Ready To Be a First Time Home Buyer?

First time homebuyers are making an impact on the housing market recovery effort. According to the National Association of Realtors (NAR), first-timers edged up to a 39 percent market share in 2012.

If you are making your first real estate purchase, take a look at some helpful tips below. They can save you time and money on your way to homeownership: 

 •make sure homeownership is right for you;

•start researching properties now;

•pull your credit report, check your FICO, and perform credit maintenance;

•determine how much home you can afford;

•get pre approved for a mortgage; and

•find a realtor to help you.

 Make Sure Homeownership Is Right for You

Owning a home is not for everyone; it is an ongoing responsibility (i.e., mortgage payments, insurance bills, annual taxes, and maintenance). Owning a home is also a long-term commitment. Mortgage terms are generally 15 to 30 years. 

Are you really prepared for homeownership? Here are a few basic questions to ask yourself as you consider buying your first home:  

•Am I stable enough to remain in one place for a long period of time?

•Can my income support a mortgage, property taxes, insurance and maintenance?

•Do I want to deal with the ongoing maintenance and security of a home?

•Am I willing to sacrifice, budget and save so I can buy in my preferred area? 

 If you feel you're really ready for homeownership after answering the questions above, continue reading. We'll explore how you can move forward so you are prepared to purchase your first residence. 

 Start Researching Homes

 Start researching homes now. Why? Because buying is a journey, which means you may encounter some stumbling blocks along the way. But as you sit at the closing attorney's office, signing your mortgage documents and ultimately collecting your keys, every seemingly insurmountable roadblock will have been worth it in the end. 

 So, start researching houses immediately. Today you can explore more than photos. You can even see video and use Google mapping tools on websites like map quest to virtually drive streets within neighborhoods.

Bookmark your favorite listings and come back to them later. This tactic will keep you motivated as you take the necessary steps to become a homeowner.

Pull Your Credit, Check Your FICO, Perform "Maintenance" 

 One of the steps you'll need to perform is checking your credit with the three major bureaus.  . See:

•http://www.experian.com; 

•http://www.transunion.com; and

•http://www.equifax.com 

 You can also go to http://www.annualcreditreport.com to get all three of your reports. (This is a free service, once per year.)

Make sure you also get your FICO score, which is a numerical scoring system ranging from 450 to 850. (FICO is the acronym for "Fair, Isaac & Company," the entity that created scoring.) The higher your number, the better your creditworthiness will be in the eyes of a lender. (Note: You may be charged a fee to see your FICO.) 

Next, prepare to perform credit maintenance and repair. This can entail removing incorrect information from your report, paying off bills, settling debts, etc.  As you perform this maintenance, your score will get higher, which can mean a lower interest rate; hence, lower monthly mortgage payments. 

Affordability

Before you purchase, you will need to determine how much house you can afford. There are several tools you can use to determine home affordability (i.e., bankrate.com/calculators/mortgages/new-house-calculator.aspx). 

Preapproval

The next step in buying is securing a mortgage. Many realtors will expect you to be, at minimum, prequalified.  However, in today's market, some agents will want you to be fully pre-approved. Why? Because mortgage requirements have become more stringent. 

To get pre-approved, perform research online to find a lender. Your lender will give you an application, pull your credit, and tell you pretty quickly whether you qualify. The full approval process will require you to submit documentation to substantiate your application. After this vital step, you will be one step closer to owning. 

Choosing a Realtor 

Partner with a realtor to help you. A licensed professional can be found via referral (ask around), or via the real estate commission. 

Perform an internet search using "state name" and "real estate commission." Once you locate the commission's website for your state, start sourcing agents in effort to find one with whom you're comfortable. Many specialize in working exclusively with first time buyers.

Your realtor will perform a myriad of duties. They will discuss your homeownership plans; explain the process so you know what to expect; discuss affordability; dissect neighborhoods; pull new listings; take you to visit homes; and, help you narrow selections.  

The agent will be the one who submits your offer to the seller, after researching and negotiating a fair price for you. As they pull together the contract, they may list contingencies so you are protected. Your agent will also tell you what to expect during the home inspection process, often submitting you with a list of qualified home inspectors from which to choose.

As you reach a binding agreement, the realtor will work behind the scenes to make sure pieces fall into place in a timely manner for your closing. 

Your realtor will be invaluable throughout the home buying process, so ask around, do your research, and select a professional who will be your partner as you get ready to purchase. 

Path to Homeownership

If you keep the above tips in mind, you'll be on solid footing to successfully becoming a homeowner. 

Remember, first and foremost, make sure homeownership is right for you; then, begin researching homes online; next, pull your credit and clean it up by removing incorrect information and paying down debt.  Next, you'll want to determine how much home you can really afford before getting pre approved for a loan. 

Finally, you'll want to select a realtor to help you locate the perfect home and ultimately guide you to becoming a first time homebuyer.

Contact us for more information about first time home purchasing.