As of November 2014, first-time home buyers made up the smallest portion of American buyers in almost thirty years. According to the National Association of Realtors®, between June of 2013 and June of 2014, 33 percent of all home purchases were made by first-time buyers. Between June of 2012 and June of 2013, first-time buyers represented nearly 40 percent of the housing market. Experts attribute the 2008 sub-prime mortgage crisis and the economic reverberations of the recession as the primary reasons why less people are becoming first-time buyers. Wages are down, growing less than a percentage point per quarter, down payments of 5-20 percent with traditional loans are an impediment to buyers and student loan debt is preventing a massive segment of young adults from buying.
Because the VA loan program does not call for a down payment, has no minimum credit requirement and features relaxed qualifying standards, eligible active duty military members and veterans have a leg up on their civilian counterparts in terms of purchasing a home. Recently, the Department of Veterans Affairs announced their 20 millionth mortgage guarantee.
Terrific Tips for First Time Home Buyers
It might surprise a first-time home buyer that they aren’t the only ones who feel confused about the whole home buying process. Almost all home buyers feel the same sense of uncertainty, even those who have purchased a home before. It’s easy to forget some or all of the home buying steps you’ve followed in the past. Here are some tips on how to begin this process:
Educate Yourself
You may have relatives or friends who live in another state or area. They might have some good advice for you, but chances are that the home buying process varies greatly in different areas, so do not make the mistake of relying solely on their advice. Educate yourself about the home buying customs of the area that you want to live in. Talk to local REALTORS®, friends, and people who’ve recently moved into the desired area. Also, suprising to many is that the public library can function as a reliable resource.
How to Get Educated
Approach a real estate agent by explaining that you do not want to enter into an agreement for representation at the current time. However, find out if they will talk to you about a typical home buying scenario. Any agent that won’t take a few moments to help you understand home buying, probably, isn’t an agent that you want to work with. If you have to make several calls to find someone willing to help you, it will be worth the effort. If you aren’t comfortable talking to a real estate agent, you can always contact one of our buyer specialists. Everyone will have a different perspective of the process, but all should be able to give you a basic overview or understanding of the home buying process.
Questions to Ask An Agent
Once you find answers to these questions, you’ll have a much better idea of the basic home buying customs in your area.
- If I decide to work with an agent, once I’ve decided to purchase a home, will the agent help me compose my offer? If not, who would be willing to help? (Lawyer, Broker, etc.)
- Some agents use fill-in-the-blank forms and if so, ask for a sample to take home and study. Will an agent give me a sample copy of typical disclosures? What kind of disclosures are sellers required to give to their buyers? Does it differ by city or area?
- Is a home inspection standard in the area? Are there other types of inspections recommended? How much does an inspection usually cost, and who pays the cost, buyer or seller? When is the inspection usually done, before or after an offer or closing?
- Is a survey of the property required, and if so, who pays for it, the buyer or the seller
- Who acts as settlement agent, the person who puts together final paperwork for you to sign? (attorney, title company personnel, escrow office or other)? Who will put together final paperwork for signing (otherwise known as settlement agent)? Several options could include title company, real estate broker, attorney, etc.
- Other than loan costs, what’s the average total cost for other closing fees? What is the average total cost of closing fees, other than the cost of the loan? What is included in these fees, such as taxes, agency fees, etc.?
- Is it common for sellers to pay for closing costs in the area?
- What earnest money deposit is standard for the area?
- Once my offer has been accepted, how long does it normally take to close on a home? What might hold closing up or make it difficult?
- What can I, as a buyer, do to ensure things go smoothly?
Stay Calm
It is very likely that you will hit a few snags on the way to closing – most people do. However, if you keep your head clear, you will be able to work with the right people to resolve any issues that pop up and the transaction will end up smoothly. There are many details to keep track of, so remember not to over react if something goes wrong, and every problem has a solution.
Now Begin
Now that you’ve reviewed this section, your next steps are the same as they would be for every home buyer. Relax, take a few deep breaths and then begin! Dig into the details and simply start the home buying process. If you allow yourself to enjoy it, the whole experience can be fun!
