First Time Homebuyers

Information and links for the first time homebuyer

Where Do I Start?

     The first thing to do is to find a realtor to guide you through the whole process. Your realtor is your resource person for all sorts of things, from finding a lender to writing a contract and going to settlement. Your realtor can not only help you to choose a home, but to get into it as quickly and efficiently as possible.

     Your realtor should be able to represent you in any transaction you choose to enter into. This means that you will probably not want to choose a realtor who is the listing agent on a property you are interested in buying. Some people mistakenly think that using the listing agent will give them some advantage such as securing a lower price by only having to pay one commission or having inside knowledge about what they should put into the contract. These assumptions are false and can actually do the buyer more harm than good.

     The listing agent represents the sellers. His/her job is to get them the highest possible price for their house. By the time the house is on the market, you cannot negotiate the commission as it has already been set by the listing agreement, a legal document between the listing broker and the seller. The only one who has an advantage if you let the listing agent write your contract is the listing agent, who will then recieve both the buyer's and seller's agent side of the commission. In other words, the agent gets twice as much.

     You have a right to be represented. If you want to get a feel for which agents you might be interested in working with, go visit some open houses in your area that you are not actually interested in buying. Chat with the agents and see if one of them is the kind of person you could work with. The agent should know the neighborhoods and schools, the places of worship and shopping areas as well as other local attractions like parks and libraries. They should have a good knowlege of the house they are selling, showing that they have researched it carefully.

     It doesn't matter if the agent works with a small local agency, a larger national company, or something in the middle. Some agents are aggressive, some are laid back, some are pushy and some are patient. You need to choose someone you feel comfortable with, as you are likely to be spending a lot of time together!

     The best part about all this? Using a buyer's agent will probably cost you nothing! In some upper bracket markets there may be a showing fee, but usually the entire commission is paid by the sellers and is predetermined by the listing agreement.

     Once you choose an agent, he or she will help you to get the financing you need, choose a home, write the contract, negotiate the terms, make sure the deadlines are met, choose a settlement company and close the deal. It's one of the best values you will ever find!

Counting the Cost

     There are some financial requirements to consider before you buy a house. You have probably already decided how much you can afford to put towards a monthly payment, but you also need to have some cash for a down payment. This could be anywhere from 3 1/2 % to 20 % of the price of the house, depending on what type of loan you use.

     You will also need some cash for settlement. Your agent can advise you of the costs and fees in your area. Sometimes a seller will be willing to contribute towards the buyer's charges in order to get a contract to closing.

     Many first time buyers will end up saving a few dollars by purchasing a house that needs some repairs or updating. If there are things that need to be done immediately, the cost of those repairs or purchases will need to be readily available. Put some money aside to take care of painting, new carpet, or a new appliance. Even more importantly, know as much as possible about the condition of the house before you agree to buy. You don't want to move into your dream home only to find out on the first rainy night that you need to spend $10,000 on a new roof!

Choosing your home

     Now that you have a realtor and have been preapproved for a loan, it's time to start looking at houses. If you have been searching on the internet, you should be aware that many of the major sites update only every  few weeks. This could lead to a lot of disappointment if you are relying on them to provide you with up to date information on what is actually available. There is a high probability that when you find the perfect place on one of these sites, it will have already been under contract or sold. Your realtor has access to information updated every few minutes and you can rely on the accuracy of the information he/she gives you. Your realtor may also be able to give you access to a website connected to their database that will allow you to search in real time.

     First, sit down with your realtor and discuss your options. Make a list of "must have" and "like to have" options. Be realistic. If your preapproval says that you can afford $100,000, you will probably not be able to afford a house with 8 bedrooms and an inground pool. Ask your realtor to show you some samples of what is available in your price range. If there is a particular neighborhood or school district you would like to explore, let them know. If you absolutely must have a basement, a fenced yard, or a main level bedroom, put that on the list and don't look at properties that do not have the "must have."

     If you have an extensive list of "like to have" items (most people do) be willing to compromise. You will probably not be able to get everything you want in your first home. The main thing is to get into a place that is likely to increase in value, wait a few years, then sell it and move up. "Starter" homes usually have fewer bedrooms, 1 bath, smaller room sizes, and no luxury items. The neighborhoods are likely to be older and have few if any HOA restrictions. Do not compromise your safety, but be ready to move into an area that is not exactly what you dreamed of. 

     The type of property you look for can influence the luxuries you can afford. For example, you may not be able to afford a single family home with a fireplace and granite countertops, but those items may well be in your price range in a townhouse or condo. Remember, if this is your first home, it is probably not your last. Buy what you can afford and wait for the rest. 

     Once your realtor has narrowed your selections to a workable number, it's time to go take a look at the actual properties. Set aside a day to see 5-6 of your top choices, but don'ttry to see everything in one day. If you try to see 10-12 at a time, you are likely to start confusing them and it will make it much harder to make a decision. Take notes as you walk through, snap pictures of the outside, (if the property is occupied, get permission before taking pictures of the inside)  and write down any questions you want your agent to find answers to. This could include things like: "how old is the roof?" "Are there any parks within walking distance?" "What kind of floors are under the carpets?" or "When was the last time the chimney was cleaned?"


Finding a Lender

     If you are a member of a credit union, that may be a good place to start looking for a loan. Your local bank probably has mortgage loans available as well. Once you choose an agent, he or she can give you contact information for lenders that they have worked with successfully in the past. Some real estate companies have a relationship with a particular lender which might help your transaction to move smoothly toward closing. Any or all of these options are open to you. You are not required to use any particular lender so consider several sources before you make a decision. Having 2-3 inquiries from mortgage companies will not harm your credit, but beware of online lending companies. They often work with many different lenders, and you could end up having 30-40 credit checks to end up with the multiple offers that they promise. This could lower your score enough to keep you from being able to qualify for the mortgage you want!

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For more information contact Janice Clark at 703-400-1995

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