In a perfect world, owing a home gives you both a great place to live as well as providing an asset that gains value over the time that you own it.  
 
 


The stress of trying to make the right decision when it comes to a home purchase can get overwhelming; it's important to follow certain steps that will help make your home ownership dreams come true.



Talk to a loan specialist at your bank or credit union; find a person who understands your concerns as a first-time home buyer. Find a person and institution that will not only give you a complete assessment of how much home you can afford, but what hidden costs are part of the transaction as well. Note the difference between pre-approval and pre-qualification. Pre-approval means you’ve completed the loan application process and have the funds ready to spend.




Research the areas you think you’d like to live in and the price of homes there; you can do this while you’re waiting for home loan approval. When you’re armed with this information, you can better direct your search by eliminating homes/areas that are out of your price range. You made need to make concessions based on what you discover; to afford a desired neighborhood you may have to look at a smaller home with fewer amenities.




It is important to work with someone who can explain local sales, trends and particulars about your desired area. If you have a young family, information about local schools is especially important. Also, it pays to work with an agent who’s commitment to the area you’ve chosen is obvious.

It is helpful to find an agent who specializes in first-time buyers; an agent who can help explain procedures and is sensitive to your concerns. Remember: it is the seller who pays the agents’ commission, so don’t select someone based on how cheap they are!

  
 


As you become familiar with prices in the area you’ve chosen, make a list of things you NEED in a home versus things you WANT in a home. Once you know what you can and can’t live without, don’t waste time looking at properties that don’t fit your description.
 


Don’t like the green shag carpeting in the den, or the pink paisley bathroom wallpaper? Remember, these types of decoration and light structural oddities can be changed. Consider if the home you are looking at has a good floor plan and a good location; those attributes are harder to change.



If you are considering a condominium or home in a structured community, read a copy of the HOA rules. Several newer home tracts have CC&R’s, or Conditions, Covenants and Restrictions that forbid certain things like owning motorcycles, or place limits on what type of color you can paint your home. Ask your agent if they are familiar with the reputation of the HOA; ask current owners if they are happy with the HOA.



Property Taxes, Home Maintenance, Repair, Insurance and Home Owner’s Association dues all add up. Property taxes are usually somewhere around 1.25% of a home’s assessed value, meaning the tax burden on a $400,000 home will be about $5,000 the year after you buy the home. Future repairs should also be budgeted for (roof repair, new air conditioner, etc.).

  


Although many first-time buyers can qualify for more than they need, a larger mortgage may be more than you can comfortable afford.

Work with your lender on a loan for an amount you can REALISTICALLY afford, one that takes into account the monthly mortgage, fees, taxes, and insurance costs.
 
 


Keep in mind the fact that if you are stretched too thin financially, you will not be able to afford landscaping, window coverings, unexpected repairs, etc.




Work with your agent to have an “inspection contingency” written in to your deal, allowing you at least a three-day grace period when you make a purchase offer. During this grace period, you can have major components of the house looked at by YOUR inspector, review the report, and adjust your offer if necessary.

You can even cancel your purchase contract without penalty. Private inspections can turn up problems or concerns that could affect your purchase decision; be sure to budget for this type of service.



Obtaining homeowner’s insurance, having your home loan funded, doing the final walk-trough on your home, signing piles of closing documents and handing over a large cashier’s check for the final loan costs: these are just SOME of the elements of completing your home purchase.

Working with professionals you trust can help smooth out this process, but it is recommended that you read up on the home-buyer/closing process ahead of time, to eliminate as many “surprises” as possible.