First Time Home Blogger

If you’re a first time homebuyer odds are you aren’t brave (or crazy) enough to coordinate the entire deal on your own so you need to find a real estate agent. Real estate investing for beginners can be tricky and you need a proven expert to go along with you, at least for your first purchase.  The problem is that there seems to be more real estate agents than there are houses for sale, so how do you know which agent to choose?

1. Ask Family and Friends What Real Estate Agents They Used

I know this sounds really obvious and really simple, but first time homebuyers often think the process is really complicated and overlook the obvious solution.  Think of all the people you know…your parents, your siblings, your best friend, your co-workers… at least one of them (if not most of them) has purchased a house and they would be happy to share their good (and bad) experiences with you. This holds especially true when you are moving to an area you are not familiar with.  For example if you are looking for a home in Las Vegas you should definitely ask friends for recommendations on Las Vegas Real Estate agents.  Some agents may also offer a referral incentive or give you a discount for being referred.

2. Find The Most Popular Real Estate Agent
Take a look around at houses for sale in your neighborhood, and the agent listing the house. If you notice that one agent has a lot more houses listed than any other agent, odds are they know what they are doing. This one doesn’t always work, more often than not the agent is the most successful for a reason.

3. Visit Open Houses Regularly
Open houses are great places to meet agents, without them knowing you’re interested in acquiring their services. Agents do double duty at open houses, they show the property for sale and they meet potential clients. Talking to potential agents in person is a great way for first time homebuyers to find the agent who they feel comfortable with, plus you may discover a house you weren’t considering!

4. Contact Your National Association of Realtors
Realtors are real estate agents that have pledged to adhere to the National Association of Realtors code of ethics. If any complaints are filed against the realtor they can be fined or lose realtor status. Your local realtors office would be happy to recommend a realtor to work with.

5. Make The Real Estate Agent Earn Your Business!
There are lots of agents out there and they all work on commission. What does that mean to you? Well they need you more than you need them, and don’t forget that. Just because you’re a first time homebuyer, that doesn’t mean you don’t deserve good service. If you don’t feel comfortable with an agent or you don’t think they’re giving you the service you deserve… walk away. There are plenty of good agents out there so don’t waste your time with a bad one!

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Part of the first time homebuyer process is obtaining homeowners insurance for the property. Before you can close on the property most lawyers and banks will require you to obtain and pay for homeowners insurance first.

Finding A Homeowners Insurance Agent

First things first, you need to find an insurance agent that deals with homeowners insurance. How do you find an agent you ask? Well there are a number of ways to begin your search but I would start out by asking family, friends and co-workers for good or bad experience with agents. When asking questions be sure to press for a better answer than he/she was nice, find out if they thoroughly explained the process, your pricing options and what it all means. If an insurance agent doesn’t take the time to explain things they aren’t worth your business.

If after asking for recommendations you still haven’t found a homeowners insurance agent that you would like to work with, check with your car insurance agent to see if they deal in homeowners insurance. Many companies will offer a significant discount on both policies if you insure both your home and car with them.

Dealing With A Homeowners Insurance Agent

When you settle on an agent they will ask you questions to determine the value of your home. The questions usually consist of the size of the house, the size of the property, how old the house is, the composition of the house (wood, brick etc), how old the roof and driveway are, and whether your home is in a flood zone or not. You will also need to know the proximity to your nearest fire department and fire hydrant. Using Home Inspection report Software The agent will come back to you and give you an approximate value of your home and use that as a baseline for your quote. Since this is just an approximate amount, the agency will send an inspector out to your home to take pictures and measurements to determine the actual value of your home.

One of the things to look for as a first time homebuyer is replacement value insurance for your personal items. Replacement value means the homeowners insurance company will pay you the full value that it takes to replace your items. If the same item is not available they will pay you to get the next closest item. The other option is depreciated value, meaning that if you claim your TV and it is 4 years old they will pay you the value of your TV minus 4 years depreciation, which isn’t much.

One last thing, and I can’t stress this enough, be sure to get flood insurance. As a first time homebuyer you may not think a flood will hit your home but you haven’t spent a lot of time at the property, and odds are the weather wasn’t terrible when you did. Floods destroy homes and if you don’t have flood insurance you will pay a severe price. The price of flood insurance isn’t much and it is well worth it to protect your new investment, especially as a first time homebuyer just starting out.

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When getting your first mortgage, you and the bank establish a number of terms for the loan, one of which is the mortgage rate. The mortgage rate is the rate of interest that you agree to pay the bank on top of the amount borrowed in exchange for the bank loaning you the money.

Mortgage rates change every day, but the most recent rates can be found in most newspapers and financial websites. The rate that you see in the newspaper is typically the low Interest mortgage and is given to homebuyers with top credit scores so unless you have perfect credit your rate will usually be a little higher. First time homebuyers don’t often have much of a credit history and will pay a little extra to take out the loan.

Since banks are taking a financial risk by loaning you the money for your mortgage, they structure the loan so that the bulk of the interest is paid up front, and the mortgage principal (the amount of money that you borrow) is paid back last. As a result the amount of equity you gain from your loan starts as just a small portion of your monthly payment, but increases at a more rapid rate over time.  Occasionally you may not qualify for a mortgage and will have to take out unsecured personal loans to cover the cost of the home but that can be quite expensive with higher than normal rates.

When you finalize the paperwork for your first mortgage, you will notice that it includes a reference to an APR (annual percentage rate) on the loan you are borrowing and often times that APR will vary from your quoted mortgage interest rate. Don’t worry the bank didn’t pull a fast one and change the rate that they quoted you, APR is just a calculation of the amount that you will be paying to obtain your mortgage. It varies from your quoted interest rate because the fees and payments needed to close the loan are included in this figure.

Most importantly you need to make sure you fully understand your mortgage interest rate and all of the terms associated with it, especially if you’re dealing with international real estate.  If your mortgage broker won’t take the time to explain what everything means then its time to find a new mortgage broker. As a first time homebuyer there will be a lot of parts of the mortgage process that are new to you, so never sign anything until you understand it completely.

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The home buying process can be confusing enough on its own, so first time homebuyers need to be organized in order to get the best deal. Our checklist for home buying is an will give you an excellent start as you begin the home buying process for the first time.

Do Your Research

As a first time homebuyer, you are at a severe disadvantage when buying a home because you’ve never done it before. There are hundreds of real estate websites out there, view them all and view them often. Whether you’re looking for a condo in New York, a beach front home in the Bahamas or an Alberta recreation property, you will soon get a feel for your real estate market, average home values, and what type of homes are available in your price range.

Find A Realtor You Trust

Looking up a realtor in the phone book is a rookie mistake, one that first time homebuyers make all the time. Our article on finding a real estate agent outlines five important tips on finding a good agent. If you haven’t read it, take a few seconds to look it over before completing the rest of the checklist for home buying.

Find A Good Property Attorney

Just like a good real estate agent is important, a good property attorney is a must have too.  When selecting a property attorney, make sure that the one you select has a good amount of experience working with properties similar to the one you are buying, and make sure they have experience in the immediate area you are considering.  For example, if you are buying a property in Seattle then make sure you select a Seattle property attorney that has worked in the area and has a good success record.

Understand Your Home Buying Budget

This step may be the most important of all. With all of the foreclosures today, home buyers need to fully understand their budget for purchasing a home. First time homebuyers need to focus on this step even more since they have no experience. If you don’t have enough credit to afford a mortgage you may find yourself getting unsecured personal loans to cover the closing costs or even a portion of the home loan, and that high interest can really add up. Mortgage calculators can be a handy resource, however they are usually very simple and can under-estimate monthly payments.

Get Pre-Qualified For A Mortgage

Once you understand your budget limitations, consult a mortgage expert and get pre-qualified for a mortgage. Getting pre-qualified shows agents and sellers that you are serious about purchasing a home, and will give you more leverage as a buyer. Mortgage lenders can also give you a better idea of the home buying expenses, which can often vary from state to state.  Also if you plan on building from scratch you will need to be pre-approved for a new construction loan for which you will need to provide a design your own house to the bank prior to approval.

Tour Lots Of Homes

When searching for a home, first time homebuyers often fall in love with the first nice house they visit. Buying a home for the first time is an exciting process, but remember you are inexperienced and may not know what else is out there. Visit lots of open houses and have your real estate agent show you lots of houses. It’s the only way to know if there is a better house out there for you. While you are there be sure to bring this checklist for home buying with you, you never know where you might need it.

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