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.