Understand the Process
Whether a first-timer or seasoned home buyer, your home buying and selling process can be as challenging as learning a new language. Before you make your move, it's important to first understand the steps involved and the buzzwords of the "deal" to ensure the smoothest transaction possible.
Your best source of information will be from your Realtor. The real estate industry and financing are constantly changing, so even if you've bought a home in the past the process may have changed. Friends and relatives are often well-meaning, but they may not have purchased or sold recently either and could be giving you inaccurate information.
So how does this work?
Get prequalified by a lender so you know how much you can afford and how much your payments will be.
Choose a Realtor who will represent you (ask about Buyer Representation). Your Realtor will have access to the Multiple Listing Service and can show you every house in town regardless of which agent or company has it listed.
Once you find a house you will make a written offer. When it's been completely accepted you are officially Under Contract!
Your Realtor will help you schedule inspections, deliver the contract to the lender and review the title commitment. There are a lot of things happening behind the scenes while you are under contract and your agent will be handling the details for you.
Once you've accepted the inspection, title commitment, and survey, and you have loan approval, you will be on your way to closing.
About a week prior to closing you can schedule utilities connections for the date of closing.
Closing typically takes place at the title company. When you go to sign documents, you will need to bring identification (usually your driver's license or passport) and your funds for closing. The funds for closing must be in the form of a money wire or cashier's check - the title company will not accept cash or personal checks.
First-time Home Buyers Dominate the Market
In some areas of the country, housing is selling like hotcakes, driven higher by the first-time home buyer segment of the market. Typically, first-time home buyers average about 40% of all home buyers, but in 2009, they composed an unprecedented 47%, according to the just-released National Association of REALTORS® 2009 Profile of Home Buyers and Sellers.
Affordability was among the most cited reason for buying a home. Incomes decreased from 2007 to 2008, and tax incentives, particularly the first-time home buyer tax credit – promising up to $8,000 in tax rebates, or as additional funds to pay toward closing costs and down payments, played a key role.
Among key characteristics found:
• More than half of first-time buyers were between the ages of 25 and 34. The median first-time home buyer is 30.
• The median income for first-time home buyers is $61,600. Most first-time home buyers make between $35, 000 and $44,999 (14%) and $55,000 to $64,999 (also 14%.)
• Non-traditional households outnumber traditional households for first-time home buyers. Forty-nine percent of first-time home buyers are married couples. Twenty-five percent of first-time buyers were single females; twelve percent are male, and 12% unmarried couples. One percent is classified as “other.”
• Most first-time buyers moved to their new home from a rented apartment or house (78%) and 18% from living with parents, friends or other relatives, reflecting the affordability of owning vs. renting.
• The number one reason cited by first-time buyers for buying a home was the desire to own (62%.) The second reason given was affordability (10%.)
• Among the reasons cited for buying now, first-time home buyers reported that it was “just the right time” – (40%), affordability improved (27%), and mortgage financing options were available (14%.)
Between 2008 and 2009, many areas of the country reported some of the largest inventories in decades, providing home buyers with plenty of options. What did first-time home buyers choose to buy and why?
• First-time buyers prefer detached single-family homes with no shared walls (74%) but 26% chose attached homes that have at least one wall shared with another home. The larger number of singles may account for a greater attraction to and acceptance of attached home lifestyles and shared amenities.
• Fifty-two percent of first-timers chose a suburb, while 22% chose urban areas. One quarter chose either small towns or rural life.
• The median priced home purchased by first-timers was $156,000. Most first-timers spent between $125,000 and $148,999 (16%), followed by $150,000 to $174,999 (13%.)
• The median home purchased by first-time buyers was 1,600 square feet and built in 1991. Size mattered most to first-timers (20%) followed by price (19%) and distance to job and lot size (tied at (16%.)
• The median length of time first-time buyers expect to occupy their homes is 10 years.
Readiness to buy is the primary reason people buy homes, but the quality of the neighborhood remains the most important factor in which homes they choose to buy.