Learning the Ropes For First Time Home Buyers

Louisville first time home buyers are in for an exciting experience. Buying a home is still an important part of the American dream.

But buying a home for the first-time is also a challenging task. You’ll need to qualify for a mortgage loan. You’ll need to determine what neighborhood and housing type is right for you and your family. And you’ll need to develop the budget discipline to take on a monthly mortgage payment.

Fortunately, you can eliminate much of the stress of buying a home for the first time by educating yourself on the house-buying process and what you should expect during it.

Pre-Approval

Before you even begin looking for homes, you should get pre-approved for a mortgage loan from a mortgage lender. This isn’t as much fun as is looking at homes. But it’s important: When you’re pre-qualified you’ll know exactly how much home you can afford. This way, you won’t waste time looking at residences that are outside your budget.

During the pre-qualification process, you’ll meet with a mortgage lender who will review your monthly income and debts to determine how large of a mortgage loan you can afford. This, in turn, will tell you how large of a home you can buy. If you can only qualify for a $200,000 mortgage loan, you shouldn’t buy a house above that number.

To prove your gross monthly income and debts, you’ll need to provide your lender with copies of important papers such as your work pay stubs, income-tax returns and bank statements.

The House Hunt

Once you are pre-approved, and given a pre-approval letter from a lender, you are ready to start looking at homes. You’ll want to sign up with a real estate agent at this point. You can search for homes on your own, but an agent will remove much of the stress from the process.

Your agent will schedule showings, scour the Multiple Listing Service for homes that fit your budgetary and neighborhood criteria and handle the negotiation process once you find a home that you like.

Best of all? You won’t have to pay this agent. The agent’s commission comes from the sellers, who use the proceeds from their home’s sale to cover this cost.

You and your agent will work together to find the right neighborhood and housing type for you and your family. If you’re a young couple without kids, you might not care as much about local school test scores. If you do have young children, you might care more about whether parks are located nearby and whether good public schools are within walking distance.

The Offer

Once you find a home you like, you’ll make an offer – through your real estate agent – to the sellers. You’ll also include earnest money with this offer, a sign that you are serious about purchasing the house. The amount of earnest money you’ll provide varies, but the National Association of Realtors says most buyers offer earnest money in the amount of 1 percent of the home’s asking price. If the real estate deal doesn’t close, you will get this earnest money back.

Even with earnest money, your offer might not be accepted. The sellers can reject it outright or come back with a counter-offer. At this time, you and your agent can either accept the counter-offer, make a new offer or reject the offer and walk away from the house.

This is a tense time, and not just for first-time buyers.

Once the offer is accepted, you’ll order a home inspection – usually costing about $450 or so – to make sure that the home is in acceptable condition. If you find serious problems during the inspection, you can ask the sellers to make repairs, pay for the repairs or reduce their sales price. If the problems are serious enough, you might be able to walk away from your offer without penalty.

Finally, if the inspection goes well, it’s time to move to the closing table. Here is where you’ll close on your mortgage loan and officially take ownership of your home. You’ll sign a mountain of paperwork during closing – usually you’ll be helped along by a real estate attorney or your real estate agent – but after this is done, you’ll receive the key to your new home.