Virgin homebuyers, gird your loins. Your first foray into property ownership will likely be more of a roller coaster journey than you expect. Lucky for you, we were able to snag Atlanta-based realtor Lauren Blass for a few home buying tips.
What advice can you give to first-time home buyers?
Think about where you would like to be in five years. Even though it may not be a thought right now, begin thinking about public versus private schools. Consider the location you want to live in and your commute time. Make a list of all your must-haves in a house; consider your lifestyle; and try to be flexible and open-minded.
Before beginning your search, have a budget in mind and get your finances in order to be able to start the loan process. A good lender will be able to help you identify your target price range. Ask your agent, friends, or family members who have recently purchased a home for lender recommendations. It never hurts to call a few lenders and ask about various programs for first-time home buyers. Find an agent who has experience and is willing to spend the time to help you find what you are looking for. Many first-time home buyers see 20-to-30 homes before actually finding their nest.
What percent of a down payment should you really have in the bank before you seriously look at owning a home?
For first-time home-buyers, only 5 percent is actually needed before you seriously start looking at homes. However, having 20 percent will help get you the lowest rates and payment because it will reduce the risk for the lender. It is helpful to have several thousand dollars set aside as an emergency fund when you own a home for those unexpected issues. Also, remember to save money for closing costs in case that becomes your responsibility after negotiations.
What are a few terms first-time home-buyers should be familiar with?
Contract (purchase and sale agreement) – The agreement between a buyer and a seller to purchase and sell real property. The contract contains all material terms relevant to the transaction: sales price, property description, amount of earnest money, who is paying closing costs and how much, closing date, and items to be completed at or before closing.
Appraisal – This is ordered by the lender and is an estimate of value based on comparable properties
Inspection –An inspection is essentially a “visual snapshot” of a home’s condition as it exists at the time of the inspection, and that condition is described in a comprehensive written report.
Due diligence period – The time during the contract when the buyer conducts any and all inspections of the home that she or he chooses, so the buyer can learn everything that can be known about the property
Financing contingency- A period of time specified in the contract that the buyer has to obtain financing for the property
Earnest money- A sum of money that the buyer will deposit to the seller as a demonstration of the buyer’s good faith intention to purchase the property; this deposit is applied towards the total purchase price at closing.
HUD/settlement statement – A document that itemizes all fees and services associated with the sale of the home
HOA dues (homeowners association) – Assessments charged by a homeowners’ association to the individual homeowner
Seller’s disclosure – The checklist of potentially problematic items known to sellers about the property and included in the contract
Commission – Sometimes this misunderstood by first-time buyers, but commission is always paid by the sellers – NOT the buyers.
What is the breakdown of the home-buying process?
The first step in the home buying process would be to talk to a mortgage lender to identify your budget and get pre-approved. After pre-approval, find a real estate agent who is familiar with the areas you are considering. It is helpful to utilize online resources along with searches provided to you by your agent. Once you have found the home you wish to buy, your agent will present an offer and the negotiation process will begin. Once the seller of the home has accepted your offer, you are now under contract. Your due diligence period along with your financing and appraisal contingency will begin as well. The due diligence period is a specified number of days that you as a buyer are allocated in order to make sure it is still the house of your dreams. The lender will order an appraisal of the property and make sure you are able to obtain financing in the specified time period. The last step in the process is closing on your new home. The closing is the execution of legal documents of conveyance and loan paperwork to transfer and/or mortgage a property. All parties meet at the closing attorney’s office and the attorney will execute the closing documents, collect fees and disburse proceeds.
Michelle is SweetJack’s savvy Momma in residence but don’t let the bumpers and bibs fool you. This Staff Writer loves a witty Rap reference and a heavy pour of pinot.