7 tips for first-time home buyers

Think you're ready to take the plunge? Following these steps first will help ensure you're making the right decision.

By Bankrate.com

Are you a first-time home buyer eager to get into the market? Here are steps to take to help you decide whether you're ready to take the plunge.

          1. Check the selling prices of comparable homes in your area. Web sites such as Zillow and Homegain can give you a general idea of what you should expect to pay. You can also do a quick search of actual MLS listings in your area on a number of Web sites, including the site of the National Association of Realtors.

          2. See what you can afford. Use Bankrate’s  mortgage calculator to see what your payment would be. To get a sense of the maximum you should spend, use MSN Real Estate’s home affordability calculator (below).

          3. Find out what your total monthly housing cost would be, including taxes and homeowners insurance. To get a feel for the maximum amount you should spend, including taxes and insurance, use MSN Real Estate's home affordability calculator. In some areas, what you'll pay for your taxes and insurance escrow can almost double your mortgage payment. According to the Insurance Information Institute, the average yearly premium can range from $477 in Utah to $1,372 for unlucky Texans.
          To get an idea of what you'll pay in insurance, pick a property in the area where you want to live and make a call to a local insurance agent for an estimate. You won't be obligated to get the insurance, but you'll have a good idea of what you'll pay if you buy. For an idea of what you'll pay in taxes, Zillow publishes property-tax information for homes all over the country. Just remember that exemptions and the intricacies of local tax law (such as Florida's Save Our Homes value cap) can create differences between what a homeowner is currently paying and what you can expect to pay as a new homeowner.

          4. Find out how much you'll likely pay in closing costs. The upfront cost of settling on your home shouldn't be overlooked. Closing costs include origination fees charged by the lender, title and settlement fees, taxes and prepaid items such as homeowners insurance or homeowners association fees. You can see what closing costs average in your state by looking at Bankrate.com's annual closing cost survey.

          5. Look at your budget and determine how a house fits into it. Fannie Mae recommends that buyers spend no more than 28% of their income on housing costs. Go much past 30% and you risk becoming house poor.

          6. Talk to reputable real-estate agents in your area about the real-estate climate. Do they believe prices will continue falling or do they think your area has hit bottom or will rise soon?

          7. Remember to look at the big picture. While buying a house is a great way to build wealth, maintaining your investment can be labor-intensive and expensive. When unexpected costs for new appliances, roof repairs and plumbing problems crop up, there's no landlord to turn to, and these costs can drain your bank account.

          So consider whether you're ready for the expense and effort of homeownership before pulling the trigger.


By Claes Bell, Bankrate.com

How to Choose a Home

Here are some tips to help determine which house is best for you.

Once you've settled on a couple of neighborhoods for your search, it's time to pick out a few homes to view. Your wish list can remind you which features are absolute requirements and which amenities you'd like to have if possible. When narrowing down your home search, consider:

• Types of homes
• Home purchase considerations
• Home comparison chart
• What to do when you’ve found the right home for you

Types of homes

In addition to single family homes (one home per lot), there are other forms of home ownership:

Multifamily homes: Some buyers, particularly first-timers, start with multiple family dwellings, so they'll have rental income to help with their costs. Many mortgage plans, including VA and FHA loans, can be used for buildings with up to four units, if the buyer intends to occupy one of them.

Condominiums: With a condo, you own "from the plaster in" just as you would a single house. You also own a certain percentage of the "common elements" -- staircases, sidewalks, roofs and the like. Monthly charges pay your share of taxes and insurance on those elements, as well as repairs and maintenance. A homeowners association administers the development.

Co-ops: In a few cities, cooperative apartments are common. With those, you purchase shares in a corporation that owns the whole building, and you receive a lease to your own apartment. A board of directors supervises management. Monthly charges include your share of an overall mortgage on the building.

Home purchase considerations

 Most buyers' first consideration, after neighborhoods are chosen, is the number of bedrooms. As you begin to view homes, keep the following purchase and resale considerations in mind:

• Weigh your needs, budget and personal tastes in deciding whether you want a home that’s a newly constructed home, an older home or a home that requires some work -- a "fixer-upper."
• One-bedroom condos are more difficult to resell than two-bedroom ones.
• Two-bedroom/one-bath single houses generally have less appeal than houses with three or more bedrooms, and therefore less appreciation potential.
• Homes with "curb appeal" (a well-maintained, attractive, and charming view-from-the-street appearance) are the easiest to resell.
• When resale is a possibility, don't buy the most expensive house on the street, or anything that is unusual or unique. The best investment potential is traditionally found in a less expensive, more moderately sized home on the street.

Home comparison chart

While house-hunting, it's a good idea to make notes about what you see because viewing several houses at a time can be confusing. Use our home comparison chart to help you keep track of your search, organize your thoughts and record your impressions.

When you’ve found the right home

 Before you begin the home buying process, resolve to act promptly when you find the right house. Every REALTOR® has stories to tell about a couple who looked far and wide for their dream home, finally found it, and then revealed that "we always promised my Dad we'd sleep on it, so we'll make an offer tomorrow." Many times the story has a sad ending -- someone else came in that evening with an offer that was accepted.

Resolve at this point that you will act decisively when you find the house that’s clearly right for you. This is particularly important after a long search or if the house is newly listed and/or under-priced.

Copyright © by Move, Inc.