Some people breeze through the purchase of a new home with no problems at all. In many cases, they have bought and sold so many houses, it’s gotten easier with every sale. Hopefully, they’ve learned to trust their real estate agent to work out the details.
But what about those folks who never owned a home before? How do they enter that world of complex documents, title searches, and financial challenges? What steps can they take to make sure they get a fair deal? And what precautions can they put in place to avoid any legal problems down the road?
“Probably the first question a new homebuyer should ask himself is, Do I want to buy or do I want to keep on renting?” said Ocala broker Carolyn K. Roberts.
According to the U.S. Department of Housing & Urban Development (HUD), a home is an investment. When you rent, the check you write each month is gone forever. But when you own a home, you can deduct the interest on your mortgage loan from federal income taxes. Ultimately, you have something that belongs to you that you can sell later, possibly for a profit.
The first and best step a new homebuyer can take is to access the services of a reputable real estate agent. The agent is already familiar with all the details involved in home buying and can navigate you through the financial waters along the way. A real estate agent also can recommend the right neighborhood and characteristics of a home for your specific needs and lifestyle. An agent will consider such amenities as schools, shopping, traffic volume, and proximity to your workplace. An agent also has a good idea which neighborhoods stand to increase in value and which could depreciate.
There are at least six things a new homebuyer should consider before looking for a home. Neighborworksamerica.com recommends the following:
1. Get your finances in order.
Find out your credit score and correct any inaccuracies. Lenders look at the four Cs: credit history; capital available; capacity (income versus debt); and collateral (the value and condition of the house).
2. Look for down-payment and closing-cost assistance programs.
Normally, both are expected to be paid up front, however, there are programs that allow you to borrow all or part of them.
3. Make sure homeownership fits with your lifestyle.
In some situations, renting might be the better financial solution. For example, if you only plan to stay in a community less than three years, if the local economy is unstable, or if unemployment is rising, then renting might be the better option.
4. Get pre-approved for financing.
Pre-approval will help you know what you can afford and the best rates and terms prior to the purchase. Pre-approval is different from pre-qualification in that pre-approval guarantees that the lender will loan you a fixed amount of money, depending on the property’s appraisal. (Note: there may be a fee with pre-approval.)
5. Get a professional home inspection.
When you make an offer to the seller, include a condition, or a contingency, for a home inspection that indicates no major problems.
6. Keep in mind that homeownership always costs more.
Many first-time homebuyers are surprised by the cost of basic maintenance. In order to be ready for unexpected repairs or desired improvements, build an annual emergency fund that is equal to three months’ worth of living expenses.
So, if you’ve decided that owning a home is the right choice, then, “Welcome to the world of homeownership.” Step ahead carefully. Read everything thoroughly before signing anything. And trust a reputable real estate agent and/or an attorney to guide you.
Buying your first home in Ocala, Florida? Roberts Real Estate specializes in personal service backed by a deep knowledge of the local community. We have professional, knowledgeable, and dedicated agents who follow through from the beginning to the end of the transaction. Call (352) 351-0011 to speak with one of our agents today.