Buyers

FIRST TIME BUYER INFO

The search for your first home should be an exciting and rewarding experience. If you’re not prepared, it also can be a bit overwhelming. There are many things you should know and many more you will learn along the way. It is essential to seek the counsel of a real estate professional who will guide you through the process, identify advantages, and help you avoid the pitfalls. Within the next few pages, Bradford Real Estate outlines the important issues and opportunities facing the first-time buyer.

Preparing For Your Search

Traditional banks, lending institutions, and credit unions offer a wide variety of financing options for homebuyers. Many of these are subject to terms of specific lenders and require a range of fees. Following is information about the most common types of mortgage loans. Bradford Real Estate will assess your needs and recommend a lender that meets your requirements and goals.

• Select a broker you can trust, someone who will listen to your needs and produce results.

• Sit down and arrange your finances so that you may budget your purchase accordingly and comfortably.

Check your credit to discover any blemishes or mistakes on your record that may have negative impact.

• Work with your broker to determine your specific requirements, including maximum monthly mortgage payments, preferred home style, amenities, and acceptable neighborhoods.

• Make a list of necessities and a list of negotiable items in your search.

• Drive through unfamiliar neighborhoods at varying times to determine your comfort level.

• Assemble your tax records, landlord references or rental agreements for the past three years, as well as pay stubs and utility bills for the past three months. You will need these to establish credibility, stability, and security with your lender.

• Pre-qualify for your mortgage loan with the lender. This will provide a tremendous competitive edge in negotiations.

Determing Your Budget

Before your begin your search, it is important to set your budget and determine how much you can comfortably afford. By doing so, you will put yourself in a position to enjoy your new home fully and completely.

As a rule, first-time buyers qualify for the loan, but some require assistance with the down payment. In other cases, buyers have the resources for the down payment, but wish to preserve the ready cash for other purposes.

As a general rule, most lenders calculate that your monthly mortgage payments should not exceed 30 percent of your pretax income. Factoring in other debts and bills, this percentage may be very slightly in individual cases. Both your broker and lender will work with you to assess budget and recommend an affordable price range. In addition, many lenders offer innovative financing programs that help first-time buyers obtain more house for less money.

At Bradford Real Estate, we want your new home to provide years of stress-free enjoyment and pleasant memories. We will never suggest properties that exceed your budget.

Calculating Your Down Payment

So you’ve settled on a desirable property in a comfortable price range. Now you need to determine the source of the down payment. Based on the financing options available, down payments can range from zero to 20 percent. Typically, however, most down payments for first-time buyers are in the 3-to-5 percent range.

As a rule, first-time buyers qualify for the loan, but some require assistance with the down payment. In other cases, buyers have the resources for the down payment, but wish to preserve the ready cash for other purposes.

Down Payment Options

Banks and mortgage lenders have a variety of plans available to assist with down payment options. Some allow a gift from a parent or relative. Some minimize the down payment and closing costs to attract first-time buyers. Others agree to waive some portion, or agree to roll these into the terms of the loan. Put simply, banks and lenders want to get the deal done. They will often go to great lengths to assist in your property purchase, provided you are a favorable risk. An agent at Bradford Real Estate can recommend a lender and program that will best fit your needs.

Financing Sources and Options

Traditional banks, lending institutions, and credit unions offer a wide variety of financing options for homebuyers. Many of these are subject to terms of specific lenders and require a range of fees. Following is information about the most common types of mortgage loans. Bradford Real Estate will assess your needs and recommend a lender that meets your requirements and goals.

Examples of Available Financing

• Adjustable Rate Mortgage (ARM)
This loan features a fluctuating interest rate, capped at a certain percentage per year and term, which allows homebuyers to enter the market at a lower rate.

• Balloon Mortgage
A loan with regular monthly payments that calls for a lump sum at maturity.

• Bi-weekly Mortgage
This loan offers bi-weekly payments, which facilitate earlier payoff.

• Blanket Mortgage
A commercial loan that is secured by more than one property.

• Conventional Mortgage
Also known as a traditional mortgage, this loan is offered by a lending institution that is subject to specific rate and terms.

• FHA Loan
A residential mortgage insured by the Federal Housing Administration.

• Fixed-Rate Mortgage
A loan that offers an unchanged interest rate over its life.

You’ve just seen a fantastic property, one with many of the amenities on your list. So now what? Do you make an offer or continue looking? When is the time to negotiate?

Preparing to Compromise

You may locate your dream property, the one that fits your exact specifications. More often than not, though, you’ll find one that exceeds your expectations in some areas and differs in others. For example, your “wish list” specifies two bathrooms. This otherwise ideal home has one but offers space to expand. It even includes a 3-car garage. And it’s priced to move. That’s where compromise plays its part.

Your agent at Bradford Real Estate will provide timely advice and guidance. However, the decision and control is always yours. If you like the property and feel it’s a good decision, prepare to make an offer. Chances are that someone else already has or soon will, so time is of the essence.

Closing the Deal

Once you discuss terms with your broker, he or she will draw up an offer. This document will propose a sale price, as well as other negotiable items (appliances, fixtures) that you would like included with the sale. Once the offer is submitted, it is most often accepted or countered, unless another offer is written with more favorable terms. If it is countered, the buyer presents some modifications for consideration. Once agreeable to all parties, the offer is accepted and a purchase agreement is drawn up. Congratulations, you’re on your way to home ownership.