A First Time For Everything

Buying a house for the first time can be an extremely frightening thing to do, especially when you don’t even have a good idea of where to start. It might come as a shock, but the top of the “to do” list doesn’t have anything to do with deciding how many bedrooms are absolutely necessary, or whether the house has bay windows with a Southern exposure.

For Kitch Ayre, realtor for Blue Water GMAC at Emerald Isle, the first thing on a first time buyer should do is go into a mortgage broker or bank and speak to someone about how much money they will be able to take out in a mortgage to actually pay for their new home.

Before even speaking to a lender, the office of the US Department of Housing and Urban Development (HUD) recommends checking your credit score. Checking a credit score is free one time a year, guaranteed by the government, and many places can check more than one provider to be sure your credit score is accurate. Depending on this score, banks and credit companies will determine what they will lend, so it is important to make sure this credit rating is as high as possible.

One of the first things an honest realtor will tell you is to never buy a home you can’t afford. The HUD website provides useful links to assist in calculating what you could feasibly afford in a house. Even putting a down payment on a house can require significant savings. Saving is very important before buying a house, but Ayre said you don’t have to have a fortune saved up before buying your first house. While speaking to a lender or banker, Ayre suggests looking for financing options, especially if you or your spouse is a veteran.

Many programs used to be available for first time home buyers who were also veterans, or even for people who worked in the service industry, holding jobs such as healthcare providers, teachers and police officers. Unfortunately, in the wake of the financial meltdown during the fall of 2008, many of these programs are harder to find. “If there is any financing out there still, you need to get to a realtor right away and discuss what finance options you do have,” Ayre said. “These programs go by the wayside pretty quickly.”

The HUD recommends interviewing several real estate agents in the area where you are looking, to find which will work best with you. A newer realtor might not be a bad thing, as they won’t be as busy as realtors with more experience and may be more familiar with newer technology. Experience can have its benefits as well, especially when it comes to being familiar with a particular area. Ayre said that it was important to work with a realtor who is very familiar with the market. Often a realtor familiar with the market might be able to convince the seller to include perks like club memberships, furnishings or even to pay closing costs (a significant sum, usually around 5% of the cost).

Buff Chalk of Chalk and Gibbs Realty also suggested finding a real estate buyer’s agent who can act as a buffer during negotiations with the seller. “They know market conditions … they can look at a seller and say ‘Lets see how badly they want to sell,’” he said.

If you skipped step one and went directly to a realtor, Ayre said that any good realtor would direct you back to a lender before showing houses you may or may not be able to afford. “They’re not going to put you in a car if they know you don’t have any money,” she explained. This is a good practice, as often it can take several weeks for mortgage or loan paperwork to complete before you can even put an offer on a house.

After obtaining a credit score and finding a loan or mortgage to lock in, you may want to do your own research on the area you are thinking about living. Pay attention to what the people are like, what jobs are available there, what the neighborhoods are like, whether there is a high crime rate, how the local schools are and what recreation opportunities or local amenities are available. It is a good idea to also check for proximity to local transportation or commute times when you do find a home. The HUD homebuyers’ guide suggests visiting at different times of day to get the most accurate picture. Internet sites can be a wonderfully helpful guide in independently researching a new place to live so you don’t see a buyer’s agent blind.

Investment advisor Robert Valentine suggests that once you find an area in which you want to look, it’s a good idea to get insurance quotes. They probably won’t be accurate, but they can give you an idea of the rates for the area, especially because coastal living also requires homeowners to have extra policies, such as special flood insurance.

Communities on the coast often have Homeowners Associations. If there is an association, find out how much fees are, and what services are provided. It’s also a good idea to get a copy of the community rules, and decide if you can live with them. These can range from being fairly restrictive to being pretty lax. If you aren’t interested in being part of the homeowners’ association, there may be an option to opt out.

Before you close on the house, it is important to get a building contractor to go through the house and do a thorough inspection to make sure the buyer’s agent or realtor didn’t miss anything. Real Estate site Zillow.com lists the home inspection as the most important contingency in the purchasing contract next to financing. Make sure the inspector is well trained. Often your realtor can suggest a qualified inspector in the area. While the inspector is helping you, check to see if any renovations have received the proper permits and inspections, to avoid paying for something not properly permitted after the sale is done and it is too late. The same goes for the condition of the house. Check under every rug and corner, because during the final walkthrough, the only changes that can be made are those that deal with the larger utilities like the furnace.

Realtor Elaine Main of Realty World said that although first time buyers may view the inspector as an extra unnecessary expense, the inspector combined with a home warranty are important. Since often most cash is used in putting money down on the house, any problem that wasn’t pre-existing (the inspector finds pre-existing problems before the house is sold) would be covered under the first year. “After you’ve put all that money down, you don’t want hidden expenses,” Main said. “If the air conditioning was fine when you bought the house, but goes out during the first year, you’re covered.”

Finally, before the home is yours, there will be a huge volume of paperwork waiting to be completed between the buyer and seller. Having a buyer’s agent can help reduce this load immensely. A bonus feature of this paper pushing assistance is that after closing, they are a witness to the transaction. “If a builder or seller is faltering up what they said they would do or fix before closure, (the buyer’s agent) can help get that completed,” Chalk said. There’s no better way to empower yourself buying a new home for the first time than with knowledge. Do the research, jump through the many hoops, and at the end of the tunnel the dream of owning your own home might be a lot closer than you think.

While first-time-buying of a home can be a daunting experience, the internet can be a great resource for looking into the area where you are thinking about moving, finding realtors, and even just having a checklist to let you know what you should be doing and when. The following are just a few links that may prove helpful in your search:

• The US Department of Homes and Urban Development (HUD) has its own “nine steps to buying a home” online at hud.gov/buying/index.cfm. The site includes helpful checklists for visiting houses like this one: hud.gov/buying/checklist.pdf



• The Home Buying Institute is also a great up-to-date source for information on steps you should take before buying a home: Homebuyinginstitute.com



• Check your credit report before your mortgage lenders do online: annualcreditreport.com, Equifax.com and freecreditreport.com



• Mortgages can be very confusing, but Mortgage101’s website can provide help in the form of tools, information, advice and a mortgage rate calculator: mortgage101.com.



• Banking sites also offer mortgage and loan calculators on their sites to help prospective buyers discover which loans are affordable: bankrate.com/brm/mortgage-calculator.asp, eloan.com and lendingtree.com are a few.



• Finding a real estate neighborhood assessment can make a big difference in finding what neighborhood environment will be right for you: realestate.yahoo.com/neighborhoods



• Why not “Google it?” Using Google alerts, you can set property alerts to come up every time a new item is added to the search engine. For example, search for “Buying a home in Morehead City,” or “New Bern Real Estate” to receive email notification to help in your search: Google.com/alerts



• Homefair.com is a great resource for moving information, salary calculators, cost of living comparisons and more: homefair.com



• Choosing a realtor can sometimes be a frustrating, uncertain process. Real estate site Zillow offers a real estate guide that can help navigate the process and offer helpful tips: zillow.com/wiki/RealEstateWiki.htm



• Home inspections are one of the best investments you can make during the home buying process. To find a certified home inspector in your area, check the official website of the National Association of Home Inspectors: nahi.org