So you want to buy a home for the first time? 

Why buy vs. renting? This is usually the biggest and most important question people ask themselves when considering the purchase of a home. The reasons are endless depending upon your needs. Consider these two critical points: If you have been renting for five years paying an average of $1,000.00 per month, you will have given your landlord over $60,000.00. If your rent has averaged $850.00 per month over the last ten years you will have paid your landlord over $102,000.00 and have nothing to show for it, while your landlord will still own the home that you have been living in. You have helped to pay for it but the landlord is getting all the benefits and tax breaks that should be yours! Why pay someone else’s house payment for them? 

The other important point is the tax savings you are missing out on. Did you know in Minnesota you can deduct 100% of the interest you have paid on your home loan as well as 100% of any home equity line of credit? Did you know that 100% of the property taxes you pay are also deductible? If you paid an average of $10,000.00 in interest per year and $2,500.00 in property taxes, you’d earn a total of $12,500.00 in deductions. If you are in the 27% tax bracket that would be an annual tax savings of $3,375.00, divides by 12 months that totals $281.00 per month! So it actually costs you less to live in your home per month than most rental situations. Plus you are building savings through the equity and increased value of your home. Think of it as a forced saving account or retirement fund. Perhaps it’s time you start to invest in your own future rather than someone else’s. With historically low interest rates and all of the first time homebuyers programs available today, there hasn’t been a better time to purchase a home than now. While all of the information you are reading may seem overwhelming, becoming a homeowner is truly the best investment you can make for a solid financial future. 

Choosing your Realtor. 

When choosing a realtor it’s very important to find someone who truly listens to your needs and has your best interest at heart. You want a Realtor that is not so much a sales person but a counselor. Someone who will walk you through the whole process from beginning to end, not just fill out a contract. That is how we choose to work and it is reflected in all of our satisfied clients. The best part is my services cost you the buyer nothing. I work for you for free. When you buy a home, I get paid by the seller, not you. All that we ask is for you to sign the standard buyer/realtor “exclusive right to represent” agreement. This is done simply to avoid any potential conflicts of interest with outside realtors. 

A good agent will help you get the home you desire. A great agent will help you get the same home but for the best possible price and terms. Plus will make sure you feel comfortable every step of the way throughout the whole process. The best way to accomplish this is by you the client asking as many questions as necessary until you are completely comfortable. A great agent welcomes these questions and is happy to address all of your concerns. When your decision had been made, you will meet with your agent and start with these three steps.

1) Fill out a buyer’s information sheet.
2) Discuss your needs and wants in a home to create a profile sheet.
3) Formulate a plan of action.
 

Choosing a Mortgage Consultant 

When choosing a mortgage consultant you again want someone that listens to your needs and has your best interest at heart. This person should be every bit as much of a counselor to you as your Realtor will be. The financing is the cornerstone of your offer. All written offers that you will make on a home are presented with a pre-approval letter form your mortgage consultant. By going in and being pre-approved, your mortgage consultant can write you a more through pre-approval letter. They will also be able to answer any questions the seller’s agent may have with regards to your ability to qualify for a loan to purchase the home. Because there are so many lenders offering money to first time home buyers, you have to choose a mortgage consultant that really understands the best loan programs that are available to you. The first place to start is by referral. It can be from a family member, friend or co-worker. We can refer you to someone as well. We work with several mortgage consultants on a regular basis who are at the top of their field. Stay away from internet lenders! Instead, work with someone local that will be there to answer your questions and will work with you on an individual basis. Try to find a mortgage consultant that has a large number of loan programs to choose from. A mortgage consultant that works more from a financial planner’s approach is always a plus. They will structure a loan that meets your individual financial needs not theirs. By asking the right questions up front, it will help to ensure a much smoother home buying process. The last thing you want is to lose a home because you made a poor choice when picking a mortgage consultant. At your first meeting you will cover these four steps.

1) Discuss your loan options.
2) Fill out necessary paperwork.
3) Determine your price range.
4) Get pre-approved.
 

Start your search for your new home 

The first thing we do for you is to set up a personal search engine. What this does is email you all of the properties currently available that fit your search criteria. When a new listing becomes available; it will be automatically emailed to you. You can choose to have every new listing emailed once a day or as soon as it enters the MLS system. When you see a home that interests you, we can then set up an appointment to go and see it. Time is of the essence in this situation. The first time home buyers market is always hot and the homes tend to sell very fast. Please keep in mind, if you have looked at ten homes in a specific area and price range, so have fifty other home buyers. More than likely they will also find more value in the same home you do. So it is you job as well as ours to work as a team and stay on top of the new listings. We try to make sure our clients are the first to say yes or no to a new listing. The only way to successfully do that is to work together. All the basic information you need will be contained in that email. If you are not sure of the location of the property, all you have to do is double click on the address and it will open up a map that will show you exactly where it is located. That is just one example of the many features this service provides you. If you happen to drive by a property that looks interesting just take down the address, call me and I will set up a showing for you. It’s as easy as that. I am committed to showing you as many homes as it takes to find the right one. This is our responsibility as your agent and we are happy to do it.  

Present a written offer 

Once we have found the right home for you; we will help you to write a clear and concise offer by going over the contract line by line with you. We will make sure all of your questions are answered by explaining everything in detail as well as giving you options and offering possible suggestions. Additionally, we will do the same with the seller and their agent when presenting them with your offer. Everything is negotiable in a contract and when the purchase agreement has been negotiated and all the terms agreed upon by both you and the seller, the closing process starts.  

Choosing an inspector 

Although an inspection is optional, we highly recommend you do not waive your rights to one. In the purchase agreement you will have a specific amount of time to hire a home inspector and set an appointment. This is usually done within three business days of the final acceptance of the contract. The best way to find a home inspector is by referral. Due to the nature of this particular step we can not refer you to one specific inspector. We will however supply you with a list of several inspectors to choose from. The inspector must be completely independent of the transaction. If you are not familiar with one, you van open the yellow pages under Home Inspections and start calling qualified individuals as well. Currently in the state of Minnesota you do not have to be licensed to be a home inspector. There are many courses that they can take to become accredited by different organizations. Generally, you want to look for someone who has an engineering and or builder’s background. So ask about their previous job experience. It may be a good idea to start interviewing prospective inspectors while still looking for a home. This way they know who you are and will do everything possible to accommodate you within the contractual time frame.  

Choosing your closer and a Title Company 

The person that prepares all of the documents for the sale of your home is known as the closer. The buyer and seller will each have their own closer. The closing takes place at the buyers closing company. 

Researching the history of the property is the job of the title company. This step is necessary to determine that no one else will have any claim to the property once you purchase it. During this time your mortgage consultant will order the title to be updated and will assist you and your realtor in setting up a time for the closing. We will make sure all involved parties have copies of all the documents associated with the transaction in addition to keeping everyone updated to any changes that are made. Furthermore we will stay in constant contact with your mortgage consultant to make sure all the financial deadlines as defined in the purchase agreement are met. 

During this time, your mortgage consultant is overseeing the final underwriting process by the lender. This way they are able to catch any problems that may arise and fix them in a timely manner; this is why it is so important to work with a local mortgage consultant. 

Purchase Home Insurance 

This step is typically done after the inspection is finished. You need to pay for a full years worth of home insurance before closing. This applies to single family homes only. If you are buying a town home or condo part of the monthly association fee you pay will cover hazard insurance. You may be asked to pay at closing a few moths of association dues to build up a reserve. Once paid, the insurance agent will issue an insurance binder which is like a receipt. You will need to get a copy of the binder to your real estate agent and your mortgage consultant. This is a very important part of the process because without it you will not be able to close on your home. If you do not have a home insurance agent we can recommend several to you. 

Walk Through 

Walk through usually takes place the day before closing. It gives you the opportunity to go through the home one last time before you purchase it. This way you are able to make sure that the home is in the same condition as when you wrote the offer. This is also the time to make sure that any and all repairs have been made by the seller before the closing date, as agreed to in the purchase agreement. At this time, we will go over the preliminary HUD statement with you. The HUD is the document that discloses all of the final fees associated with the purchase of the property. By taking the time to review this ahead of time you will avoid any surprises the day of closing. 

Closing Day 

Closing day takes place at the closers office that represents the buyer. I will be present as well as the seller’s realtor. The seller’s closing agent will also be present to handle their paperwork. You will need to bring a valid drivers license, your insurance binder and check book. Once all of the documents are signed, the sellers will turn over the keys and garage door openers; then the home is officially yours! 

Summary 

We know what you are probably thinking, “This is too hard” o “This is too much information”. What ever you are feeling right now, remember that we have helped lots of other people just like you through this process. After reading through these pages you already know more about real estate than 90% of the general public. We are 100% committed to making this process one of enjoyment and excitement for you. 

We have found that knowledge is empowering and we sincerely hope you will see, by being up front and walking you through the home buying process, that we are here for you every step of the way. 

As your exclusive realtor, we will be there to guide you step by step through the entire process; helping to ease the overwhelming sensations most people feel when purchasing a home for the first time. 

In the long run we think the only thing you will be asking yourself is “Why didn’t I become a homeowner years ago?”.
 

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