Effective Home Buying
As a potential first time home buyer, you may feel a little overwhelmed with the entire process of buying your first home. Our goal is to
empower you with the information and resources necessary to give you the confidence and financial help needed to make the dream of buying
your first home become a reality. The more you know about the home buying process, the more likely you will be able to purchase the home
of your dreams. For instance, the largest hurdle most first time home buyers face is saving the funds necessary for a down payment. Did you
know that nearly every state has a program to help first time home buyers with the down payment? Some of that help is in the form of outright
gifts: grants that never have to be repaid. In addition to state programs, there are also Federal programs available. There are literally dozens
and dozens of programs available to the first time home buyer. We cover it all within our company, and provide complete information for you.
We sincerely want you to be able to buy your first house and enjoy all the wonderful benefits that home ownership brings.
Home Buyer Grants
As previously mentioned, most states have programs to
help first time home buyers with down payment and closing cost assistance. Sometimes this help is in the form of low-interest
loans, and other times the help is an outright gift: grants. A grant is simply a gift to be used for a specific purpose.
Governments want to help people of more modest means experience the many benefits of home ownership. Money is budgeted each
year to government agencies for that very purpose. Depending on your income level, you may qualify for a state or federal first
time home buyer grant. For many first time home buyers, grants are the deciding factor in being able to buy their first home.
Home Buyer Programs
We provide an educational approach that explains in detail all of the programs (including grants and low-interest loans) available
to first time home buyers. Some of these courses are free and some are available for a very small nominal fee. The programs vary
from state to state Many states have programs for down payment assistants
Home Buyer Loan
While interest rates have not moved up substantially since reaching 40-year lows of a couple years ago, they are still a major cost
factor in buying your first home. The good news is that most states provide low-interest loan programs for first time home buyers.
Depending on the state, the savings can be huge compared to conventional mortgage loans. To find out what is available to you call us 602-326-9341.
Home Buyer Tips
You may be already be somewhat familiar with the process of buying a home. However, the more you learn, the more you will benefit from your knowledge.
This section provides tips for first time home buyers covering all aspects of the home buying process. Everything from the things you should and shouldn't
say to a loan officer to contract contingencies in a purchase and sales agreement to rebuild credit. If you have a question that isn't covered, you can
email us and we'll do our best to respond in a timely manner.
Home Buyer Guide
If you are looking for a complete guide that outlines the entire process, step by step, of buying your first home, then please call our office 602-326-9341
The home buying process can be quite complex, even for those who have been through it a few times. For the first time home buyer, the process can seem impossible.
This breaks down the home buying process into 15 steps, with information and resources provided to make each step achievable. Also, most states offer first time
home buyer grants and low interest loans for those within specific income limits. For most people, these programs can make the difference between being able to
afford your first home or not.
Here are the 15 steps to buying your home:
1. Establish good credit.
The first step in the home buying process is establishing good credit. Banks and mortgage lenders will not lend to first time home buyers unless the borrower
has a history of borrowing money and paying it back in a timely manner. If you have absolutely no credit references, you will need to get some. The most basic
way to do this is to visit a local bank and deposit a small amount, let's say $500. You would then apply for a $500 loan, using the money that you deposited as
security for the loan. This is the simplest, quickest way to establish a good credit report.
If the loan term is for 6 months, make payments for the first 3 months, then pay the entire loan off. Repeat the process with larger and larger amounts.
This will build up an excellent track record. Do this repeatedly, and you'll progress to a point where you don't need to deposit any money as security,
your track record will be strong enough to be able to borrow with just your signature.
Unless you are independently wealthy, or come from a wealthy family, the process of becoming a first time home buyer starts with establishing a good credit
history. At the same time that you are building your credit with bank loans as just described, you should also be using credit cards responsibly as well.
This means paying off the entire balance every month.
2. Raise your credit score.
A high credit score is one of the most important elements to the first time home buyer. Home buyers with high credit scores are able to get the lowest interest
rates on home mortgages. As a first time home buyer, it is doubly important to have a high credit score. Here are the basic tactics for getting a high credit score.
A. Always pay your bills on time.
B. Keep your credit card balances at zero, or at least very low.
C. Make more than the minimum monthly payments.
D. Negotiate to remove negative items from your credit report.
E. Borrow great credit from a relative or close friend.
Improving your credit score will likely take a on average a minimum of 2 months, but will be well worth the wait. For more in depth information on the
secret to raising your credit score almost instantly we suggest you contact us. By getting a higher credit score, you will greatly increase your chances
of approval on the loan as well as qualify for the lowest rates given only to those people who have the best credit rating.
3. Save for a down payment & closing costs.
When buying your first home, you'll need money for a down payment as well as closing costs. This applies to previous home owners as well as first time home
buyers. Lenders want borrowers to have a vested interest in the property. If you've put your own money into the house, you will be less likely to walk simply
away from the property.
It is very important to start saving immediately. Set aside a certain amount every pay period and stick to it. Learn to live on what remains. Save now for your
future, and your future will take care of you. It will be very, very beneficial to save every week, even if it is a meager amount. We strongly suggest that you
open an account and discipline yourself to set aside a certain amount every week. It is a habit that will pay dividends the rest of your life. Even if you only
save $10 per week, it is a great habit to develop. We highly suggest you discipline yourself to save a certain amount each and every week.
4. Keep detailed records of money spent.
First time home buyers (and everyone else for that matter!) should develop a sound budget. To gain control of your money And how you spend it we recommend that
you keep track of every single purchase, no matter how small, for a period of one month. At the end of this period, categorize this information to see the exact
breakdown of where your money is spent. you'll be able to easily see where there is room for improvement in your budget. The important point to stress here is to
live within your means. The more you save, the quicker you'll reach your goal of buying your first time home.
5. Develop a financial plan.
When constructing a house, builders use a set of blueprints as a detailed plan they follow to accomplish the goal. In like manner, first time home buyers need a
financial plan to follow in order to achieve the goal: buying your first house and moving in. To buy that first house you should set a goal of saving 20% of the
purchase price to use as the down payment. There are programs that will allow you to put less than 20%
down, including mortgage insurance where you can purchase a home with a down payment of 5% or less.
6. Establish a relationship with Premonitions agent
Any potential first time home buyer would benefit greatly by early on establishing a relationship with Premonitions real estate broker that specializes in
working with first time home buyers. You won't be wasting time trying to develop a working relationship with an agent that has a specialty that doesn't match
your need. Your agent will be your link to all the property in your area that is currently for sale. We can provide a treasure trove of information on the
entire buying and selling process.
7. Study market values.
When buying a home, you will not want to pay more for a house than the house is worth. Along the same line, you will likely want to find a great deal.
The only way to find a great deal is to have us study the market values in your area. Over time, you'll development a mental database of comparable properties
and get a sense for which properties are overpriced and which ones are under priced. Your first home will likely not be your last. The average American sells a
home and moves into another every 7 years. You will benefit greatly if you purchase a home for less than what it is worth. This instant equity will boost the
profit and cash to you when it is time to sell.
8. Let us get you Pre-approved for a mortgage.
Not all lenders are created equal: some will be very efficient and helpful in dealing with home buyer, and some will not. However, getting pre-approved for a
mortgage is an important step in the first time home buyer process. With a pre-approval, your offer will carry more clout with the seller, and you'll be in a
position to close on the purchase more quickly. This is important to many sellers. Offering a
quick closing is also a powerful tactic in negotiating a discount off the purchase price. For a no-cost, no-obligation pre-approval, call us
9. Decide your needs and wants within your budget.
Builders, brokers, and bankers all know that the typical home buyer. As a home buyer, you'll need to be aware and really focus on making choices that fit
within your budget. Everyone would like 5 bedrooms and 5 baths in their first home, but not everyone can afford such luxuries. When you buy a Home, you'll be
taking on a major financial commitment. There will be lots of incidental expenditures. As a home buyer, those incidental costs can really add up and strain your
budget. Be careful not to overspend on the house that you choose.
It is important to spend ample time on steps 4, 5, and 8. These steps will help you know and understand your budget. Once you know your budget and the price
range of homes your budget will allow, you'll be able to shop for the right home. Again, avoid the trap that most first time home buyers fall into: don't stretch
your budget beyond what it can handle.
10. Shop for the right home.
With the exception of moving in, shopping for the right home will likely be the most exciting step for first time home buyers. By this time you should have
already established a working relationship with a real estate agent that specializes in working with home buyers. You should already know your budget and how
much you can afford to spend on your home. You'll need to summarize all this information for us to use to suggest certain homes to visit. Start with the price
range. We will let you know how much you are qualified to spend. Then well go over a list amenities that you desire such as number of bedrooms, and additional
items such as a deck, fireplace, whirlpool tub, etc. If you are hoping to purchase your home in a certain area, or within a certain distance from work, let us
know that too.
The more information that you give to us, the more time can be saved by everyone. Your home may not have everything included that you could possibly want, so
decide which items are negotiable, and which aren't. The more homes that you visit, the more knowledge you'll develop regarding property values in your area,
and which homes you like and which homes you don't in your price range. However, being a home buyer, you'll need to understand that your agent gets paid on
commission (usually paid for by the seller). Therefore, your agent will not want to spend the next 3 years showing you 500 different properties without you
actually making a purchase. Likewise, you would not want the agent simply showing you one home in your price range then pressuring you to make an offer.
An ideal world for us would be one sale for each time she shows a home. On the other side of that same coin, an ideal world for a home buyer would be the
opportunity to look at several hundred homes or more before ever making an offer. The ideal world doesn't exist for either us or the home buyer. Reality
will be somewhere in between. You'll want to look at a reasonable selection of homes in your price range. That will be a good compromise for both us and home buyer.
11. Learn about the elements and terms of a sales contract.
As a home buyer you may have never been a party to a real estate purchase and sale agreement the way we show you how to be. You'll need to do some studying
to learn the elements and terms of a sales contract. Here is a short list of the basic elements of a real estate contract:
Acceptance: How much time the seller has to either accept the offer or to provide a counter-offer.
Closing: A future date by which time the closing will take place.
Description: A legal description of the property as well as the street address.
Deposit: How much initial money is included with the contract and who will hold it.
Financing Contingency: A clause that states the entire contract is subject to the purchaser being able to obtain a mortgage loan of X amount, by a certain date.
Home Inspection: The contract can be contingent upon a satisfactory home inspection to be done by a qualified professional within X number of days.
Inclusions and Exclusions: Some items in a home are not considered part of the real estate, but are instead personal property. Refrigerators and washing
machines fit this category. This clause should state exactly what is included in the sale, and what isn't.
Insurance: Who will insure the property until closing.
Price: The amount of money the buyer will be paying to the seller.
Possession Date: The date on which the buyer will receive possession of the property.
We know each element of the contract in detail.
12. Choose the right neighborhood.
It seems quite ironic that you should be thinking of selling your house before you even buy your first home. But that is exactly what every home buyer
should do! There will come a time when you'll want or need to sell your home. This may come out of a desire to upgrade your home, or maybe due to a job
relocation to another city. If you choose the right neighborhood when you purchase your first home, you'll be
rewarded with a higher value home that will be easier to sell, when that time arrives.
Some items that a home buyer should look for when searching for a great neighborhood are:
A. Located in a good school district.
Is there a particular school in your area that is a recognized favorite? If so, you'll want to buy a home within that district. If this school appeals to
you as a first time home
buyer, it will also appeal to the next first time home buyer who comes along and wants to purchase your home from you in the future.
B. Is the area improving or in decline?
You'll want to consider that point carefully. While an area may be acceptable to you now, if it is in a state of decline, by the time you are ready to sell,
the next buyer may not find the area acceptable.
C. Is the area close to many popular attractions?
Being located next to parks, beaches, lakes, mountains, and wilderness is important to both the first time home buyer as well as the seasoned homeowner.
Choose an area that is convenient to popular locations.
D. Choose your neighbors carefully.
If there is an obnoxious neighbor right next door to the first home you plan to purchase, think twice about it. Nobody wants to live next to an eyesore, nor
do they want to be kept up all night by loud, uncontrolled behavior from their neighbor. Do
your homework. Knock on doors if you have to. Find out what the neighbors are like. If you follow these steps, you'll be a happy home buyer instead of a
disappointed one.
13. Submit your offer.
After completing the first dozen steps in this guide, the first time home buyer can confidently submit an offer. If you've followed these steps up to
this point, you are well
armed with the necessary info to purchase your first home. Making your offer is an art, not a science. Dozens of books have been written explaining
techniques and methods of successful real estate negotiation. Here are some basic negotiation guidelines:
A. Know the seller. It goes without saying that you want to purchase the house for as little as possible, and the seller wants to sell the house for
as much as possible. Somewhere in between is the settlement range. Try to find out what the seller wants besides a high price? A quick closing, or a
delayed one? Does the home need some work like new carpet, new siding or windows? Does the seller want to get this work done, or would she rather not
deal with the hassle? The more info you can gather, the better position you are in to negotiate a win/win situation.
B. Determine what would be the best case and worst case scenarios. Once you've done this, decide how much risk is involved. How bad do you want this house?
Are you willing to lose the deal to try to get your best case scenario? Only you can answer that question.
C. Be professional at all times. The best negotiators remain emotionally neutral throughout the negotiation process. By doing so, it is much easier to
remain professional. If you are insulted or upset during the negotiation process, you'll
likely make decisions based upon your elevated emotions, rather than logic. Rarely will emotional decisions be correct. Try your best to remain unemotional.
This is particularly difficult for a first time home buyer, as buying your first home is a very, very emotional event. However, the more professional you are,
the more likely you are to succeed in our negotiations.
14. Arrange for a home inspection.
Even experienced real estate investors will depend on a qualified home inspector. This should be doubly true for home buyer. Qualified home inspectors
will examine in detail such items as roofing, heating and air conditioning systems, structural integrity, siding, windows, plumbing and electrical systems.
Deficiencies in any of these components will be brought to your attention in a detailed written report. We highly recommend that every home buyer consult
with a qualified home inspector. You should make your offer contingent upon a satisfactory report.
15. Arrange for homeowners insurance and warranty
All real estate owners should have homeowners insurance, and the soon-to-be first time
home buyer is included in this group. For the best rates on home owner insurance, we suggest the free comparison services
Premonition Investments LLC. Can Help…..Contact us today – 602-326-9341
