Real Estate Tips for First Time Home Buyers

Home Buying Tip - Have Your Finances in Order 

One of the mistakes that first time buyers are prone to make is not getting pre-approved or pre-qualified by a bank or lending institution. Sellers and their agents are skeptical of a prospective buyer’s ability to obtain a mortgage loan when the buyer has not been pre-qualified. When a seller is comparing offers or considering a counteroffer, he or she will always look more favorably upon the pre-qualified buyer, who is more certain to be able to obtain financing.

The Buyer Should Be Represented by His or Her Own Realtor

Employing the services of a Realtor makes great sense, since navigating through the home purchase process is both complex and fraught with financial dangers. As the buyer, you should have your own Realtor instead of relying on the seller's Realtor.  Your personal Realtor will be fully committed to representing your best interests. The seller’s Realtor will often favor the interests of the Seller, with an eye on earning a commission.

Know What You're Buying

Before signing a contract, take a look at the title documents.  You should be provided with a survey, a legal description, and recorded liens and easements.  You can find many of these documents online through the county recorder's office.  All too often, people overlook reading their title and survey and a year or so down the road after the purchase has been completed, serious problems come up that sometimes involve costly litigation. 

Blurb Alert! If you do not understand the legal gobbledygook that describes your property, learn how to read a survey and title description in the next 30 minutes.  This online tutorial will have you understanding all the basics that you need to know - guaranteed.  Watch "How to Read a Survey" in a new window.  Realtor and Broker Recommended Resource!

Beyond the Title and Survey - Restrictive Covenants

Before signing a purchase contract, find out whether there is a homeowners association or other type of property or community association that has recorded restrictive covenants.  Restrictions can include, among other things, fencing guidelines, parking restrictions (no RV’s in the driveway), no boats in the yard, landscaping requirements, and in some cases, occupancy restrictions.  Many of these associations require annual or monthly assessments, so you need to find out if there are any declarations and/or restrictive covenants of record.  

Think It Through Before Signing the Contract

Not only do people want to cancel their contracts because they found something that they like better, they might realize too late that they've contracted to spend way too much on their home.  Putting the majority of your earnings into your mortgage payment detracts from your quality of life. Things you used to enjoy, such as vacation trips, going out to dinner or splurging on an expensive piece of clothing will no longer be affordable.  Worse, if you are unable to save money because your mortgage is eating you alive, if something breaks in the home, you will not have the savings to repair it and will start spiraling into credit card debt.

Taking Too Long to Make a Decision 

Some people have something very specific in mind for their dream home.  Sometimes they wait too long for the perfect home to present itself. While waiting for the ultimate home, people pass up other excellent homes that are great bargains and would fulfill a majority of their needs.  In many cases when a person's expectations are too high and they continue to pass up worthy homes, market prices and mortgage rates continue to rise.

Understand Mortgage Terms Before Selecting Your Financing

Have the Home Inspected Before You Commit to Buying It

An ounce of prevention is a good thing.  Require a comprehensive home inspection before buying, and don't rely on your friends' or the seller's advice.  Home inspections are not very expensive.  The inspection should include a review of electrical system, condition of the roof, plumbing, heating and air conditioning, septic system, water quality, etc.  Like the survey and title review, this is a very important process that can save untold heartache in the future. Be sure to get a seller's disclosure statement before making any decisions about buying.

Check Out the Neighborhood

Your surrounding community is going to affect whether or not you enjoy your home. Your new home can be a showplace, but if it’s surrounded by run down properties, barking dogs, or neighbors who don’t fit into your preferred social structure, you aren’t going to be happy. Be sure that the school system meets with your approval; inquire about the crime rate and consider the quality of the stores and services available in the area.

Potential Resale Value

Sometimes it’s hard to look into the future, but when buying a home, it’s good to think about its resale value. Although the resale value will not be your primary consideration, you should look for things that would be a deterrent to another buyer.  You never know if you might want to sell the home because of a job relocation or other reasons.

Conclusion

Buying a home should be done systematically and carefully. Checklists are available from reputable Realtors and should be used throughout the searching and buying process.

"Real Estate Tips for First Time Home Buyers" contributed by Wendy Robinson