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If you are making the transition from renter to homeowner,
you're not alone. In 2004, 40 percent of homebuyers were purchasing
for the
first time, according to "The 2004 National Association of REALTORS® Profile
of Home Buyers and Sellers.
With interest rates at all-time lows and
a booming real estate market, now's a good time to purchase real
estate. However with the prospect
of making one of the largest investments you'll ever make in your
life, you can easily become overwhelmed. Some of the questions you
may be
asking are: Will I be able to afford the home of my dreams? Do I
have enough money for a down payment? Will I make smart home buying
decisions?
If you go into the process prepared, your first purchase can be a
good experience.
Resources--Before starting out, educate yourself on
the process. Check your library or local newspaper to find a homebuyer
seminar
that you
can attend. The U.S. Department of Housing and Urban Development
has an entire section on its website (www.hud.gov) devoted to homebuyers.
It has a list of common questions of first-time homebuyers, information
on mortgage and home-buying programs, access to housing counselors,
downloadable tools such as a wish list and home-shopping checklist,
tips on selecting a real estate professional, etc. Other informative
sites to check out are www.ginniemae.gov, www.realtor.com and prudential.com.
Your real estate professional is also a great resource. Don't hesitate
to let him or her know that you are new to the process. They
will expect you to have questions at each step-from house hunting,
to
making an
offer to the closing.
The costs involved in the purchase of a home can be overwhelming
to first-time homebuyers. There are mortgage costs, the down
payment, and closing costs to think about.
Affordability--By looking at your income and debt ratio, your
sales professional can help you calculate how much you can
afford each
month in mortgage payments. But before determining your price
range, you
should also take into consideration other factors that will
affect your monthly budget once you are a homeowner, such as property
taxes, insurance, utilities, and maintenance. And if your down
payment is
less than 20 percent of the cost of the home, you will be responsible
for private mortgage insurance, more commonly referred to as
PMI.
Mortgage payment--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 not only help you feel more confident, it
will also
give you an advantage where there are multiple offers for
a specific property. In addition, 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.
If you don’t have a specific mortgage lender in mind,
ask your sales professional for a recommendation, Down
payment--The
down payment amount varies depending on the value of the
home you choose and your mortgage lender. And
in some cases,
first-time homebuyers can purchase a home with no money down.
Although it varies from state to state, most offer government-funded
programs
for first-time buyers that help people buy a home with no
down payment. Your real estate professional will be able to explain
the different
options available to you.
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 different homes to get a feel for the
marketplace. When you decide on a home to make a bid on,
work with your
real
estate professional to get all of your questions answered
before making
an offer. But don't wait too long to make an offer. The
longer you wait,
the greater the chance other prospective buyers may place
offers, making it harder for you to negotiate a good deal.
Above all, remember there are no silly questions. Make
sure you understand and are comfortable with every aspect
of the
transaction.
Your real
estate professional 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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