Dec 11 2007
Buying a Home For The First Time
Buying a home is a big decision that takes time and research. Jumping in to home buying without doing your homework is like jumping from a plane with no parachute.
First thing you want to do is find a good reputable bank. This should be the bank you do your banking with or at least a local bank if possible. Avoid places like Beneficial and Countrywide Loans for you will pay more than you need to and they will add little fine print that has you hooked. They pray on the poor creditors and the less educated people and give you the best loan possible (For them). Even with local banks be sure to shop around, all banks are not equal and many offer no closing cost, free appraisals and more. Just make sure you know what you are getting and what the loan will cost before you sign.
Once you find the right bank, get pre-approved for a mortgage. Most banks will give you a pre-approval amount before you look for a house. This is important because you will have a better idea of what you can afford and it will save the embarrassment later of being turned down for a higher amount.
Once you know you have the loan approved, it is time to start looking for the home. Be practical in what you need. Do you really need a $100,000 house if a $60,000 house will satisfy your needs? It is easier to start smaller and step up later than to buy bigger now and not be able to afford the payments. Many smart home owners started in a small house and as it appreciated in value, they sold and bought something bigger. This is the smart way to go and can save you thousands later in life.
When you find the home you want, do not jump at the first advertised price. Have a home inspection done, and than negotiate the best price you can get. Real estate agents work for their client. If you have no skills at negotiating, hire your own agent to act on your behalf. The fee you pay them could save you much more money in the deal they will get you.
If you decide to negotiate on your own, ask questions and stay informed. Often times just having a conversation on a personal level with the real estate agent can land you valuable information which you could use. For example, when I purchased my first piece of real estate, I saved $9,000 off the price because I chatted with the agent and it came out that the buyer was desperate to sell and needed the money fast. I use to be in sales and I used the number one tip for a salesman, make the person your friend and they will buy anything from you. That agent really liked me and let her guard down a bit, I used that to extract the information I needed.
Once you find the home and the deal you can live with, get all other ducks in a row. Make sure you read everything prior to signing. Also get everything in writing. If the seller says they will pay for the house to be painted, ask for it in writing. Once they have your money, oral agreements are hard to prove so make sure you have it all in writing.
One big point about the home appraisal, banks often hire appraisers who will get the value of the loan even if the home is not quite worth it. Make sure you have a good idea what the home is really worth. This is where you should do some research. Check into what homes are selling for in that area and take in account any huge jumps in recent times. Markets rise and fall quickly. I live near a huge military base which expanded in the last two years due to the Iraq war. Homes have jumped through the roof. A $40,000 home just two years ago is now selling for more than $100,000. I know the market here will fall again. This keeps me from buying right now and brings me to my next point.
You need to follow the trend of real estate. Do not buy when it is a sellers market. You will be paying for the premium that will settle down in a few years. Real estate sales are cyclic and what goes up will always come down. They may not match pre-spiked times but they will go down if something artificially inflated the prices. Watch for these signs before buying.
This is only a tip of the iceberg in home buyer but it offers some advice from someone who has made some major mistakes when buying real estate.
I will be adding more about buying homes in the near future. Until then, remember you can’t cry over split milk, just say “That Blozzz” and move on.
