First Time Buyer Guide

Seacoast First Time Home Buyer Guide adapted from firsttime-home-buyer.com

Here are the 15 steps to buying your first 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 potential borrowers unless the borrower has a provable history of borrowing money and paying it back in a timely manner. If you have absolutely no credit, you will need to get some.

Unless you are independently wealthy, 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 .

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. Not having a high credit score will not only mean you don't get low interest rates, you likely won't get any interest rate at all.

1. Always pay your bills on time.
2. Keep your credit card balances at zero, or at least very low.
3. Make more than the minimum monthly payments.
4. Negotiate to remove negative items from your credit report.

3. Save for a down payment & closing costs.

When buying your first home, you will likely need some money for a down payment as well as closing costs. This applies to previous home owners as well as first time home buyers.

It is very important to start saving. Set aside a certain amount every pay period and stick to it. Learn to live on what remains.

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. With this information 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. Your home should be your biggest investment…..not your wardrobe or music collection!!

5. Develop a financial plan.

First time home buyers need a financial plan to follow in order to achieve the goal: buying your first house and moving in. It is considered affordable for your housing expense to be around 30% of your total income. If that number seems unaffordable to you, it may be time to re-evaluate your spending and lifestyle if buying a home is really a priority.

6. Establish a relationship with an agent.

Any potential first time home buyer would benefit greatly by early on establishing a relationship with a real estate agent that specializes in working with first time home buyers, preferably Bridget Hayward. Your agent will be your link to all the property in your area that is currently for sale. Agents can provide a treasure trove of information on the entire buying and selling process. Buyer’s agents are often paid entirely from the listing side of the sale, so this can be a no or low cost benefit to you. As a first time home buyer, you definitely want the help of a professional agent.

7. Study market values.

When buying your first 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 study the market values in your area. The average American sells his or her home and moves into another every 7 years. As a first time home buyer, you will benefit greatly when it is time to sell if you purchased a home for less than what it is worth. This instant equity that you received upon the purchase will boost the profit and cash to you when it is time to sell. Before making an offer on a property it is important to ask your buyer’s agent to provide comparable sales for your perusal.

8. Get Pre-approved for a mortgage .

Not all lenders are created equal: some will be very efficient and helpful in dealing with the first time home buyer. Ask your agent, friends or family to provide you with referrals. Getting pre-approved for a mortgage is an important step in the first time home buyer process. However it is important to understand that a pre approval is not a guarantee of financing. Offering a quick closing is also a powerful tactic in negotiating a discount off the purchase price.

9. Decide your needs and wants within your budget.

As a first time home buyer, you'll need to be aware of this temptation and really focus on making choices that fit within your budget and your needs. When you buy your first home, you'll be taking on a major financial commitment, one that you aren’t used to. Be careful not to overspend on the house that you choose.

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.

10. Shop for the right home.

The more information that you give to your agent, the more time can be saved by everyone. It is also important to narrow in on an area. Many first time home buyers on the Seacoast have a hard time deciding where they want to be. However weighing your options and doing your own research on area towns will help save time and gas money in the long run.

Your first home may not have everything included that you could possibly want, so decide which items are negotiable, and which aren't. Let your agent know. 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. You'll want to look at a reasonable selection of homes in your price range.

11. Learn about the elements and terms of a sales contract.

As a first time home buyer, by definition you've never been a party to a real estate purchase and sale agreement. You'll need to do some studying to learn the elements and terms of a sales contract. Ask your agent to email a copy ahead of time. Read the contract over and ask questions. This will make you feel more comfortable when the time comes to actually make an offer. Items to think about ahead of time are deposit amount, closing date, financing terms and contingencies.

12. Submit your offer.

1. 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 he or 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.

2. 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 loose the deal to try to get your best case scenario? Only you can answer that question.

3. 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. This is particularly difficult for a first time home buyer, as buying your first home is a very, very emotional event.

13. Arrange Home Inspection

Even experienced real estate investors will depend on a qualified home inspector. This should be doubly true for the first time 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.

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14. Secure Financing

This component is now more important than ever. The mortgage industry as recently undergone huge changes. It is important to have very good communication with your loan officer. It is also important to be speedy when he or she asks for documents.

15. Make your moving plans !!

Congratulations! You are about to become a first time home buyer! Try and persuade friends to help you move by buying lots of pizza!