Tips for First-Time Home Buyers

About two years ago, the housing market was booming virtually everywhere in the United States. Buyers were engaging in bidding wars and sellers were getting offers above the asking price. Today, the market has softened a bit, making the dream of home ownership possible for more Americans. But how to go about finding your first home? And how much should it cost?

Finding a trustworthy and competent real estate agent
Chances are, you already know someone in the real estate business who is itching to help you purchase your first home. Before automatically deciding to use this person, be sure you talk to other people who have also done done business with him/her. Just because someone is your friend, doesn't mean they will make a good real estate agent. A good real estate agent knows the market and has your best interests at heart. A good agent won't pressure you into buying something out of your price range to earn a larger commission, nor will he/she pressure you to make a decision before you are ready.

Getting pre-approved for a loan
You'll need to find a loan officer who will pre-approve you for a loan. Most sellers won't consider your offer without a pre-approval letter from a respected mortgage banking company. Choose your loan officer and mortgage company not only on the interest rate and points, but also on the level of service. During the buying processes, it's imperative that all your paperwork is in order and completed in a timely fashion. Simply choosing a loan officer based on a low interest rate could backfire. Your real estate agent can probably recommend you a loan officer, but be sure to speak with at least two before making your decision.

Based on your income, credit score and outstanding debt, you will be pre-approved for a particular loan amount. Do not buy a home for this amount! The lender will approve you for as much money as you can possibly afford, because they want to make money on the interest. If you purchase a home for the amount of your maximum approval level, you will probably be eating Ramen noodles for dinner every night and you won't be able to purchase any new furniture.