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The complete guide for first time homebuyers

December 20, 2017

 Purchasing a home is one of the biggest investment and decisions in our lives. That's why it is important to be well informed about the process, current market trends and options available. 


When I was first time homebuyer, I remember how confused I was. Later, I wanted to educate more people so they don't feel so disoriented. 


1. Meet with lender


It's always a good idea to get the numbers you're working with before searching for homes: what is your price limit, what your down payment is going to be, what interest rate you can get, etc. A lot depends on your credit score (your history as a debtor) when your lender is pre-approving you for a loan. This is also a good moment to "shop for loan" meaning to go and ask who is going to give you the best terms on loan. 




2. Choose a real estate professional


You need a trusted professional who is going to lead you through the very comprehensive and often exhausting process. She will set up goals and strategy upon your criteria and keep you informed and well educated.

Why is hundred times better having your own broker to represent you and your interests than working with listing agent in so-called dual agency? First of all, listing agent is the agent representing the seller and owing him the fiduciary duties. He cannot reveal any information that will harm seller in the transaction. Dual agent needs to be very careful, and therefore he is rather no one's  broker. That's not a broker you want for yourself. Your broker should be there to fight for your rights and for your benefit, to find a best deal for you and negotiate the best possible deal. 

Find an agent who will represent you like representing her or his own interests.


3. Plan for the costs


A lot of people who never purchased a home before will think "I have been pre-approved, I have certain amount for down payment. Let's find a house and sign the papers." Not exactly.

You will need to count in closing costs. In the hot market, like we are in right now, you cannot expect seller's concessions toward closing costs. If you want that house, the closing costs are on you, the buyer. They are variable, but going usually around 1% of the purchase price. You can find on my website another blog post: Closing costs itemized.

Earnest money is one more expense you need to prepare for. Earnest money is showing your severity in purchase. The more money you put in, the more serious you look in seller's eyes. It all goes towards your down payment, or returns to you if the deal breaches. 

It's good to have home inspection done by licensed home inspector. But that is another cost to count in. It goes around $300, but can be lower or greater depending on the area home is in, specific inspector and most likely on the home's size. You can do pre-inspection before filing the offer, or make condition in offer for inspection to be done after acceptance by seller (that's a conditional clause, and if you are not satisfied with the inspector's report you can walk away with earnest money returned to you - but in hot market it is risky doing this - you are competing with lots of other potential buyers for the home and any condition in the contract is weakening your offer