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First Time: What to Know about Buying a Home before You Jump In

First time home buyers are often surprised at what it takes to find and buy their first home. The details and the paperwork require attention to avoid some of the pitfalls of homeownership. The major considerations are financial, followed by the actual location and physical condition of the property.

The Down Payment

This is almost always the biggest hurdle for first time home buyers. Conventional lenders require a down payment of three to 10 percent of the total purchase price. While that doesn’t seem like much of a hurdle, it can be, depending on the location of the home. It’s going to be more difficult to get into a home in the highest priced cities of Los Angles, New York, Boston, or San Francisco than a home in the rural Midwest.

Fortunately, there are down payment assistance programs you might be able to access through local programs. The new lending rules also allow gifts as credible down payment assistance programs.

The Mortgage

The mortgage meltdown demonstrated how important it is to know the details of the mortgage. Without such knowledge, you could be surprised when the terms change or you have a balloon payment due. Insist that your lender explain the ins and outs of the kind of loan and any provisions it carries before signing.

Location, Location, Location

Be sure that investigate the neighborhood where you’re considering a home. First, look into the school district and then the nearby schools. Next, look for transportation corridors. Besides convenience, sometimes nearby highways and freeways increase noise levels.

Is the home near a hospital or is it on a flight path? How far away is essential shopping and what’s the crime rate? You can research the answers to these questions online and using maps. Your real estate agents will know the answers to these questions about the areas in which you’re looking.

The Inspection Report

Pay close attention to the items in the home inspection report. Serious shortfalls like electrical, plumbing, foundation, or HVAC problems could cost you considerably down the road. Be firm in your negotiations with the seller about fixing them or lowering the price of the home to compensate you.

Bottom Line

It’s crucial to pay attention to every step involved when buying a home. Don’t be shy about asking questions. Your real estate agent is your advocate during the home buying process and will provide the information you need to make good choices.

Tim Esterdahl

Tim Esterdahl is the editor of IFCS blog. He is a married father of three and enjoys golf in his spare time.

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