The Benn Pacific Blog

Tuesday, June 30, 2015

10 Valuable Lessons for a First Time Home Buyer

10 Valuable Lessons for a First Time Home Buyer
by Ryan Oda (RA)

1. Start saving early for your down payment. For a 30-year conventional mortgage, the lender will require you to only put down 20% of the purchase price. The more you save, the greater your buying power increases.  If you do not have 20%, you still can get a mortgage. However, the lender will require you to get mortgage insurance, or other alternatives.

2. Build your credit. The lender will analyze many factors for your loan amount. Having poor credit—or no credit at all—will cause delays in your home purchasing process. The factors that affect your FICO score are: (A) payment history; (B) credit utilization; (C) length of credit history; (D) types of credit history; (E) new credit lines.

3. Find a Realtor you can trust. Your Realtor’s fiduciary responsible is to you. In addition to getting you the best deal, your Realtor is there to look out for your best interest. And here’s the best part… as the Buyer, most times the Realtor’s services are free to you!

4. Securing a low mortgage rate is great, but finding a loan officer you can trust is just as important. 

5. When you are unsure, ask questions. Your Realtor has access to valuable resources and information. As an expert, a responsible Realtor should educate you on the entire home purchasing process. This ranges from explaining the purchase contract to informing you how title is transferred.

6. Don’t rush, but be ready to make a move. Buying a home will be the largest purchase of your life. Be patient and do not settle for less. In an active market, the “hot” properties do not last long. When you see “the house,” put your best foot forward and give it your all.

7. Buy the best house you can afford in the right neighborhood. “Best” and “right” are subjective. Ever buyer has different taste. Only you can determine this. Some factors to consider are safety, traffic, proximity to shopping venues, distance to work, distance to family and friends, and quality of the neighborhood schools.

8. Read the home inspection report. Purchasing real estate is a backwards process because it requires the consumer to submit payment first, then to inspect property once in escrow. Per the purchase contract, you have the right to inspect the home you are buying. The home inspection report will explain everything wrong with the property. Although the report may seem overwhelming, it is important you consult with your home inspector and Realtor to see how severe the problems are.

9. Look at real estate through an investment lens. Some of the financial advantages of owning real estate are: (A) hedging against inflation since your monthly mortgage payments are fixed; (B) deducting a portion your mortgage interest from your yearly tax obligation; (C) deferring of capital gains tax through a 1031 Exchange; (D) taking out a loan on your equity. Owning a home not only provides intrinsic value, but it can also build your wealth.

10. “Grow” with your home. If something goes wrong, do not sweat it. Rather, learn from each experience so that problem can be minimized or eliminated in the future. As time progresses, you will know how to be a better home owner—enjoy it.

Posted by Trevor Benn on 06/30 at 11:51 AM
Real Estate NewsPermalink

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