If you are a first time home buyer, looking for a property that suits your preferences, needs, and budget can be quite a challenge. House hunters are not just after location, they are also on the lookout for home features and amenities that add value to the property.
Here are several tips and guidelines we’ve collected to help you make that momentous decision:
Buyer’s Real Estate Agent
If you’re actually wondering why people compound their home buying expenses by hiring an agent to help them score their dream property, here are good reasons why you should do so:
• Professional agents are on the loop when it comes to potential development in surrounding areas that can truly make your purchase a shrewd investment. They’re also in the position to provide an informed opinion and smart advice.
• They have a better grasp of the market and can tell you right away if a property is overpriced or just right, helping you save precious dollars in the process.
• An agent can help you come up with a good offer and will eagerly do the negotiations with the seller until either an agreement is reached or the deal is called off.
• They are experienced professionals who have been through many real estate negotiations and know how to sift the real, valuable properties from the hyped ones.
• They provide an impartial layer into the buying process, helping you decide based on factual data. They peel sentimentality and emotions away from the negotiating table.
• An agent’s strong social and professional networks can be handy when you need other professionals to handle inspection, renovation, and property issues.
• They take the stress out of the buying process by doing the scouting, short listing, reviewing, scheduling, and coordinating, making sure that you don’t miss out on important appointments. This helps you focus on your usual life, family, and work routines, taking precious time off only when you absolutely have to.
Financing Your Home
Most home buyers rely on mortgage or loans to finance their dream house which usually cost way above the savings of most families, individuals, or couples just starting out in life. A percentage of the total price is required as down payment, usually fixed at a minimum of 20%. The balance is funded through a home mortgage which is subject to either a fixed or floating interest rate. Amortizations are in equal monthly payments which are applied to both the principal and interest. The portion allocated to the interest diminishes over time as the loan balance is reduced each time a payment is made.
There are many other options for first-time home buyers like federally-backed loans, loans that allow less than the 20% minimum down payment, as well as state-based programs.
A good credit score can help you secure a higher loan amount at more competitive rates. Buyers intending to take out a home mortgage on a property normally avoid using their credit to buy high ticket items like cars to maintain their credit rating.
Locking the interest rate is desirable when the rates are really down and are likely to go up in the coming years. Getting a competitive rate for your loan package is very crucial in ensuring the affordability of monthly payments.
Getting pre-approved for a home loan will be a good negotiating tool in your favor. The seller is more inclined to be amenable to your requests if it’s obvious that he is close to sealing a deal with you. Banks, other lenders, or financing companies can help you fund your property purchase.
Closing the Deal
After an offer has been made and accepted, the buyer normally deposits an initial amount or earnest money under an escrow agreement in which both the buyer and seller have specific obligations to fulfill in order to finalize the deal.
A home buyer can’t be too careful when it comes to making sure that everything is in place. A house inspection conducted by a trained professional is recommended and will give you a heads up on the structural safety, quality, and general condition of the property. If it is listed as a contingency in the purchase agreement, any undisclosed, serious flaw uncovered during the inspection is a valid ground for rescinding the offer and demanding for refund of deposit. You can also negotiate for a discounted price or require the seller to make the needed repairs.
A title search has to be conducted to ensure that there are no potential problems on the legality and enforceability of the title. In addition, obtaining title insurance can provide legal protection against third party claimants in the future.
When all contingencies have been removed, you should be able to deposit the remaining down payment and the applicable escrow fee or closing costs into the escrow account.
There are tons of paperwork needed to close the deal, and the buyer should go through all the documents carefully and thoroughly as your finances and lifestyle choices for the coming years will depend much on the fine print that you are about to sign. Check the tiniest details, verify that the loan amount and interest rate are accurate, and make sure that there is no prepayment penalty in case you decide to settle the loan in full before its maturity.
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