First Time Homebuyer's Guide
From Dream to Reality with CENTURY 21® Princeton Properties: On Your Way to Your First Home
CENTURY 21® Professionals understand
that buying a home is one of the most important personal and financial
decisions that you will make in your life. This is why CENTURY 21
Professionals® are committed to guiding you step-by-step, answering all
your questions along the way, to ensure that your experience is as
pleasant and successful as possible. In the pages that follow you will
find information that will help you to better understand the real estate
process. This summary is intended as a general overview of a typical
home purchase, and to identify the typical procedures followed. Read on
and you'll see that realizing your dream of having your own home is
easier than what you perhaps imagine.
for the Buy
Now that you've decided to investigate home ownership, the best way
to approach your purchase is as an educated consumer. It is very
important to educate yourself on the process and requirements before you
begin looking for a home. For example, many people believe that renting
is cheaper than buying, or that you have to be a Permanent Resident of
the United States or have an exorbitant down payment to buy a house. The
reality is that you only need a work permit, and in some cases, the
starter costs of renting may almost be the same as that of a down
payment for a house. Stay informed by talking with people who have
already gone through the process, by attending home-buying seminars, and
by visiting a CENTURY 21 Princeton Properties.
Your Real Estate Professional
Choosing to buy a home is one of the most important decisions of your
life and should not be taken lightly. That's why it is in your best
interest to associate yourself with a good real estate agent who has
experience, who works in the area where you would like to live, and with
whom you feel comfortable. If you choose a CENTURY 21® agent, rest
assured that you will be dealing with a true Professional who will
provide you personalized service and answer any questions or concerns
you may have.
During your first meeting, a CENTURY
21 Professional will typically talk to you about the neighborhood where
you want to live and the prices of the homes, as well as the
transportation, schools and surrounding areas. Your Professional can
also assist you in the process of talking with a mortgage representative
to potentially secure a "mortgage pre-approval". It is helpful to get
pre-approved for a mortgage before looking for your home because you
will know the amount of money you will have to spend, and it will be
easier for you to calculate how much you can afford to pay monthly.
It is important to develop a financial plan so that you not only save
money for the down payment, but for other costs that will come along
later like the credit check, the mortgage application and the closing.
Having an established credit history is an important step in a smooth
home buying process. Build a good credit history by trying to diversify
how you pay for things and don't pay for everything in cash. Pay your
bills on time, limit your debt, reduce the amount of credit cards you
have and use them responsibly. It is also important to review your
credit report - a record of past and current debt that states when, how
and if you paid. Make sure that the information contained in your credit
report is accurate. You will have the opportunity to correct any errors.
A CENTURY 21® Professional can provide you with assistance in securing a
copy of your credit report for review.
Your credit history is one document
that gives the mortgage lender confidence in you. The better your credit
history, the better your credit score; and the better your credit score,
the higher the trust level of the lender, which may translate into more
mortgage options for you.
best approach in buying a home is to gain an understanding of how a home
is financed, the process of obtaining financial assistance toward your
home ownership dream and the costs that you should be prepared for.
There are crucial elements to be aware of: (1) Mortgage Pre-approval,
(2) the Down Payment, (3) Mortgage Options and (4) Closing Costs.
A pre-approval is a simple calculation that tells you the amount you'll
be able to finance through a loan and what your monthly payment will be.
A pre-approval also provides the "seller" some comfort that you have the
financial means to purchase their home.
Once you know the amount of money the bank will lend
you, you will need to determine how much cash you should save for the
down payment. This will help define the types of homes that are within
your budget. Bear in mind that your monthly costs not only consist of
mortgage payments, but will also include at a minimum real estate taxes,
homeowner's insurance and utilities.
Securing mortgage financing is an important step in
the real estate purchase process. There are lots of options to explore
to find the fit that's right for you. One step you can take towards
figuring out how much you can afford to make your home search more
effective, even before contacting a financial lender, CENTURY 21
Princeton Properties to learn more details regarding home financing and
to utilize the Mortgage Calculator. Additionally, your CENTURY 21
Professional can help you in making sense of the financing process and
guide you in sorting through your options.
The Down Payment
A down payment is generally the money you pay up front toward your new
home. Typically, the more cash you pay as a down payment, the less you
will have to pay each month on the mortgage, and the lower the interest
costs will be over the life of the mortgage. Many people make a down
payment of 5, 10 or 20% of the sales price of the home, but the right
percentage for you depends on many factors. There also are certain loans
available for down payments of under 5%. One thing that is certain is
that saving the money for the down payment can be a challenge. This is
why there are so many mortgage options available and a CENTURY 21
Mortgage Professional is a good resource to help you choose the one that
best corresponds to your personal situation.
The types of home financing options available to you toward the
attainment of your new home are varied, depending on your personal
financial situation and unique needs. The best resource available to you
in determining your financing option is your CENTURY 21® Professional
who can guide you through contacting a financial lender and attaining a
Mortgage Pre-approval, to help you in gauging what you can afford to
spend on a home and financing available to you. As a general overview,
here are some typical financing examples:
Adjustable Rate Mortgage (ARM):
in general terms, this is a type of mortgage in which the interest
rate is tied to a certain economic index and may adjust at certain
times. Overall, your monthly payment may go up or down at intervals
specified in the disclosure associated with this type of mortgage,
depending on the current interest rate.
Fixed Rate Mortgage (FRM): in
general terms, this is a type of mortgage in which the interest rate
does not change during the entire term of the loan. This means that
the monthly payments for principal and interest are also fixed for
the life of the loan.
generally, mortgages that are not part of a government-housing
program, typically have a limit of $322,700, and are not insured by
the federal government.
Jumbo mortgages: generally,
mortgages that typically exceed $322,700 and are not insured by the
federal government. These loans usually command higher interest
Government backed loans:
There are two types of government-backed loans, the FHA and the VA.
FHA loans are insured by HUD (the Department of Housing and Urban
Development of the United States) and VA loans are insured by the
Closing and other additional
Closing is when ownership of your new home is officially transferred
from the seller to you. Sometimes sellers will pay closing costs. If
not, you need to be prepared to pay this additional cost, which can
range to be an additional two to five percent of the home purchase
price. These costs can vary from state to state. Your CENTURY 21®
Professional can assist you, and guide you in this step towards
achieving your homeownership dream.
Some other cost that you can
gather more information on, as well as general estimates, to prepare
your personal finances, typically include: • Good faith deposit:
This deposit shows the sellers that you are really interested in
buying their home and that you are willing to make them an offer.
This deposit can vary between 1 and 10% of sales price depending on
the market and can be applied to the down payment.
Mortgage application and credit
Narrowing your home search down with knowledge about how much you can
afford to spend is only one factor to consider, having an idea of what
specific features you want versus need in your new home, can also help
your CENTURY 21 Professional in guiding you through the process to a
successful and happy outcome. With this information in hand, your
CENTURY 21 Professional can give you information on houses for sale and
will take you to see those that interest you. Your CENTURY 21
Professional will discuss with you the pros and cons of each house.
Don't be afraid to ask all the questions you want. Remember that one of
these houses could be your future home.
While searching for your new home,
your CENTURY 21 Professional can assist you in fine tuning your search
criteria and find the home of your dreams by visiting "Open Houses".
Visiting an "Open House" will involve you personally touring houses for
sale and getting a first hand view of the home and property. You may
want to visit open houses on your own or you may want to go with your
CENTURY 21 Professional so that you get a better feel for the market,
the neighborhood and the styles of houses available to you.
It's always good to ask yourself
the following questions:
What features are most important
to me? Number of bedrooms? Number of bathrooms?
Does it have special features
like a garden, a fireplace, a yard or a garage?
Do I want a newly constructed
house or a house that has been lived in before?
Is it most important that the
house be near a specific school, my job, or public transportation?
What is the school district like?
Are there kids in the
neighborhood who are the same age as my own?
Does this house need a lot of
When you find your perfect home you will need to make the seller an
offer in writing. Your offer is often the first step toward negotiating
a sales contract with the seller and is much more complicated than
simply determining a price. Because of the large amount of money
involved, both the buyer and the seller should protect their investments
and limit their risk. Therefore, when you make an offer, typically you
not only specify the price you are willing to pay, but also the details
of the purchase such as:
How you intend to finance the
Amount of the down payment
Who pays the closing costs
What inspections will be
Whether personal property is
included in the purchase
Terms of cancellation
Any repairs you want done
Date you will take physical
ownership and possession of the property
How to settle disputes should
generally allow you to anticipate potential problems so that if
something goes wrong, you can cancel the contract without penalty.
If you cancel a contract without having agreed upon conditions and
contingencies, you could find yourself forfeiting your good faith
deposit and the money you spent to inspect the property, as well as
other damages. For this and other reasons, it is highly recommended
that you retain an attorney. Your attorney will advise you as to
what you should include in your offer to protect yourself.
Before making an offer, thoroughly
evaluate the property (including but not limited to the following):
Property Conditions Your CENTURY
21® Professional can tell you how the property compares with the
rest of the neighborhood.
Home Improvements Take note of
what the previous owners have done to the house to determine if
these improvements warrant the asking price and/or were done
Market Conditions If the market
is "hot" it is often considered a "seller's market". This may give
the buyer less room to negotiate his/her ideal price because there
may be other people willing to pay more for the home. If the market
is "slow" then it is considered a "buyer's market". In times like
these, houses often sit for longer periods of time without receiving
acceptable offers, so when reasonable offers do come in, sellers may
be more willing to negotiate.
Seller Motivation If an
individual needs to sell quickly due to their personal situation,
they may be more willing to negotiate.
Once you have submitted your offer,
you must await the response of the seller. The seller could accept,
reject or ponder your offer. Often, the seller will counter your offer
with higher amount. This begins the process of price negotiation that
may continue until both parties either agree on a price or decide to go
their separate ways.
Good Faith Deposit
Along with your offer you must provide the amount of your "good faith"
deposit that is designed to, among other things, demonstrate to the
seller the seriousness of your offer. This is one of the additional
costs mentioned earlier. This money is only deposited once the offer has
been negotiated and accepted by both parties.
When there is a serious interest in a property and an offer has been made,
an inspection is often ordered. The seller should have the property
available for inspection by a professional.
In a typical inspection, experts examine the existing
conditions of the property. Inspections may be required by law, but the
elements of an inspection may vary according to region and state and/or
The most common
type of inspection is the General Home Inspection. A home inspector can
provide you with a complete service, which may cover many areas of the
home - from the basement to the attic, as well as the exterior of the
home, walls, chimneys, and fixed appliances such as refrigerators and
Other specific elements that can be included in an inspection are the
following (this is not a complete list):
Before a mortgage company will approve your lending arrangement and
allow you to close on your new home, they will typically ask you to show
proof of title, title insurance, and homeowner's insurance. Your Century
21 Professional or your mortgage representative can help explain the
details, and your real estate attorney can provide counsel on title
issues and title insurance.
The Final Visit (Walk-Though)
Before the closing takes place and the property is transferred, your
CENTURY21 Professional may visit your future house with your family. The
"walk-through" provides a valuable opportunity to ensure that the house
has been left in the expected condition.
You should take this moment to make sure that all the
items the owner agreed to leave behind are still there, such as kitchen
appliances, and even furniture and accessories, depending on the details
of the final sales contract. Discuss any problem with the your CENTURY
21 Professional and with your attorney. In some cases, you "as the
buyer" can ask for a discount or credit at the closing to cover any
missing item or last-minute damage to the property.
Ask your CENTURY 21 Professional and your attorney to go over the
elements of the "closing" so that you can be fully prepared. The closing
process varies according to the area of the country (and can even vary
within the same state).
Generally, the seller is required to
provide clean title to the property at closing. Your CENTURY 21
Professional, mortgage lender representative and your real estate
attorney/legal counsel can best guide you through this process, making
sure that all documents are provided and steps followed
Making your dreams a reality!
Finding your new home can be a rewarding experience, especially when you
have a real estate professional at your side, working and negotiating on
your behalf, and guiding you throughout the real estate process. We know
that you're looking for more than just a roof over your head. You're
looking for a home to express your lifestyle and values, a place to
spend time with family and friends, a place to retreat at the end of the
day and CENTURY 21® Princeton Properties can help you achieve those
dreams. Although the real estate process can be complex, CENTURY 21
Professionals want to share their knowledge, experience and patience
with you in achieving those goals.
Your goal of having your own home is
totally achievable. CENTURY 21 real estate professionals are here to
©2013 CENTURY 21 Princeton Properties. CENTURY 21 ® and the CENTURY 21 Logo are registered service marks owned by Century 21 Real Estate LLC. Century 21 Real Estate LLc fully supports the principles of the Fair Housing Act and the Equal Opportunity Act. Each Office is independently Owned and Operated.
None of the advice or suggestions
offered in this summary is intended to be representative of any or all
of the circumstances you may encounter in attempting to obtain a
mortgage or to buy a home. You should consult an attorney and a mortgage
broker, both of whom can provide you with information specific to your
are subject to qualification, receipt of satisfactory appraisal, and
verification of income, asset and debt information provided by the