Buying a first home is often fraught with uncertainty and stress. The home buying process may be made easier and less stressful with these tips for first time home buyers.
1. Don't Stretch Your Budget:
Figure out how much you are able to comfortably afford before looking for a home. A $1000 a month rent payment does not mean you are able to afford the same mortgage payment. Owning a home has increased costs over renting. Taxes, insurance and unforeseen maintenance costs will add up to higher expenses. Consider all of these factors when deciding on a home budget. A mortgage calculator will help determine these costs.
2. Find A Real Estate Broker:
Find a reputable real estate broker. Real estate brokers will help a prospective buyer find the perfect home. Good real estate agents know the local marketplace and whether the house is for sale at a good price. They will be aware of what is available and how much is a fair price for the amenities within the home. Seasoned real estate brokers will help walk the home buyer through the negotiating process to ensure the best possible purchase price.
3. Obtain Mortgage Pre-approval:
Have financing in place before stepping foot into any home. Pre-approval is different from being pre-qualified. Pre-approval means financing up to a set amount is guaranteed by the lender. Pre-approval letters from a mortgage company offer the buyer an advantage in the negotiating point of the home purchase. Potential buyers will be able to show they are serious and have funding in place. This allows them leverage over another potential buyer who does not have mortgage pre-approval.
4. Have A Home Inspection:
Home inspections are a vital part of purchasing a property. A good inspector will look for a variety of issues to help determine if there are any problems within the home. Issues found by an inspector will allow the buyer the ability to renegotiate price. Buyers may walk away from the house if severe issues are discovered and they do not feel capable of dealing with the problems, and the seller isn't willing to fix problems found by the home inspection.
5. Remember Closing Costs:
First time home buyers need to remember closing costs. These fees typically range from two to four percent of the total loan amount. Closing costs depend on how many points the lender is charging for the loan. Buyers can sometimes negotiate closing costs with the seller paying some or all of these fees. Use a closing cost calculator to help determine your closing costs.
6. Save Some Money for Home Repairs:
Sure, putting a big down payment on your new home is a good thing. But have you thought about home repairs? It is not smart to put all of your money into your down payment, or to use the rest to make improvements. Surprises abound for first-time home buyers who may not be aware of all the ways their new home can swallow their money. Gone are the days when many homeowners could dip into their equity to replace a roof or septic system. Be proactive and keep some savings aside for unexpected home repairs, even if the inspection came up clean.
Talk to us about buying your first home. We are experienced in all these areas and can help you make the first home buying experience enjoyable, not a nightmare.
Homebuyer Tax Credit Means No e-file
Buyers who purchased a home after November 6th were unable to claim their tax refund for first time homebuyers because the Internal Revenue Service had yet to release a new form and instructions for doing so. However, the new form is available from the IRS website now, and you can file for your $8,000 credit now.
The bad news is, you cannot e-file your taxes if you want the cash, and you can expect long delays.
Previously, first-time buyers were able to immediately file for the tax credit after Congress approved it last February as part of the stimulus program. All they had to do was file an amendment to their 2008 tax returns (the ones they filed last April) and claim the promised refund of 10% of the purchase price, up to $8,000.
But on Nov. 6 the rules changed. That's when Congress extended — and expanded — the tax credit, which was originally scheduled to expire on Nov. 30.
Now, the deadline is April 30, by when all contracts must be signed. (Closings must happen by June 30.) Plus, existing homeowners looking to trade up (or down) can qualify for a $6,500 refund.
And these new buyers can no longer file electronically. They have to mail in paper forms, including the new 5405, whether they are amending their 2008 taxes or claiming it on the 2009 taxes that are being filed this spring.
Buyers must now file documentation with their taxes — including proof of residency, a signed mortgage statement and drivers license — which the e-file system is not equipped to handle.
All this is due to the people who were scamming the system when no proof was required. The IRS points out that taxpayers can still use the electronic forms available on its Web site or consumer sites, they just have to print them out, attach the proof and mail everything in, and expect delays of up to four months before getting your refund.
Home Improvements on a Budget
There are many first time homeowners these days, due in part to the first time homebuyer tax credits. And for most new homeowners, home improvements are not something you might have a lot of experience in. Chances are your first home isn't perfect, which means you may be considering making some changes. Here are some simple tips for those first time homeowner improvements.
The first thing to remember when doing renovations is to not price out the house or the neighborhood. If the neighbors don’t have in-ground pools, Jacuzzis, and built in saunas, then chances are you won’t get the return on investment for adding that to your home either. This same theory applies to the type of countertops, appliances, and building materials you use.
Once you decide which rooms you want to renovate, the key is to find building materials that match the pricing for the neighborhood. After all, you don’t want your home to look too cheap or expensive compared to the rest of the block. For actual renovations, you don’t necessarily need to hire everything out. For home improvements that have room for mistakes, like ones that don’t entail messing with the gas lines, you can do yourself relatively easily. All you need is internet at the house, and learning how to "Google the rest."
You really can learn nearly everything from watching instructional YouTube videos, and reading blogs and construction websites on how to do home improvement. Soon you’ll feel more comfortable with tearing apart cabinetry, installing new ones, and removing walls.
Begin with small projects like painting, and maybe refinishing a floor. Then, if you feel more confident, research thoroughly – then go for it. The truth is you can save thousands of dollars by doing the work yourself. And being a homeowner does mean quite a bit of maintenance anyway, so learning along the way doesn’t hurt.
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