First Time Home Buyer
Buying Your First Home? Real Estate Agents Are Your Professional Guides. Make Sure You Choose Top Experts!
You might be a bit afraid or intimidated by the whole process of buying your first home. As top Portland Tri-Counties real estate experts, it’s our job to guide you, from beginning to end. Best of all, we’re free! The seller of the house you purchase,pays for buyer’s agents! You would never go to court without an attorney, dont’ buy a home without a realtor!
We will take the time to go through each and every step of the buying process. There are no dumb questions!
How much can you really afford?
Several of you are paying X dollars per month for rent right now, and don’t want to stretch much more above this, stick with what you know you can do or close to it! Remember this is your first home,it might not be your DREAM home but it’s a start and soon you will have enough equity to move up into a bigger home to get to your dream home!
If you’re determined to be truly conservative, don’t spend more than about 35 percent of your pretax income on mortgage, property tax and home insurance payments. Most lenders adhere to the guidelines that Fannie Mae and Freddie Mac set, will let your total debt (including student and other loans) hit 45 percent of your pretax income, but no more.
What expenses should I plan for?
If your used to living in an apartment often your water, sewer, garbage and sometimes internet and cable are provided in your rent and you don’t have to think about repairs, you just call the landlord.
If you purchase a condo, or a townhome with Home Owners Association Fees there is a good chance the monthly fees will cover these utilities and exterior repairs or some of the utilities. It’s a good idea to find out what the HOA covers and read the last years worth of meeting minutes from the association to insure you know what has been updated recently and what is included in the dues.
If you purchase a single family house your paying for the utilities and maintenance YOURSELF.
Either type of property you purchase it’s a good idea to call the utility companies on a home your interested in and ask what the bills were for the summer and winter the previous year on the particular home of interest so you have an idea of these costs and can budget accordingly above and beyond your payment.
Always have a home inspection so you are aware of repairs that will need to occur in the next few years and have the seller fix any immediate repairs needed before you buy.
Don’t’ forget to leave some money aside for ongoing maintenance. It has been estimated that owners will pay 3.6 percent of the original purchase price annually for maintenance and 4.5 percent if it’s an older home-and may rise with inflation. However, the tax benefits of home ownership can offset half or more of these cost.
What loan programs are there?
There’s several loan programs available, to name a few there is programs available through Key Bank, Portland Home Loan Experts and Onpoint Credit Union, that offer first time home buyers (A buyer who hasn’t owned a home or a mortgage in the last 3 years) 100% financing which means NO MONEY DOWN! These loans have no mortgage insurance.
If you have a Qualifying credit score there are 3% down conventional loans where mortgage insurance falls off after 80% loan to value.
There is FHA loans where you put 3.5 % down, and there is mortgage insurace associated with this loan the life of the loan. It’s through the Federal Housing Association and a government backed loan.
There is conventional loans where you put 5,10,15, 20% down….this is the ideal scenrio for a buyer and where you will get the best interest rates and be considered a prime buyer. You will have less of a chance of owing more than your home is worth if prices fall again.
The tax advantages of buying.
Your interest on your home (including closing costs when you first purchase) is a write off every year on your taxes dollar for dollar.
Earnest money is good faith money that a buyer puts down when they write an offer to show the seller they are serious about purchasing the home so the seller feels comfortable taking the home off the market. You write a check for typically 1% of the purchase price (i.e $200,000 house = $2,000 earnest money) and this check is deposited and cashed with title and held until closing. This goes TOWARDS your down payment at closing to purchase the home. If you were to bring in $10,000 down at closing you would only bring in $8,000 because your $2,000 earnest money would be applied to it)
Home Inspections :
These vary in fees based on the square footage of the house and based on the age of the home you might want to do more inspections. A typical home inspection is $375-550.00 and other inspections range from $100-$150 each. I would plan to have $1000.00 set aside for inspections. Inspections are due to the inspectors at the time it occurs and these are for your protection. You do not get the money back nor is it applied to your down payment