Archive for February 1st, 2011

10 tips for First Time Buyers

First time buyers are in a great position right now! You will probably hear it repeatedly that “it has never been a better time to be a first time buyer”.  Surprise, surprise, it is actually true. Interest rates are still at historic lows,  prices are lower than they have been in almost a decade, and inventory is still pretty good (although that is starting to change but that will be for another post!).

So, what should a first time home buyer do to get the ball rolling? Well on there was an article by Michele Lerner of Investopedia with some excellent tips that I will now share with you.

  • 1. Meet with a lender – Before you even go out and look at homes this is probably the most important thing you can do to get started. There is no sense in getting your hopes up about a particular home and then finding out that you can not afford or qualify for it. Visit with several lenders to find the one that you are most comfortable with and that offers you the best rates. Not all lenders are the same. Some work directly for a bank and others are brokers. Each one has different borrowing options available, so shop around! 
  • 2. Check your credit score– Lenders base a few different variables when qualifying you for a mortgage and the most important piece is (right now anyway) your credit score. Scores of between 720-740 and higher will get the best rates. If the score is 620 or lower it may be more difficult to qualify. Always talk with your lender, they may have suggestions on how to improve your score in a short period of time.
  • 3. Set your housing budget-While you may qualify for a particular amount to borrow this may not necessarily be the amount that you want to borrow. Get a budget together that goes over all your expenses to see what you can really afford each month. The recommended amount to borrow for your mortgage is around 30% of your gross monthly income.
  • 4. Start saving and stop spending – Once you know what you can afford in mortgage payments each month, start saving the difference between what your current rent is and what your mortgage payment will be. In today’s market you may actually have a lower mortgage payment than what your rent is.  Save the difference anyway!!!
  • 5. Find a reputable realtor– That would be me so look no more!!! Ok, so if you are buying outside of Idaho, interview several realtors to see which one will work best for you. Even though you do not pay them a commission fee, they still work for you. So treat this as if you were hiring them for a job and you are the employer. In today’s market many realtors have a second job to make ends meet. This is understandable but you need a full-time realtor. Make sure that real estate is all they do and that they answer their phone when you need them, not when they are on lunch break or home for the evening!
  • 6. Narrow it down- What you want and what you need are two different things, sometimes you can get both but be realistic. If you plan on living in the home for more than seven years than you will want to get as close to you wants and needs list as possible. If the home is just a stepping stone to the next one (less than 6 years) than your needs list is what you should focus on.
  • 7. Choose a neighborhood– This is more important than you think! The value of your home in the future is determined quite a bit by the values of other homes in your neighborhood. Look for neighborhoods that do not have a large percentage of Short Sales and Bank Owned properties. These may become a flip in the future, continuing to keep the values flat.
  • 8. Make a reasonable offer–  I can not stress this enough! Most properties are so undervalued that to make an offer that is even lower is just silly. While you will always want to feel like you are getting the best deal, I can assure you that with prices the way they are, you are getting a good deal. Also, if you do not want your offer rejected by either the lender (since most properties on the market are lender owned or subject to a lenders approval through a short sale) you are better off offering full price and asking for closing costs to be covered.
  • 9. Get a home inspection- Many of the homes on the market have not been maintained properly either because the owner could not afford to or the home has been vacant for a long period of time. An inspection does not cost much (usually between $200-400 depending on square footage) and can save you major headaches after the sale. Better to know up front what you are dealing with and a bad inspection gives you the opportunity to ask the owner to fix the issues or if they will not fix items, then you can void the contract. Please note that most short sales and bank owned properties are sold “as is”. Get the inspection anyway for peace of mind.
  • 10. Finalize the details- Now that the contract is signed around and the inspection is done, stay in touch with your lender and realtor to make sure everything is on track. Your realtor should be doing this anyway to ensure that the closing takes place on time and that any items that needed to be addressed before closing are dealt with. Your lender will probably get with you several days before closing to update you on any additional papers that need to be signed or are needed.

Buying a home for the first time can be very exciting. If you do your homework before you even go out the door then the buying process should be relatively smooth. Remember, buying a home is one of the largest financial purchases you will ever make so do so as an informed buyer!

And if you have any questions always feel free to contact me! or

%d bloggers like this: