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Re: First Time Homebuyer
Hi! Very exciting to be starting a house hunt.
I am a full time agent and an attorney (who now is working full time in real estate sales), so feel free to contact me if you want to chat. I am happy to answer any questions, no obligation! Or, we can set up a buyer's consultation or I can set you up with a listingbook account that would allow you to get daily email reports on listings that meet your criteria and review them online. Just let me know if/how I can help.
I would really recommend talking to a few reputable mortgage lenders about what loan programs and grants you would qualify for. If you need recommendations, please let me know. I have several mortgage professionals, both brokers and direct lenders, that I work with and trust, and would be happy to send you their names and contact info.
As far as down payment, what's reasonable is really what works for you, in terms of what you can afford. Keep in mind that there are also closing costs (on average, around 6% for the buyer), and most banks require you to have some cash reserves after paying the down payment and closing costs. So you don't want to deplete all of your cash. The minimum down payment for an FHA loan is 3.5%; for a conventional loan, you need to put down 20% to avoid paying private mortgage insurance, but you can go as low as 5% (most people who go for a conventional loan usually have at least 10% -- a larger down payment usually translates to a better interest rate with a conventional loan).
As far as first-time home buying tips:
1. Be prepared. If you understand the home buying process, and if you have your ducks lined up ahead of time (you have a preapproval, you know who you would use as an attorney, you've researched home inspectors, etc.), it alleviates a lot of stress. A good agent can guide you through the process.
2. Don't overuse the internet. The internet is a great tool, but it cannot replace actually looking at houses or working with an agent who understands your needs and is on the lookout for new listings and can give you much more info on a house than you can find on consumer websites. Pictures can be deceiving... you wouldn't buy a car without test driving it, and you aren't going to buy a house without seeing it. So don't use the internet to the exclusion of getting out and looking at houses.
3. Don't agent hop. Find an agent you like and consistently work with him or her. You want someone who is looking out for your interests and understands your situation. To that end, consider using a buyer's agent who will not only work with you, but represent you and your interests in the deal. You, as the buyer, are bringing money to the talbe, so why not have someone who is negotiating on your behalf and protecting you?
4. Don't get hung up on the overall price of a house. When it comes to affordability, you need to look at the monthly payment (including taxes, insurance, and other expenses). Unless you are paying all cash, the overall price is sort of irrelevant to the affordability question.
5. Don't put too much stock in cosmetics that are easily changed (paint colors, carpet, etc.) and ignore bigger issues that are not easily changed, such as lot size, location, layout, etc. Similarly, don't always assume that the lowest priced house is the better deal. Sometimes, a more expensive house that is move-in ready is a much better deal than a "steal" that will require major renovations. You have to know yourself and your situation in terms of what is really feasible for you to do, work-wise.
6. Don't be afraid to ask questions. Knowledge is power! But there are a lot of well-meaning people out there (family, friends, arm-chair realtors, etc.) who will offer you advice. That can be valuable and give perspective, but every situation is unique, and you want to make sure you are relying on accurate information.
Good luck!
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