Step By Step

A Guide For The First-time Home Buyer

As first-time homebuyers, my fiance Jonathan and I weren’t really sure where to start. But with the market as buyer-friendly as it is, we decided that this summer was the perfect time to begin the search. In the hopes of helping fellow first-time homebuyers get started, we’ve laid out the steps to follow in searching for your first home.

1. Consult a mortgage expert and get pre-approved for a loan.
Assuming you have good credit and enough money saved for a sizeable down payment (ideally 10 percent of the purchase price), it’s time to see just how much house you can afford. We were referred to John Gissal, a licensed mortgage broker with Premier Home Lending. Before running our application, he suggested we meet in person so he could get a feel for our situation, explain the application process and answer our questions. After our meeting, we filled out an application. John pulled our credit scores (mine was a decent 650, and Jonathan’s was an almost-perfect 759) and asked for our income, banking and assets information. Within 24 hours, we were pre-approved for a loan of up to $300,000 with 10 percent down at a 30-year fixed interest rate. A few days later, we met with John again, and he explained every last detail of the loan page by page. To us, this face-to-face experience was invaluable.

2. Establish a realistic budget.
We added up our monthly bills to see what we could afford without sacrificing our lifestyle. Just because the bank says you’re entitled to a $300,000 loan, doesn’t mean you can easily swing the monthly mortgage payment, which John estimated would be $1,751.00, plus insurance and property taxes. We decided we didn’t want to spend more than 250K on a home. With 10 percent down, our loan amount would be 225K, putting our monthly mortgage payment at around $1,459.00.

3. Find a real estate agent.
Jonathan and I went with a realtor because we wanted advice on making an offer and negotiating the best deal. John Pitts, a realtor with Prudential Realty, took care of finding homes that met our search criteria. He was also able to perform “comp checks” to evaluate whether a home seemed overpriced compared to similar homes in the neighborhood.

4. Go house hunting.
Once you’ve given your realtor a list of specifics you’re looking for, start looking at houses. Look for homes that are slightly more than you’re willing to pay—you can always offer less than the listing price. The more homes you see, the more you’ll begin to get a feel for property values in your desired area. It didn’t take us long to figure out exactly what was available within our price range—and remember to take resale potential into account.

5. Submit your offer.
We haven’t made it to this step yet—but once you find the right home, your realtor should be equipped to help you make an offer that will appease you and the seller. Make your offer contingent upon a home inspection.

6. Arrange for a home inspection.
If your offer is accepted, look for a qualified home inspector. They’ll examine items like roofing, heating and air conditioning systems, structural integrity, plumbing and electrical systems. The results could lead to more negotiations. Any problems could be a deal breaker for you, or you could ask the seller to fix something before you move in. On the other hand, the seller could offer you a lower selling price in exchange for you taking the house as is.

7. Find homeowners insurance.
Like looking for a house or getting car insurance, be sure to shop around.

8. Closing Time.
Remember that until the keys are in your hands, anything can happen. Contracts fall through all the time for various reasons, even during closing. Be prepared to negotiate further—and prepare yourself for the possibility that you may not get the house.

Jonathan and Erika put an offer on a 3 BR 2 BA South Tampa home late last week. They currently still negotiating with the seller. Keep checking back for periodic updates.

Update:
As of today (Aug. 13) Jonathan and Erika are effectively under contract and the home inspection is this week. Stay tuned for further updates, and find out if these first time home buyers will be moving into their brand new home anytime soon.