First Time Home Buyer?

Thinking of purchasing your first home? Don't know where to begin? Here are four steps to get you started.

1. Get pre-approved by a mortgage lender. Before you start looking at homes you will want to know how much you can afford to pay for a home. So visit a lender. This could be a bank you like, a mortgage broker, or a credit union. Ask friends who have recently purchased a home for a referral. Or go to your favortie bank. Or go online and search (although be sure to meet someone in person at their place of business before giving any personal information). There are also many programs to assist first time home buyers and your mortgage lender can help you with that. When you are ready to make an offer on a home you will need a pre approval letter from a mortgage lender to submit with the offer. Meeting with the mortgage lender first speeds up this process.

2. Now that you are pre-approved and know how much house you can afford, find a Realtor to work with. Realtors work on commission and their commission is paid by the seller so it costs you nothing to be represented by a Realtor and the benefit to you is great (you tell me after you have purchase your home). Meet with the Realtor and discuss your wants and needs. What do you have to have in a home? Must have a three car garage and would like four bedrooms but three bedrooms could work? Have to have a fenced in yard and two baths and would like stainless steel appliances but they are not necessary. These are just a few examples. The more details you give your Realtor the better he/she will be searching for a home for you and the more they know the closer you will get to the home you want. How do you find a Realtor? Ask friends, co-workers, neighbors for referrals to a Realtor they have worked with. Make some calls or send some emails. If you receive a quick response to either this is a good sign. Interview a few Realtors and see if your personalities mesh. You will be working together closely for two - six months so you will want to work with someone you like.

3. Look at homes. Your Realtor will email listings to you and you will let her know which ones appeal to you. Schedule a day to look at homes. While you look make sure you let your Realtor know what you like and dislike about each home. This helps her to clarify the type of home you want. When a home comes on the market you want to see, notify your Realtor quickly. If it is a seller's market (which it is now) homes go fast. You will want to look at homes that interest you quickly so it isn't sold before you have a chance to look.

4. Make an Offer. Once you find the home you want it is time to make an offer. Your Realtor will prepare the offer and explain it to you before you sign. Your pre-approval letter from the mortgage lender will accompany the offer. It is at this time that you provide earnest money in the form of a check made payable to the listing company or a cashier's check if you are offering on a foreclosure. This earnest money is held in an escrow account and is part of your down payment. You can ask for comparable sales in the area to help you decide how much to offer for the home. There is a lot of paperwork when purchasing a home so be prepared. The offer is usually made contingent on financing and an inspection. In other words you are telling the seller, "I will buy your home for X dollars but if I do a contractor's inspection and decide I don't want the home based on that, I can cancel the agreement and if the bank decides they won't give me a loan, I can cancel the agreement." So the offer includes addendums such as the Financing Contingency Addendum, Inspections Contingency addendum, etc.

 Questions? Ask in comments.

Come back next week for "What happens once my offer is accepted?"