less of a chance that the buyer will back out of the sale. Call your bank or ask your real estate agent to recommend two or three home loan lenders to you.
Loan payments. The costs involved in the purchase of a home can be especially staggering to first-time buyers. With the help of a real estate agent or lender, you can calculate how much you will be able to pay each month in loan payments. With that information you can then determine what price range of homes to consider.
Down payment. The down payment amount varies depending on the value of the home you choose and the type of loan you obtain. In some cases, first-time home buyers can purchase a home with no money down. Your real estate professional or loan officer will be able to explain the different loan options available to you.
Closing costs. First-time buyers often forget to consider the closing costs when making an offer on a home. Paying closing fees of up to 10 percent of the home sale amount is not unusual. Add that to the down payment and you'll have quite a sum to raise before the final papers can be signed. Don’t let this scare you. There are ways to reduce the amount of cash you need. A smart first-time buyer will discuss the options with the agent and lender before making an offer, and will know in advance what costs are to be expected.
Making offers. Don’t feel pressured into making an offer on the first home you see. This is a common mistake of many first-time homebuyers. Make sure you view severalhomes to get a feel for the marketplace. When you do decide which home to make an offer on, work with your real estate agent to get all of your questions answered. But don’t wait too long before making an offer. The longer you wait, the greater the chance other prospective buyers may place offers on the home.
Condition of the home. Buying a "problem" home is another fear of first-timers. A home that needs major repairs can become a costly venture. And, unless the asking price is adjusted to reflect the hidden repairs needed, chances are the home is not worth as much as the seller is asking for it. To avoid unfortunate surprises, your real estate agent should advise you to hire a home inspector. It is worth the expense to know what you are getting into.
Above all, remember that there are no silly questions. Make sure you understand and are comfortable with every aspect of the transaction. Your real estate agent can be an invaluable asset in helping you make educated decisions so that your first home purchase is a rewarding experience.
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