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10 Steps to First Time Home Buying

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There is nothing quite like owning your own home. We cave dwellers have developed into proud homeowners. The current market might be very intimidating to the first time buyer but on the other hand is full of opportunities to get into your first home at a more reasonable price. Here a quick guide to the 10 steps to first home ownership:

1) Examine your budget. If you are paying rent right now and can manage those payments you can expect to be able to muster an equal mortgage payment. Do not forget that you will also have to pay home owners insurance and property taxes in addition to your mortgage rate
2) Get pre-qualified with 2 lenders. Work with 2 mortgage brokers and demand to be told which lenders they will approach. Make sure they are not talking to the same lenders.
3) Select a real estate agent in the area you will be buying in. Do not just go with the first agent you come across but interview several. Ask them lots of question and try to find one that has experience and is not too busy helping you. Beware of inexperienced agents. It is a good sign if a real estate agent ask you a lot of questions back. The agent or the agent’s firm should also offer a first class online MLS search site.
4) Spend lots of time browsing the MLS online. Get familiar with what the market has to offer. Let the agent send you a list of what homes have just closed and demand regular updates. Closed prices are a better indicator of value than listing prices. Be aware that closings happening today are the prices of 6-8 weeks ago. In a rapidly falling market today’s prices would be even lower.
5) Once you found a list of homes that interest you go over the list with your Realtor and have him supplement the list with his recommendations. Set up a day or two to look at the homes. Do not make a decision before you have seen all the homes on your list.
6) You will see that some of the search criteria that seemed to matter most to you might not be all that important after the first round of showings and other criteria have become more prominent. When you started your search a pool seemed like a must have but now it turns out that a large kitchen living room area is more important.
7) With your newly calibrated list of important features go over all the properties again and re-evaluate the MLS listings. Select 5 properties for another round of showings. The aim is to find 3 properties that you could see yourself living in. Do not try to narrow it down to 1 property. You will see why.
8) When you have found the 3 properties that you like the most have your agents prepare offers for all 3 properties. Start with a very low offer price. The aim here is not to get your offer accepted but to find the seller that is most motivated. The responses to your offer will show you who that person is. Make sure your agent prepares a cover letter that goes with your offer, which highlights the point that you are pre-approved for a mortgage and that you are ready to offer a quick close. Also make sure it mentions that you have made offers on 3 properties and that you will only be buying the one offering the most realistic price.
9) Expect your offer to be countered if not outright accepted. The counter offers will show a great deal about the motivation of the sellers. Have your agent call the listing agent to try to find out more about the seller’s motivation and willingness to negotiate.
10) If none of your offers were accepted prepare another round of 3 offers at slightly higher prices. Make sure that you make it clear to the sellers that you will quickly close on the offer that is first accepted.

This strategy will lead you to purchase one of the 3 best homes you selected at a rock bottom price.

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