Fri08222014

Business & Real Estate

Tips for first-time homebuyers

As housing prices climbed steadily over the past couple of years, many first-time homebuyers - stunned by sticker shock - sat on the sidelines and waited for prices to come down, or at least level off. There is hope for first-time buyers. Now that the economy has started slowing and inventories of homes on the market are beginning to grow, residential real estate may move toward a buyers' market once again. So what should first-time homebuyers know before they march out to their first open house?

Don't wait

Many first time homebuyers wait until they can afford their dream home. That's a mistake. If in 1999, for example, you made the conscious decision to save money while paying high rental costs, rather than purchasing a new home for $250,000 - today, you would have missed out on the 40 percent to 50 percent appreciation we have witnessed in some markets over the last two years. Had the buyer purchased that home instead, he or she would have accumulated $100,000 in equity, in addition to the tax savings on homeowner mortgage interest. No, you may not be able to afford the newly remodeled, four-bedroom, three-bath dream home with scenic views, but the purchase of your first home will be a stepping stone towards that ultimate dream home.

Obtaining the down payment

The first step is to figure out how to come up with the down payment. If you haven't been able to save enough, you may want to start with family members to see if they're willing to give you the funds. Some buyers choose to borrow on their 401K plan. You may also talk to your bank or a professional mortgage advisor about first-time homebuyer programs. Some offer 0 percent to 3 percent down payment options with approved credit and even allow you to roll in closing costs so that you can close without even writing a check.

In touch with the experts

Start your home search with the help of experienced real estate, banking and financial professionals who will assist you in getting the most for your money. Often, you can be pre-approved for a mortgage up to a certain amount before you go house hunting. This lets you know, in advance, the amount of mortgage you can manage. Additionally, you should get a clear understanding of the out-of-pocket expenses you will need to obtain your home. The lender should also educate you on specific loan programs, including first-time homebuyer benefits. At the same time, interview a number of real estate professionals.

Dream home vs. reality

Once you know the mortgage you can afford, sit down with your agent and discuss everything you want in a dream home. Then decide how much of this dream is realistic. You may even want to consider buying a townhouse or condominium over a single family home. Always search for a home with an eye on location over property. My best advice to first-time homebuyers is buy the worst house in the best neighborhood.

Understanding the process

The buying process is complicated, particularly for first-time homebuyers. Real estate professionals can help make it easier for you. Most offer a buyer's booklet, which explains what escrow and title mean, and many provide a complete flow chart of the entire home buying process. Additionally, ask the agent to create an estimated calendar of how long each process takes. From offer date, to inspections, lenders, title companies, etc., you should have a clear idea of what will take place during your escrow period.

Stay in touch

A good real estate professional's work doesn't end with the closing of escrow. They should stay in touch with you and schedule follow-up meetings after your move-in to discuss the home warranty and any other issues you may have encountered. Your agent should be happy to make recommendations, work with the home warranty company and/or assist you in discussing possible home improvements. For example, is it profitable to add on? Should you install hardwood or carpet, granite or tile? Your real estate professional should serve as your home buying/selling concierge.

The purchase of a home, especially your first, is one of the most important decisions you will make in your lifetime. Obviously no amount of information can replace the one-on-one advice of an experienced real estate professional. But hopefully, these suggestions will help you move a little closer to your dream home.

The Los Altos offices of Coldwell Banker Northern California are located at 110 First St., 917-4248, and 496 First St., Suite 100, 947-2222. Hiibert can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it. and Monaco at This email address is being protected from spambots. You need JavaScript enabled to view it. .

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