Common Questions from First-time Homebuyers
Know
Your Rights as a Homebuyer
Before you start, there are many laws that protect you from scams,
unnecessary expenses, and discrimination in the process of homebuying. Know
your rights!
Find out
How Much Mortgage Can You Afford
You can save yourself a lot of wheel-spinning if you take a minute to
figure out how much mortgage you can afford. Generally, a lender will want
your monthly mortgage payment to total no more than 29% of your monthly
gross income (that's your monthly income before taxes and other paycheck
deductions are taken out.) You also need to consider current loan interest
rates. The lower the interest rate, the more expensive the home you'll be
able to afford. Follow our tips and use these simple calculators to see how
much you can afford in a mortgage payment.
Create
Your "Wishlist"
Make your wish
list. Focus on the features you want in a home: 2 bedrooms or 3? 1 bath
or 2? Garage or no garage? Knowing what you're looking for will help you
focus your search. And it will help your real estate broker, too.
Find a
Real Estate Broker
You'll want to start searching for a broker as soon as you decide to buy
a home. Talk to several and find someone you think you'll be comfortable
working closely with. Many of your friends and relatives have probably
bought and sold their homes through brokers. Ask them who they used and what
their experiences were. You can find out which brokers specialize in the
kind of home or the area you want by looking in the Yellow Pages or your
local newspaper's classified real estate ads. Or drive through neighborhoods
and note the names of brokers on "for sale" signs. When you talk
to prospective brokers, ask questions about the areas and types of homes in
which you're interested. Do they seem knowledgeable? Most important, is
their personal style a good fit with your own?
Mortgages
and Homebuying Programs
Many different kinds of mortgages are available to you. Read about them,
and make sure you understand the pros and cons of each. Your real estate
broker can help you. HUD offers some special homebuying programs. Also, many
local governments offer special homebuying programs to help low-income
homebuyers. Shop around - you may be surprised at all your options!
Shopping
for a Home
Now you really begin house-hunting. Your real estate broker will be able
to find listings for you, based on your wishlist.
But don't stop there! You can do your own looking, and then ask your broker
to show you the house. Start with the Internet. Pick up real estate flyers
at local grocery stores and convenience stores. Read the real estate
sections of your local newspaper. Drive around neighborhoods that interest
you and write down addresses where there are "for sale" signs. Go
to open houses. Try everything!
Building
a Home
If you want to build a new home, there are other things you need to know
before you begin. Learn about construction standards and about buying land,
so you know your rights.
Manufactured
Homes
Manufactured homes can be a great alternative for first-time homebuyers.
Again, it's good to know how the laws protect you.
Rehab a
Home
You may want to consider buying a "fixer-upper." If so, there
are federal programs
that can help you finance your repairs.
Home
Inspections
When you make an offer on a home, it's a good idea to make your offer
contingent on a home inspection, conducted by an independent authorized
inspector. You will have to pay for this inspection yourself, but it could
keep you from buying a house that will cost you far more in repairs, down
the road. If you are satisified with the results of the inspection, then
your offer can proceed. If you aren't,you may want to negotiate, asking the
seller to pay for certain repairs or asking for a lower price.
Appraisals
Your lender will require you to get an appraisal of the house you want to
buy, to make sure it's worth the money that you're borrowing. You may select
your own appraiser, or you may ask your real estate broker to help you take
care of that.
Homeowner's
Insurance
Lenders require that you have homeowners insurance, to protect both your
interests and theirs. Like everything else, be sure to shop around for
insurance that fits your needs.
Settlement
or Closing
Finally, you've gone through the whole process, and you're ready to go to
"settlement" or "closing." We know you'll be excited,
but be sure to read everything you sign! And before you go, read this
important information about your rights.
Moving
Looks like you're ready to move. There's a lot to consider as you plan
your move. The good news is that there's lots of help. Check this out.