Tips for First Time Home Buyers

You've finally made it. The American Dream. You have been saving for years and are finally ready to buy your own home. So, now what?  Still confused on how to navigate the vast and scary housing market? Well, we are here to help! Here is some valuable information for first time home buyers:

Look Beyond Price

When it comes to securing a quality mortgage loan, it is important to look beyond the interest rate to the true cost of the loan, both now and in the future. Read the paperwork, including the fine print, carefully, especially if the interest rate is below market rates. Upon closer inspection you may find that the interest rate is guaranteed for only a short period of time, or that it is subject to rise sharply in the future. Your mortgage loan may be the most important contract you will ever sign, and it is essential that you understand your rights and your responsibilities before signing on the dotted line.

 In many cases it will make sense to hire a lawyer to review the mortgage paperwork for you. Many communities provide some sort of first time homebuyer program designed to help renters become homeowners, and these organizations may be able to provide the legal advice you need at a price you can afford.

Every Situation is Unique

Every homebuyer will have a different set of circumstances, and it is important for the lender to consider those factors. Some homeowners may plan to move in a year or two, and they may be able to benefit from a variable rate mortgage. Others will plan to remain in their home for decades, and those home buyers may benefit from the stability of a fixed rate mortgage and its predictable and stable monthly payment.

It is also important for those buying a first home to factor in the additional costs of the mortgage when deciding how much they can afford to pay. Things like closing costs and the high price of private mortgage insurance can drive up costs and eat into funds that would otherwise be available for home improvements, furnishings and other essentials. In some cases sellers may be willing to pay some of the closing costs, and some lenders will be able to negotiate those closing costs downward. The key is to ask those questions before the closing date arrives, and to be prepared to search for a better deal if necessary.

First time buyers should also be on the lookout for any hidden fees. These small nuisance fees can add up to hundreds of dollars on closing day, so be sure to scour your paperwork for any such fees. If you are unsure about the legitimacy of any charge be sure to ask for a valid explanation. Again, an experienced real estate attorney can provide valuable insight into which fees are reasonable and which are out of bounds.

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