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7 Things The First-Time Buyer Should Know - Part 1

7 Things The First-Time Buyer Should Know - Part 1
1:Is renting or buying better for YOU: Many renters are frustrated with the feeling that they are throwing money away each month. While owning a home is effectively a forced savings account which builds up your equity over time as opposed to filling up your landlord’s wallet, you still have to decide if it’s the right move for you based on where you are at in your life.

First answer these two questions:

  • How long do you plan to living in the home? If the answer is at least 3 years, then consider buying as your up front fees are spread out over each year that passes by. If less than 3 years you should stick to renting or else you will have a tough time paying back your loan when you go to sell your house.
  • Do you have savings set aside for a down payment and your closing costs? Don’t forget that in addition to your down payment you’ll be paying around 3% of the purchase price in closing costs. You should also speak with a mortgage loan originator to learn more about some of the government backed programs that can help first time buyers with down payment and closing cost assistance.

2: The first step to buying is getting pre-qualified: Getting pre qualified is a simple process that helps you determine amount of money you should be able to get loaned. It is a quick process in which a loan originator takes a glimpse at your financial picture. From there you will have a proper idea of the price range you and your real estate agent should be targeting, as well as an understanding of the total monthly obligations for a home in that price range. When it comes time to make an offer, most sellers will not even consider your offer without a pre-qualification or pre-approval letter.

3: You don’t pay your realtor, their commission is paid by the seller: It may be obvious to some, but many first time buyers have no idea how their realtor gets paid. The potential of possibly having to pay a realtor is enough to scare an inexperienced buyer into never picking up the phone and contacting a realtor. No worries, the person selling the home pays the commissions for both their listing agent as well as the buyer’s agent. Just keep that in mind when it's time for you to become a seller in the future!

In my next post, I’ll give you the the other 4 things the first-time buyer should know.

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