Buying your first home is a major decision; being a homeowner comes with many advantages. A mortgage payment combined with property taxes and insurance is often the same or only slightly more than monthly rent. And, you will be building equity with each payment. Additionally, your payments will be offset by tax savings from mortgage interest deductions, which constitute most of the payment in the early years of a mortgage
One of the biggest hurdles in the first-time buyer's purchase is producing cash for the down payment and buyer's closing costs. But even this obstacle is not insurmountable. If you are a veteran, you may be able to obtain 100 percent financing through a VA loan and many conventional lenders offer 95-100 percent financing. If your income enables you to qualify for the necessary mortgage loan, you may be able to negotiate a contract in which the seller pays a portion of your closing costs and adjusts the price upward so that you, in effect, finance your closing costs. But the loan appraisal will still need to support this higher value in order for the loan to close. Be sure to ask your Coldwell Banker agent as to the availability of specific first-time home buyer loan programs.
A good place to start the entire process is to visit a Happy State Bank loan officer to "pre-qualify" and establish your maximum loan amount. This loan maximum, coupled with your available cash, will determine the price range in which you should look.
When shopping for a mortgage, look at the overall cost, not just the interest rate. Generally speaking, the higher the rate, the lower the up-front costs collected by the lender. Make sure you understand any hidden costs or special early payment penalties, which could create problems for you.
Buying a home is usually an emotional decision, and you need the counsel of a reputable, knowledgeable real estate professional who can help you buy wisely. As a first-time buyer, professional real estate assistance can be crucial. You should insist that the agent work with you as a "buyer's agent" to be your advocate in the transaction. In most cases, this agent is compensated from the seller's commission paid at closing, so you will not pay to be represented by a professional agent.
A professional agent can help you evaluate the pros and cons of purchasing a single family home, condominium, or townhouse, and what the various types of ownership mean to you. Should you purchase a resale home or new construction, and what kinds of inspections or warranties should you seek in each situation? How does the price compare to similar homes on the market? Are you negotiating terms and other costs (home warranty, for example) as well as price? What do you do if inspections uncover needed repairs? Are there any factors related to the house or neighborhood, which could create resale problems? What closing costs are considered typical? What if you cannot find a suitable property listed with the Multiple Listing Service? Can your Coldwell Banker agent approach For-Sale-By-Owners on your behalf?
Once you have settled on a community or neighborhood and seen several homes, the next step is to make an offer on a home you like. If you and the seller, with the negotiating help of your agent, come to terms and you execute a sales contract, you will then finalize your mortgage. The mortgage company will require a title search. You may have to coordinate your closing date based on when the seller can vacate. It is not atypical for the seller to already be under contract for a replacement home, so coordination of multiple closing dates is important.
To remain in control of the many details associated with moving, see our moving checklist.
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