HomeCenter

June 28, 2006

Over the course of one's life, there will be no greater financial commitment made than purchasing a home. It's a huge step that requires money, knowledge and patience.

It can be an intimidating process; it is wise to be prepared before ever starting your home search. Whether you're a first-time homebuyer or a veteran, there are some basics steps that can save time and money.

First, know what you want. Consider what you want in a home that you might not have now. Also consider a working timetable. When do you want to be in your new home? How can you make that happen?

Once you have an idea of what you want, determine what you can afford. Because of changes favoring homebuyers, many will find it easier than ever to purchase a home. New programs have come along in past few years making it possible to buy a home with as little as 5 percent down, while other loan programs allow purchase of a property with no money down. Remember, though, that less money you put down, the higher your monthly mortgage payments will be.

It's important to check your credit before beginning to look for a home. The better your credit, the better chance you have of qualifying to buy a home with little or no money down. Experts advise that there is no substitute for a solid credit record when it comes to buying a home.

Another thing to consider is whether or not you wish to obtain a Realtor, or a buyer's agent. Buying and selling real estate is complicated and might require the help of someone who is familiar with the community and who understands the process.

Getting pre-approved for a home loan is a timesaving step in the process. It takes very little time and also helps the would-be buyer understand how much house they can afford and makes them more attractive to sellers.

Once that is out of the way, it's time to look at homes. Consider neighborhoods and schools, if either factor is important to your choice of home, beforehand. It's important to have a list of desirable features you want in your home, too. Also consider factors such as how close the homes are to your place of employment, schools and other quality-of-life matters. Think about what you might need in several years. Will you need a larger home? Do you expect your income to grow?

Once you have found a home, it's time to figure out how to pay for it. There are literally thousands of different kinds of loans available from a variety of lenders, but several factors will influence your mortgage: down payment, credit rating, and whether or not you're a first-time buyer (someone who has not owned real estate in the past three years).

You apply for a loan by submitting an application with supporting documents such as pay stubs and tax returns. Loans can be obtained from mortgage bankers, mortgage brokers, savings and loan associations, mutual savings banks, commercial banks, credit unions and insurance companies. Some Realtors can arrange financing, too.

Once you have found a home you want, you make a written offer. It helps to be pre-approved for a loan when you do this. The seller has the option of accepting, rejecting or countering the offer. The buyer then has the same choices. Always pay close attention to the price and terms included in any offer or counter-offer.

It is important to have the home you are interested in inspected. Many people add home inspections as a provision of the offer. There are several different things to be examined. These include checking for termites, determining boundaries, checking the value for lenders, reviewing the title and inspecting the structure. A structural inspection allows for the discovery of potential physical defects and whether repairs will be needed. Typical structural inspections run two to three hours, and it is recommended the buyer attend.

Next is the "settlement" or "closing," a process in which all the required paperwork is signed to complete the transaction. The result is the title is transferred from the seller to the buyer, and the money is transferred from the buyer to the seller.

The papers you receive during this process are valuable and should be kept in a safe place for short-term and long-term tax purposes. Generally, sellers are expected to leave the property "broom clean," which means it is ready to be painted (if needed) and cleaned.

Buyers should also obtain fire, theft and liability insurance. Seek advice from an insurance professional in these manners; most mortgages will require insurance.

Finally, enjoy your new home.

Sources for these stories include: Coldwellbanker.com, Moving.com, Federal Citizen Information Center Home Page, Realtor.com, Homestore.com, homebuilder.com, forsalebyowner.com, San Diego Association of Realtors, Monstermoving.com, Interest.com, Century21.com and Amsouth.com.