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Real estate / mortgage shopping tips for the first time home buyers

With the White House extending the first time home buyer tax credit stimulus plan, consumers shopping for a new home have several tasks to simplify the quest for a new domicile. Use these seven-basic home buying tips:

1.    Set aside the down payment. Fifteen to 25 percent is an ideal down payment for two reasons: 1) the more you have down the better your loan options. 2) Nominal down payments mean a higher monthly mortgage and that you own less of the equity.

2.   Be pre-approved. Before you go house shopping, first consider how much you “think” you can afford. Regardless of how much you “think,” be pre-approved for a home loan. Lending institutions will set your budget with a pre-authorized mortgage. If you’re a serious shopper, you need to be prepared to make an offer.

3.    Shop around. After you’ve been pre-approved for a mortgage, your total loan value, search for homes within that price range, your new home budget.

4.    Conduct research. If you’re interested in buying a home in a specific neighborhood, analyze the costs of comparable properties. If you’re working with a real estate agent, most will provide this information at no cost.

Optional tip: Real estate agents can minimize the time and preferable choices of finding a new home. Expect to pay 5 to 10 percent in commission.

5.    Opt for basic financing. There’s no such thing as “growing into” a mortgage. Steer clear of “alternative loans,” as the rates tend to provide a false sense of affordability. For instance, although an adjustable rate mortgage (ARMs) appears feasible on paper, overtime these mortgages move with the market.  Instead, seek a fixed mortgage rate where payments remain the same (in example a 30-year fixed mortgage), alleviating any financial surprises.

6.    Hire a lawyer. Consider an attorney, who not only specializes in closings, but also charges a flat rate as opposed to by the hour. Have a list of prepared questions.

7.    Negotiate the asking price. Motivated sellers are more apt to bargain with buyers, who already are pre-approved for a mortgage. Armed with a pre-approved mortgage, and real estate marketplace research, place an offer 7 to 10 percent below the asking price.

Other article Home Buying Tips: Construction Loan Vs. All-in-one Construction Loans

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Get A Good Home Price By Negotiating

If you have your eyes set on a plot of land or a vacant lot, there are five contingencies to investigate before jumping into the investment. Although, the land may seem like the ultimate location for building your dream home, researching any stipulations, now can prevent tomorrow’s headaches and unforeseen expenditures. Research the following information:

Deeded restrictions
Contact the local municipality to determine if there are any building limitations or restrictive covenants. Certain property deed restrictions prohibit specific home floor plans, house size limitations or specific structure limitations. For example, some counties do not allow a mobile home or modular home from being moved or developed on the land.

Infrastructure
Determine if the plot of land has the necessary infrastructure to build your home. If water, electricity, sewage, telecommunications (phone/internet service) or cable/satellite television is not in place, adding these infrastructures could inflate the overall cost of building your new home. Be sure to research any contingencies, which may hinder the development of the property. For instance, some towns have well water restrictions, a serious setback if you’re planning to build a home on the plot.

Public Road Roads
Research the public road system. There should also be a deeded right-of-way, allowing the right to build a public road or accessibility to the land. Make sure that a road maintenance policy requires the community to contribute to the repair and upkeep of the road; otherwise, a private road can eat into your housing budget.

Environmental Hazards
Investigate the history of the property. A plot of land that was once an Indian burial ground, a land mine or a plot where toxic waste was once stored could pose future building and safety biohazards.

Financing
Prior to purchasing that plot of land for your new home, apply for a construction loan. Some lending institutions require a land survey.

Whatever you do before agreeing to buy a plot of land, be sure to do the homework to determine if there are any additional costs or restrictions.

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