First Time Home Buyers Guide

You will gain maximum use of this booklet if you read it prior to proceeding any further on your home buying trek. Remember: Approach the experience with anticipation and a positive attitude.

Why Buy?

1. Investment only.
2. Desire to experience "pride of ownership."
3. Increase in family size.
4. For possible tax advantages.

Most first time buyers fall into groups 2 and 3. Of course, as a homeowner you reap the rewards of all of these groups.

As a homeowner you are an investor from the stand point that with each payment made on the (a) loan you build an equity in dollars. It is not unusual under normal economic conditions that home prices can double or even triple in the first few years of ownership. The interest portion of the loan payment is at this time a deductible item. So, determine why you want to buy and move ahead with a temperament of optimism and desire.

FIRST SUGGESTION: HOW MUCH HOUSE CAN I BUY?

Determine the approximate maximum value of loan for which you might qualify.

Going to your bank and discussing this with a loan officer usually does this. The result is commonly known as a pre qualification.

During this process you will be asked about your debt. You should be as complete as possible. This means divulging any present or past debt. Any omission will most likely be discovered when you actually apply for a loan. Any omission could result in you not being able to buy the house of dreams. So, be forthcoming.

Once you have finished your "pre-qual", ask your bank to give you a copy of the result. You now know very close to the selling price of a house you can buy and you have copy for use by your agent.

Remember this is just an indicator of a possible loan value. Your agent can explain how this will relate to the final purchase price of the house.

As a first time home buyer you may be eligible for a state's "first time home buyer plan". If this type of plan becomes interesting, have your agent or attorney describe in detail the terms and limitations as well as any penalties included in such a plan.

We draw your attention the fact that we usually use the word house instead of home because that is all that it is until you actually move into your dream house and make it a home.

SECOND SUGGESTION: SELECT AN AGENT

Selecting an agent is one of the most important things as a buyer you will do.

In most instances, you as the buyer will not have an agent representing your interest unless you actually contract with an agent to do just that.

You have two choices. You can use the traditional approach to engage an agent. That is going to any real estate office and ask to be shown houses. In this case, you will be working with a listing agent who represents the seller only. This means you as the buyer have no representation; consequently no one is looking out for your interests. The listing agent cannot represent both buyer and seller. There is the dual agency relationship, which could exist, but it is not the purpose of this booklet to get involved in the legalistic explanation of the applicable agency relationships. Your second choice is to contract with a realtor or broker who will and can represent you, the buyer as a client and creates a fiduciary relationship between you and your agent (agency).

Contracting with a buyer's agent need not cost you any money for commission because the buyer's agent can share in the commission as the seller offers it under the listing agreement. In the instance of a "For Sale By Owner", then the buyer's agent must negotiate with either the client or the seller (owner).

Interview your prospective agent in order to determine if you feel comfortable with he or she and certainly determine his or her experience level. Once you have engaged an agent, the agent can do the following.

1. Negotiate the best price for you.
2. Negotiate to have any required repairs and other items done at the seller's expense.
3. Shop for the best loan, fees and rates available.
4. Be only your advocate in real estate matters.
5. Assure that all closing costs are minimized and review the closing statement to ensure no unnecessary fees charged.
6. Assist and accompany you through a home buyer's inspection.
7. Provide services, which are designed to protect you from unforeseen problems after the purchase is complete.
8. Be at your side during closing to assure all terms of the sale agreement have been met.
9. Listen to you in order to provide the best possible trouble free service.

Remember: He or she is your agent - not the seller's agent!