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2014-03-20 10:50:05
Top 10 things every new homebuyer needs to know

Top ten things that a first time homebuyer must know and do before buying a home:

1. Get pre-qualified.

Before looking for your new home online or with a real estate agent you need to apply for a mortgage loan.  It is heartbreaking to set your mind on buying your first home and then finding out from a mortgage lender that you cannot buy a home or that you can only afford a $100,000 home when you have been looking at $200,000 homes.

2. Hire an experienced real estate agent. 

Sure we could all pull out our own teeth, but you go to a dentist because they are experts in teeth.  Real estate agents are experts in the process of buying and selling homes. Buying a home can be an overwhelming experience, but a professional real estate agent will guide you through the entire process. From finding the right home to negotiating the right price, a real estate agent is your ally when it comes to buying a home.

3.  Understand the OTHER costs of home ownership.

The cost of owning a home is more than just the purchase price.

On top of a mortgage payment, there are several monthly fees and expenses any first-time buyer should consider when becoming a homeowner: insurance, property taxes, utilities and maintenance. The roof may need to be replaced in 5 years, the furnace may need replacement soon, etc. and you might need to save up for those items.

4. A top 10 list of  “must have’s” in a home.

It is important to know what you are looking for in a home and understand that generally you can’t have it all.  If you have 3 kids and you want them all to have their own room, you should be looking for at least a 4 bedroom home.  If you need to be close to work, then be sure you are looking for homes near your work. 

The idea of the list of 10 “must have’s” is to figure out what aspects of a home you really need and what you don’t.  It is important to not only think about your current needs, but also the potential needs in the future. 

5. Location, location, and location.

After figuring out the financing the next 3 most important things are location, location, and location.  It sounds silly but you can change anything about a house EXCEPT for its location. A bad location puts you at risk for having trouble re-selling the home. Good school districts also boost property values. Even if the homebuyer does not have kids, buying a home near sought-after schools can help the resale value.

6. Decide on what to test for once you find your home.

Research home inspectors and decide what you plan on testing for after you have a home under contract, ex. radon, meth, mold, etc. Your real estate agent is a great resource for recommendations for home inspectors and should know what you need to test for in your area. Some homes are at greater risk for radon, meth, etc. so testing for them may be important.

7. What Are Closing Costs? 

This is probably the top asked question by first-time home buyers. When you get a mortgage loan, you will be charged closing costs that are an additional expense besides your down payment. All mortgage lenders are required by law to disclose in writing your estimated closing costs and fees, so you’ll know what will be ahead of time.

8. Foreclosures and short sales.

A “short sale” is a home that the current owners owe more than the value of the home. In order to purchase a short sale the bank must be willing to take less than what is owed on the property.  A foreclosure is a home that the bank has repossessed from the previous owner.

Foreclosures and short sales may present great deals, but proceed with caution. Buying a foreclosed home or short sale can be a risky proposition for a first-time buyer. Foreclosures often are sold “as is” and may not be in very good condition, whereas a short sale transaction can be lengthier and more complicated and frustrating than a typical home purchase. Many times we find that homes that are foreclosures or short sales are priced well but need so many repairs it may not actually be a better deal than buying a home that is maintained depending on what market conditions are.

9. Understand the value of the home you want to buy. 

Doing your homework can help you make a competitive offer. Before buying the home, determine the property’s market value by having your real estate agent conduct a comparative market analysis. This report shows what buyers were willing to pay for similar homes in the area, giving a good idea of what will make a fair offer.

10. It’s important to have a back-out plan.

Before signing on the dotted line, make sure to have a contingency plan in case things don’t go as planned during the home inspection or appraisal. If the home has a major flaw or doesn’t appraise for the purchase price, an escape plan allows the contract to be voided. A good real estate agent will keep this process on track and will ensure your back-out plan is viable.


For more tips on buying and selling a home, visit www.SaltLakeOpenHouse.com.

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