What is the best way of buying my first house?
- Anonymous1 decade agoBest Answer
First research your financial situation. You have to know how much money you can afford to spend on a mortgage payment per month. Once you have established a maximum amount that you can afford to allocate on a mortgage payment, you can then start looking for a home.
This is by far the most fun part of the process. As you look for a home, make the determination if this is a house you will want for 3 years, 10 years, or more. Is this for you or for you and a family? This will determine not only the size home you need, but the type of neighborhood and mortgage you will choose. If you decide on a start up home, you may choose to live in a more Hip, up and coming neighborhood, with the hopes that your home will appreciate enough to allow you to move up in home size and neighborhood prior to starting a family. And if you plan on moving relatively soon, an adjustable rate mortgage may make more sense than a traditional one.
Once you find that perfect home, research the neighborhood a bit, How much to homes go for there? What is the average home appreciation in the past 5 years? Are there any government or commercial projects planned (new parks, new malls, prisons)? What is the crime rate? Do most people own or rent? Most of this data is available on local city or county websites. All of this information gives you an idea of if the neighborhood is moving in the right direction, and if it is a good fit for you.
Once you have made a bid on a home, and been pre-approved...
Now you need a mortgage broker...FHA loans are typically the easiest way to buy your first home, they require little down payment and many communities offer FHA classes which will lower your mortgage interest rate. Once your finances are in order, you will need to find an insurance company and begin the process of finalizing the purchase.
The most important part of purchasing a home is getting a good inspection! Hire a home inspector who is familiar with the age of home you are buying, and those who have a background in structural engineering are usually the best. The last thing you want is a house which is about to slide off of its foundation.
Once inspection items have been resolved, and your loan is ready to go, it comes down to signing documents until you can't hold a pen anymore.Source(s): www.fanniemae.com www.realtor.com
- 1 decade ago
The best way to go about your first home purchase is to first get pre-approved for a home loan. Ask a lot of questions; Do I qualify for first time home buyers loan (lower interest rate)? Would an ARM be good for me so I don't have to pay as much mortgage insurance? Looking at the market where you live and the duration you plan on living in the house, would an interest only loan be best? etc...
My recommendation would be to go to a large commercial lender like Bank of America or Banner Bank...these institutions will more than likely be able to give you the best rate and I happen to know Bank of America has an unspoken rule that they will beat anybody else's rate (fyi).
You can start looking for a house anytime in the process, but you don't want to get serious and make an offer until you know how much you can get your home loan approved for. Once you find that out and know you are approved or the bank can make it happen, find your house and make an offer!
When making an offer, you have to look at a few things a lot of people tend to forget about: 1. What did the person living in the house pay for it? 2. How long have they lived there and how much has the house gone up in value (area market study which your realtor can do). side note, if they have only lived in the house for a year or two and the market hasn't changed much, chances are they are going to lose money when they sell it and won't sell it for anything less than they are asking (it costs someone a lot of money to sell a house, so ask the realtor what a good place to start offering is...they'll be able to show the previous price of the house and how much cost is associated w/ selling the house). You need to ask yourself how long you're going to be in the house and if you want to keep it as a rental property when you are ready to leave that home. If you do want to keep it as a rental, make sure the house is in a neighborhood that the rent will make the mortgage payment.
After you have looked at all these things and you feel comfortable with where you are, BUY!Source(s): Personal experience.
- peculiarpupLv 51 decade ago
1st question - how much can you afford as a downpayment? If the answer is "not much," then be careful -- you might qualify for a loan that will turn out to be hard to repay (you can sometimes qualify for more than you can really afford).
Next ?? -- how's your credit? You can ask the credit card reporting agencies for one free report a year. Before you apply for a home loan, get your credit report and clear up any mistakes.
After that, think about fixed rate or adjustable. Adjustable's great IF you think rates may go down AND you've got good reason to believe you'll be making more AND you can stand the risk. The rate will go up. Adjustables let people just starting out qualify with a lower rate to start, great if you have a good job and good prospects of making more down the line (so you can afford the higher payments when the rates go up, or the cost to refinance).
I'm a big fan of the fixed rate, especially when rates are fairly low, as they are now (they've been much, much higher). That way, you can budget for your house payment, and if you find something happens down the line and you don't turn out to be making a lot more, you can still afford your house!
Best way to buy? Make sure your loan has no penalty for prepayment, then pay a little bit more, even $20, every mortgage payment. You'd be surprised how quickly that gets you from "interest only" payment to actually owning a bit of your new house (building equity).
Ask your community's housing and redevelopment agency where there are first-time home buyer programs. My husband and I got a great deal on our house because there was a city first-time buyer incentive. Also, some utilities (like SMUD in the Sacramento area) have energy-efficient houses that will save you a bundle in heating and cooling costs - it's worth it to check them out.
A tip - visit the neighborhoods you're considering in the daytime, then drive through again in the evening. Visit on a weekday, and a weekend. That's where you find out about the neighbor with the car stereo who feels everyone has to share his taste in music. Hope this helps!Source(s): Check out the Housing and Urban Development web site, and the gov't has first-time home buyer information from the Consumer Info center in Pueblo, CO. Most of the info comes from time I spent as a Loan Processor, or working for the FHA.
- 1 decade ago
Your best bet for a mortgage is to go to a direct lender (CitiBank, Credit Unions, or even just put your information into one of those websites) and let them know you are a first time buyer. There are quite a few first time buyer mortgage programs out there that will significantly reduce your mortgage payment. And don't be afraid to get multiple offers from different lenders. Have them run numbers for a 30 year fixed mortgage, interest only mortgage, no money down mortgages, there are multiple options and all will have their own advantages.
After they tell you how much you would qualify for, then you know what price range to look in with a real estate agent.
The best advice I can give is to be patient. Give yourself at least 6 months before you want to move to start looking at houses. Settlements generally take 30 to 45 days dependig on how good your lender is and what kind of schedule they have open.
It can be a very stressful time, but rest assured, it is worth it in the end.
Know your limitations. If you don't know how or want to do some fixing up on the house you buy, don't buy a house that needs work.
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- 1 decade ago
As a former real estate agent, I'd have to say first, clean up your credit. Don't use your credit cards right before (about 3 mos prior) to getting with a real estate agent. First thing he or she will do is pull your credit record.
Second, don't get a big head about what you will not accept as a home. You can get into a fixer-upper if you don't have a lot of money and can't afford a $100,000+plus home. That's what my husband and I did. In other words, be realistic. If you desire a 3 bedroom with A/C and a garage, but can't afford a three bedroom home, you might have to settle for a 2 bdrm with A/C and no garage.
Third, get prequalified for your mortgage. This will give the real estate agent a dollar range that she can work with and he or she will show you only homes that are within this dollar range. It saves time and stress on you and the sellers whose homes you visit.
Third, pay for a home inspection on the home you're considering purchasing. It will cost about $300 to $400 depending on where you live. Don't get an inspector that is recommended by an agent, find your own. A home inspector will give you a written report as to the condition of the home you're wanting to buy. This will give you an idea of what needs to be fixed (if anything) and if there are major problems, you can either walk away from this house (the purchase agreement can be written to void the sale if the inspection comes back bad) or negotiate a lower price--or--see if the seller will repair before the mortgage closes.
Also, before you shop around for a mortgage, ask the real estate agent if your state or county has 'first-time homebuyer programs'. These programs are set up to help low and moderate income families to afford their first home. Sometimes the banks that accept these first time homebuyer programs will give you a lower interest rate or easier
payment terms. In my county, if the buyer stays in the home for 5 years, the interest on the mortgage is written off. This same program give a low-cost loan for repairs such as roof, windows, kitchen remodels and siding. It's worth looking into.
Also looking into Fannie-Mae and Sallie-Mae loans from the Fed Gov't.
Your real estate agent can help you with this.
- 1 decade ago
the best way to buy your 1st home is :
1. Pay all of your past due bills and keep up w/all the rest. - Dont have any over due $$$ when you are ready to call a realitor, bank, etc..
2. Dont rush into anything.
3. Dont believe everything that you are told about a home
4. Take someone who is older, has bought a home, and more exp'd in loans and such
5. Have a pro look at the home. Even if it means 2 - 3 for different areas.
6. Again, DO NOT RUSH
7. If you are under 30, have less than 20,000$$ in a savings account, and have lived with your parents up until recently w/o paying them some kind of $$$$ - RENT FOR NOW!!!
8. When it's the right time, right place, home, & area, and the right price, you'll know what to do next.
9. Have a professional - not the realitor, they want the commision for their own mortage.
10. DONT RUSH INTO ANYTHING THAT IS GOING TO COST YOU MORE THAN 5.00$$Source(s): My opinion. There are soooooo many things to consider when making a purchase as such. Just be smart and dont feel pressured into anything. Make sure that YOU are happy w/ your decision and not just satisfied, because there is a HUGE difference
- 1 decade ago
Number 1... decide realistically how much you can afford. Keep in mind, taxes, maintenance , repairs etc.
Number 2... Seriously think about a condo or townhouse. Its hard to make a mistake with a condo, any structural repairs is the responsibility of the association. Its a great way to get your foot in the "home ownership" door with less risk.
Number 3... Look at your credit first. No what's on there and what's valid or not. Do your research there are lots of mortgage companies, and lots of different rates. Don't be afraid to explore , and tell people "no" that's not a good match for me.
Good Luck ( I've purchased 3 houses in my lifetime and had to learn some things the hard way)
- 1 decade ago
If you're in a metro area, I would suggest renting in the same town where you want to buy a house for at least a year. That's long enough to give you time to figure out suburbs and neighborhoods and commute times and such, so there won't be any surprises after you've signed a purchase agreement and it's too late (i.e., your best friend says, "You bought a house in THAT neighborhood!? There's a drive-by shooting twice a week in that neighborhood!"). I would also suggest using a buyer's agent (as opposed to a regular realtor). With a buyer's agent, you're guaranteed that they are representing YOU, and not working with the listing agent to get the most money possible out of you for their commission. (I'm not a realtor or a buyer's agent, but have worked with both in the past and was MUCH happier with the representation from the buyer's agent.)
One other idea that has worked well for me is to buy a lower-end house in a higher-end neighborhood. If it's a good neighborhood, your investment is likely to increase in value, and you'll benefit from the high-end neighbors. You can always make improvements to your house, but I've also owned "the nicest house in the neighborhood" and you can't get what you want out of it if you're surrounded by less-nice houses.
- la_la_laLv 41 decade ago
I noticed nobody mentioned procurring a downpayment! A good downpayment is typically 25% of the sales price, but some lenders may ask for more or less.
0% down offers are usually too good to be true, so always read the fine print. Believe me, there's always a catch. Lenders aren't typically generous...They're going to make that money back one way or another.
Prequalification is common sense, as you really don't know what price range you can look in until you know how much you can afford.
If your exisiting financial institute offers lending programs, speak to them first as they may be more negotiable on the terms. Credit card companies sometimes offer this as a service and can work with you if you're a customer in good standing.
Best of luck! And work with a licensed realtor...They have the time and the expertise to get you what you want! I'm a licensed real estate agent, but I deal exclusively in commercial real estate. I plan on hiring a residential agent when I buy my next house, because they are more skilled in that department.
- 1 decade ago
I recommend going for a new construction home. The builders often have incentive packages and will pay a portion of the closing costs. Also, you should try to use the FHA mortgage program is designed to help first time homebuyers. The credit score requirements and downpayments are lower. Also, the FHA guidelines are more lenient for new construction loans. Ask your mortgage lender (don't use a broker) about a downpayment assistance program such as "Nehemiah". This should give you the total 3% down payment required for the program. This money is not a part of the loan and does not have to be repaid. The seller usually pays for it. They will more than likely increase your sales price by the amount to cover the assistance and fees. Be prepared. Purchasing a home requires a lot of paperwork, but FHA usually requires more. All in all, it's worth it. Good Luck!