One of the first big investments newlyweds typically make as a couple is to buy a home. This can be the start of a wonderful life together or it can be the beginning of the end if poor decisions are made.
There are many choices to be made in today’s real estate world. It is very important to have good professionals working for you. You will be responsible for hiring a real estate agent, mortgage broker, title company and/or a real estate closing attorney. Remember, they are experts in the field, but they are working for you. Ask trusted family and friends for recommendations so you find trust worthy professions to represent your interests. It is equally important to discuss your needs and desires honestly so your agent can guide you effectively to reach your housing goals.
When buying real estate, being knowledgeable of the process is imperative. Here are the Top 5 things first time homebuyers need to know:
It’s a buyer’s market. That means buyers pretty much get whatever they want. Since the boom cooled off in the last couple of years, the market has turned in the buyer’s favor. There are more people trying to sell homes than there are buyers qualified to buy them. In many cases, home prices have dropped so much sellers are in no position financially to drop their price, offer closing cost assistance or repair general wear and tear. Buyers are often surprised they will have to do quite a bit to a house to get it the way they want it.
Good deals are available, but you may have to work for it. With the market in such dire straits there are many distressed, bank-owned foreclosure properties that are deeply discounted if you’re willing to jump through hoops. Another common deal – the short sale – occurs when a seller is underwater on the mortgage but has to move and will end up having to pay what is left over after the sale to fulfill the loan requirements. A short sale is important because in some markets, they represent up to 50 percent of what’s currently available.
Buying a home is a process. First you must work with a mortgage professional to establish an appropriate monthly mortgage based on income and existing debts. Then you can start your home search. A real estate agent cannot take you looking for a home without a pre-qualification letter from a lender. They have to prove to sellers your ability to purchase the homes you are viewing.
The deal has a complex time line. Once you have worked with your mortgage broker on a loan and with your agent to find a home; it’s time to write an offer. When an offer is accepted, the buyer has three days to officially start the loan process. They also have a specific number of days to inspect the property and make sure they are satisfied with the condition of the home. If repairs are necessary, they can be negotiated between buyer and seller. The loan company will also have the property appraised. The title company will check the previous ownership of the home and file all necessary documents for the ownership transfer. And all will work together to get the loan approved and ensure the home’s condition safe and sanitary for the new buyers before the closing date.
Buyers must do their homework. The buyer may get information from the seller, but it may or may not be reliable. Zoning classifications for adjacent properties may also change over time without the seller’s knowledge. Buyers are responsible for uncovering any issues regarding zoning, permits, environmental situations and sexual predators. The presence of Chinese drywall has also become a problem for some buyers in the last couple years, leading to huge financial losses.
There is much more that a first time homebuyer should know before heading down the path to real estate ownership. But this compilation is a good starting point and handy reference to ensure the important stuff doesn’t fall through the cracks.