- Bargaineering - http://www.bargaineering.com/articles -

7 Essential Tips for Buying Your First Home

“This is most likely the largest financial investment you’ve ever made,” Chicago real estate attorney John R. O’Brien says.

When you buy a home, you are making a huge commitment. On top of that, buying a home is a complex transaction, requiring titles, insurance, escrow, and there are usually a number of players involved. As a first-time home buyer, things can become overwhelming.

If you are planning to buy a new home here are 7 essential tips to ease the process:

1. Check Your Credit First

Make sure you check your credit report [3] before you begin the process. Mistakes on your credit report can lead to a lower credit score that disqualifies you from borrowing, or that results in a higher interest rate. Look over your credit report and identity problem areas. Then, fix issues that need to be addressed. You can get a free copy of your credit report from AnnualCreditReport.com [4].

2. Figure Out How Much You Can Afford

How much house can you afford [5]? O’Brien recommends that you consider costs beyond just the principal and interest. He points out that you will have tax and insurance costs as well. “Houses have a tendency to surprise you with unexpected expenses,” he says.

Don’t stretch to be able to “afford” a house. Instead, make sure that you truly can make the payments with relative ease. That way, if you experience a financial setback, you won’t fall behind with your home payments.

3. Contact a Realtor

“In most cases it’s a good idea to contact a Realtor,” O’Brien says. “They are generally paid by the seller. A competent Realtor should know the market value of the property you’re considering, and will give you tips on how to avoid overpaying.”

It can also help to have someone on your side to guide you through the process. A buyer’s agent can provide you with valuable services — at no cost to you in many cases.

4. Make Sure the Contract Has a Home Inspection Provision

“Make sure the contract has a home inspection provision — most do — and is subject to being cancelled if the home doesn’t pass, or if the seller doesn’t agree to correct items that the inspector finds,” O’Brien says. He says to make sure there is a final inspection, and that you bring someone you trust along to look at items that need to be corrected. This is the time to ask for repairs and corrections to be complete before you close.

5. Consult an Attorney about Your Contract

O’Brien recommends that you consult a knowledgeable and trusted attorney before you sign the contract. Make sure everything is in order, and reads the way you want it to. “It is worth having an attorney look at the contract,” O’Brien insists.

6. Put Down as Much as You Can

You should make the largest home down payment possible to reduce the amount that you borrow. The best case scenario is to put down at least 20% so you don’t have to pay PMI [6]. However, if you don’t put down that much, you will need to figure the cost of PMI as an expense that can affect affordability.

7. Plan Your Closing Date

Do your best to plan your closing date. “Do not put yourself in a position where you have to close and move in on a specific data,” O’Brien says. Instead, plan ahead so that you close prior to your need to move. “If you have a lease that expires on June 30, try to schedule your closing for June 15,” he suggests. That way, you have some leeway in the event that your closing is delayed.

What other tips can you think of for first-time home buyers?

(Photo: Images_of_Money [7])