Tips for First-Time Homebuyers
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The government is really hoping that you will buy a home — especially if you are a first-time homebuyer. Not only is there are generous tax credit available, but you can use it now to put toward the down payment on your home. Some state governments are also offering special first-time home buyer programs, like the Illinois plan to provide interest-free loans that can be used toward a down payment. If you’re ready to buy, now is a great time to do it. But you should be careful. Gather Little By Little offers some helpful tips for first-time homebuyers:
- Get pre-approval. This is when you are actually approved (not just qualified) for a certain loan amount. This is essentially an agreement that the bank will finance you. Here is what GLBL says about pre-approval: “Being pre-approved will not only allow you to focus on the homes you can actually afford and are approved for, but can often give you more negotiating power as well. “
- Remember closing costs. There are a number of closing costs that come with buying a home. The down payment is just the tip of the iceberg. While many closing costs can be covered by the seller (especially in this market), you will still have to pay a number of fees from origination fees to appraisal fees to title fees. You can have them rolled into the loan, but this increases the overall cost. If possible, it’s best to pay closing fees with cash.
- Shop around. As with any other major purchase, it is important to shop around to make sure you are getting the best deal.
- Consider resale. When we bought our home, we considered its resale potential. We considered neighborhood, schools and other issues. We already know how we will sell the home when we go.
- Use a buyer agent or broker. Don’t use the same representative that the seller is using. Most states have a designation that says whether the person you are working with is required to work for the buyer’s advantage. Here is what GLBL says about it: “This will be real estate agent that will sign an agreement to work in your best interest. A good and ethical agent will truely do this as well, even at the cost of their own commission.”
You should also have a home inspection, consider the costs of property taxes and make sure you read through the paperwork and understand the fine print. It’s a lot of work, but it’s the best way to get a good deal on your home.
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August 11th, 2009 at 1:21 pm
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