what advice can you give to a potential first time home buyer?

Question

I know this is an very general question; however, I am looking for some helpful warnings from those who have already gone through this. I have always rented and feel with the falling prices and relatively low interest rates, next year might be a good time to take the plunge. I have read that it is important to get an engineer to look over the house before you buy. Any other thoughts would be appreciated. thanks in advance.

All the answers are so good and helpful that I can not in good faith pick one out as the best. As I go forward in my search for a home in 07 (my goal), I will try to use much of the advice I received here. It is kind of daunting for a lifetime renter who has never owned a house to take the plunge. Thanks again everyone for excellent advice.. Happy new year and G-d bless you all.

Answer 1

There is alot of good advice (Except that Jar Jar Binks retard) here so here are a few things.

1. I will repeat this advice... GET AN INSPECTION DONE!!! You do not want termites or other insects eating your home up. Also, make sure you get your own inspector. Do not use the ones supplied by the realtors either. Conflict of interest.

2. Get your own lawyer. Again, if a realtor suggests people, that could also be a conflict of interest. You want your people to have your best interests in mind.

3. Depending on where you are, look to buy NOW. Winters tend to be the worst time to sell so sellers are a little more motivated to move their properties, which could mean savings for you.

4. Don't buy more house than you can afford. Just because you prequalify for x amount doesn't mean you want to spend that full amount. You really don't want to be eating ramen noodle soup everyday because the mortgage payments are crushing you.

5. When taking out a loan, consider an 80/20 loan. If your down payment is less than 20%, you will have to pay PMI (Private Mortgage Insurance). PMI is not tax deductable. The 20% of your portion of the loan is at a higher interest rate but at least the interest is deductable.

6. Know the neighborhood. Besides coming back at night to see what the place looks like at different times of the day, talk to whoever you see around. People love to talk and will give you invaluable information about the area.

Listen, real estate is the BEST investment you could ever make. As I have said in the past, unless you find out you are built on top of a toxic waste dump or a nuclear power plant just got permission to be built next door, your home will appreciate in value. But do it before the end of next year because that is when the market will rebound in real estate. Good luck and congratulations on your really wise decision.

Answer 2

Don't go with the first lender that preapproves you - shop for loans the way you'd shop for anything that you want a good deal on.

Definitely pay the $350 or so for a home inspection. You'll get a 30-page report of anything and everything that's wrong with the property.

Visit the house at different times of day. What's the traffic like? Are there trains roaring by early in the morning?

In your purchase offer, ask the seller to pay for a Natural Hazard Report. It's about $100 and it tells you if you're in a flood zone, on an earthquake fault, high fire danger area, etc.

Be realistic about what you can expect in your price range. Lots of first time buyers want a mansion on a shoestring budget and will want to look at 30 houses only to get frustrated that they can't find anything they like.

Buy in the best neighborhood you can afford. The smallest, crappiest house in a fabulous neighborhood is usually the best investment. Don't buy a totally remodeled, beautiful home in the bad part of town. When you go to sell, no one will want it because of the location.

Try to set aside a little money each month for home repairs. I put everything on my credit card and maxed that sucker out in the first year. When your water heater breaks you want some money in the bank to repair it.

Also, ask the seller to pay for a one-year home warranty. It's around $300 and if anything breaks in the first year (air conditioner, furnace, dishwasher, etc.) it will be fixed or replaced for only a small fee ($40 for the house call or something like that.)

Find a Realtor who has experience with first time buyers and can really explain the whole process to you. They can really ease all your anxiety by letting you know what to expect.

Good luck!

Answer 3

Good for you! This is a great investment plan you are contemplating and precaution is totally necessary...it really does depend on what city and state you are located, prequalification for how much home you can afford to purchase, what type of home you are looking for, such as a two bedroom condo, house, two story, single story, etc. A trusted real estate agent can assist you more directly as they do have direct access to MLS Listings, experience in the field/area, and they don't get paid until they get you what you want. So, that's some things you can take into consideration. If you are buying a resale home always get it inspected inside out, see if the buyer is willing to upgrade if not, see if they can take down the price if it's a total fixer upper, verify the neighborhood is safe via conversing with those residing in the area, check out the prices of other homes if being sold in that area, if not many are being sold in the area, it could be because it's a great area or it's too hard to sell in that area so make sure your home is still an investment with resale profit. If you are looking for a new home, try new homes that are in their last phase of building.This will help you to get all the extra incentives the buyer has to offer, sometimes no money down, or they pay the closing cost, or the points. Be aware of the points though...the buyer tends to always pay the points and they usually bring it up to you right when you are getting ready to close...so keep that in mind. Also, here are some links that might be of use for you:

http://www.downpaymentsolutions.com/first_time_home_buyer.shtml (downpayment assistance information)

http://homebuying.about.com/ (gives articles that might be of interest)

http://homebuying.about.com/od/howtobuyahome/ (information on how to buy a home)

http://mortgage-x.com/library/loans.htm (information on types of mortgage loans, definitions, etc.)

http://www.realtor.com/Default.asp?poe=realtor (site for finding a realtor, but also check in your local Better Business Burreau)

Good luck and Be Safe...(smiles)

Answer 4

Stay away from houses on busy streets, near railroad tracks and power lines. I never liked living on the corner either! I know having a home inspector is probably the foremost important, but you also want to ask yourself when I'm going to sell this house in the future, the location itself might be a decision breaker. Also watch out for low-lying areas or flood plains. Good luck!

Answer 5

We learned from our first house, check absolutely everything.
We saw the house at night with inadequate lighting and the wiring was not in the greatest shape. We SHOULD have had an inspector for our first house. We didn't for the next two but we learned from the first house and were more thorough about it.

Best of luck.

Perhaps check out a real estate web site for various questions and answers. Or, type in "Home Inspection" questions/answers.

Answer 6

If you have found a home your interested in ask about a home inspection report. If you plan on reselling in the future, look into a company that knows how to use GIS (Geographic Information Systems)

A company that uses GIS can tell you more than you ever imagin. I am a GIS Tech and have a few tips but we can do that through email.

If your unformilliar with what GIS does most Realtors will help ya when you ask about Realty GIS.

Good luck

Answer 7

An inspection is a must. A credible home inspector will be able to find structural issues, as well as any other problems. And don't go with the cheapest guy out there. Get references so you know he does a thorough job.

Also, see a lot of houses before you buy, too.

Answer 8

My advice to you would be to not buy an older home. My husband and I bought one a few months ago and you will not believe the trouble we've had. We spent most of our savings on a new sewer line and water pipes at Thanksgiving. Now we got a notice that in January they're going to cancel our insurance because of more repairs they want done. My daughter and son-in-law bought a new home last year and it went as easy as pie. Whatever you decide my friend just do some homework on the place before you sign.

Answer 9

First , you want to get prequalified for your home loan and find out how much you can afford. A word of advise about that is to find out on your own what your credit score is as you don't want your credit pulled multiple times. Too may inquiries reduces your score and raises a red flag.Then you want to get a R.E. Agent to represent you . Their commission is paid by the seller not you. They are working for you but, not paid BY you.