First Time Buying a Home

It is my first time buying a home and I don't know where to start.

This is a common introduction we see on emails from first-time home buyers. For somebody who has been through the home buying process before, it might seem obvious where to start the process. But for someone buying a first home ... it can be downright baffling.

That's why we like to chime in from time to time with articles written especially for the first-timers out there. So if this is your first time buying a home and you need some help getting the process started, this one's for you!

First Time Home Buying - By the Numbers

Let me begin by saying the process of buying a home can be different from one person to the next. For example, some people can afford a big down payment, while others have trouble making a down payment of any kind. Some people have great credit and will easily qualify for a mortgage loan, while others have poor credit and will have to shop around a lot more.

Just like no two home buyers are identical, no two home-buying experiences are identical either.

With that being said, there is a general sequence of events that will take place during your first time buying a home ... and they go something like this:

1. Review your finances, your credit score, etc.
2. Determine a home buying budget, create a wish list, etc.
3. Get pre-qualified for a mortgage loan.
4. Find a real estate agent.
5. Start the house hunting process.
6. Find a home that meets your needs, budget, etc.
7. Make an offer.
8. Offer gets accepted (hopefully).
9. Get a home inspection.
10. Lender will have the home appraised.
11. The home passes the appraisal process (hopefully).
12. Take care of other financial details with lender, escrow agent, etc.
13. Go to the closing / settlement meeting.
14. Review and sign all documents, pay all closing costs, and get the keys!

We have outlined the home buying process in many places on this website, so there's no point in rehashing it all here. I want to focus on the preliminary steps you should take when it's your first time buying a home ... the first steps on your path to homeownership.

In my opinion, the three most important things a first-time buyer should do -- and as early as possible -- are the following: (1) review your credit reports and financial standing, (2) start saving extra cash, and (3) start reviewing the home buying and mortgage process.

The first two items (credit review and saving cash) are essential if it's your first time buying a home ... and here's why. If you find errors on your credit report, you will need to get them resolved as early on as possible. It takes time to fix such errors, so you should not delay doing so. Negative information on your credit report -- even if it's erroneous information -- will interfere with your mortgage approval.

It's also important to review your credit and finances to see where you stand. Do you have a good credit score or a weak one? Is your debt-to-income ratio favorable or not so great? Lenders are going to review these items, so you'll want to do it first.

It's also important to start saving your cash, and the more the better. If it's your first time buying a home I can almost guarantee that you'll encounter more fees and total costs than you expect. It always happens, and that's why mortgage lenders like to see that you have some extra money saved up to cover such things.

When buying your first home you will also encounter a lot of terminology and concepts that are unfamiliar to you -- especially on the mortgage side of things. So by brushing up on your home buying and mortgage terminology (especially the meaning behind the terms), you will be better prepared for your first time buying a home and taking on a mortgage.

I hope this article makes you better prepared for, and more comfortable with, your first time home buying process. If you have any additional questions, you can ask them here.

-Brandon

Buying a Vacation Home

Is buying a vacation home still a good idea in the current real estate market we are in? How does a slow real estate market affect the buying of a vacation home ... or does it? Can I get a good deal on a vacation home purchase because of the current market?

These are just a few of the questions people will have when thinking about buying a vacation home for investment purposes. In truth, it's difficult to answer these home buying questions across the board, because every real estate market is different, every home buyer is different, and every vacation home scenario is different.

But we can certain offer some insight that applies to most vacation home-buying situations.

Buying a Vacation Home in a Slow Market

Let's think about the basic process and motivation of buying a vacation home for a moment. The usual goal here is to buy a home in a popular vacation spot for three reasons:

1. You want to take your own vacations there.
2. You want to rent the home to other vacationers.
3. You want a solid investment property.

So how does a slow real estate market tie into all of this? Well, it might mean that you can buy a vacation home in a popular area for far less than you would pay later on, when the market turns upward. So from an investment standpoint, buying a vacation home in a slower real estate market could benefit you in the long run. Ah, but there's that "could" word again ... nothing in real estate investing is a guarantee.

Other Benefits to Owning a Vacation Home

If you choose a location that's a current hot spot (and it remains "hot" in the future), then buying a vacation home can be a wise investment -- especially if you get a good deal on it because of a slow real estate market. Generally speaking, vacation homes tend to hold their value extremely well. This is even more true when the home is located in a vacation spot that has been popular for a long time (and will likely remain popular).

Buying a vacation home also has obvious benefits for your own leisure life. By owning a home in a nice vacation area, you can save money on your own vacations.

And, of course, there is the revenue factor. People who are smart about buying vacation homes can make a nice profit from it, by charging more for rental than what they pay on the mortgage every month.

Of course, this will take some careful research on your part. You'll need to know what the average rental fees are in a particular area for vacation homes similar to the one you're considering. Only then can you factor in the potential rental revenue to compare it with your mortgage expenses.

The Downside of Vacation Homes

This article is not meant to suggest that buying a vacation home is always a good idea. Nothing could be further from the truth. If you don't play your cards right, or if you fail to do the proper research, your vacation home become more of a money pit than anything.

For example, if you buy a vacation home in an area that's trendy at the moment, but not so popular 2, 3 or 5 years from now, your investment could go south. Also, if you choose an older home that needs constant maintenance and upkeep, your expenses could negate your profits -- even if your rental fees are higher than your mortgage payments on the vacation home.

Here's a related article on the subject of buying vacation homes that you might find helpful:


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Tips for Flipping a House - New Software

Each day, hundreds of people buy homes across the U.S. with the intention of turning them around for a quick profit. This is the practice of house flipping, and it's still a popular form of real estate investing in this country.

If you're thinking about becoming a "flipper," then you've probably already begun to gather tips for flipping a house ... using the Internet, your local bookstore, etc. But here's another source for house flipping tips that you probably didn't know about...

It's an interactive software trainer called Flip That House, and you can run it on your PC like any other piece of software. If you're anything like me, you probably get bored to tears reading reference books. But you need tips on flipping a house before you venture forth and tackle your first flip, so this software is the perfect solution.

The makers of this flipping software call it a "game," so I will stick to their terminology. But in reality, it's a real-life lesson in house flipping full of tips, tactics and techniques that will help you become a more successful house flipper.

The cool thing about the game is that it keeps track of your budget, like a little "cyber accountant" following you around on your flipping project. So you will learn tips on flipping a house as if you were conducting an actual flip. It's okay to get excited about it ... it's a really cool product.

At $40 (at the time of this writing), I thought it was pretty reasonably priced too. After all, the house flipping tips and tactics you'll learn from this "game" could save you thousands of dollars in the real world, so a $40 price tag is not much to blink at. At least not for the serious house flipper.

So there you have it. If you're looking for tips on flipping a house but you get bored reading reference books, then this software may be a dream come true for you. Just don't let the seller's "game" terminology fool you ... you will learn more than you realize as you progress through this real-life game of house flipping.

Learn more or purchase

Home Improvement Tips - Now Open

The mission of Home Buying Institute is to give home buyers (especially first-time buyers) a one-stop resource for information on buying a home.

But for many homeowners, the next logical step in their home buying process -- after the actual purchase -- is home improvement. In fact, I would say that home improvement projects are one of the best investments you can make these days.

So to support those homeowners who are looking for ways to improve their homes, we have just opened the new Home Improvement Tips section of the website. Though still in its infancy, this is part of an ongoing effort to expand the Home Buying Institute into related topic areas.

Current areas of focus in the new section include:

• Kitchen remodeling ideas
• Bathroom remodeling ideas
• Landscaping ideas

More to follow on this!

What is a Good Credit Score in the U.S.

Credit scores and home buying go together like carrots and peas. (Sorry, Mr. Gump)

When you apply for a mortgage loan, your credit score is one of the first things the lender will look at to help determine your qualifications for a loan. Credit scores range from 300 to 850, and higher is obviously better. The higher your credit score, the easier time you'll have qualifying for a home loan ... not to mention the benefit of paying a lower interest rate on the loan.

But what is a good credit score in the U.S.? What's average, below average, above average, etc.? Where do you fall on the scale and how will affect your chances of buying a home?

These are the questions we have answered in a new article in the credit section of the website.

Read the article here:
What is a Good Credit Score in the U.S.?

Home Buying Challenges Outlined in Report

Press release source

Industry Survey Reports on New Challenges Facing Home Buyers

ARLINGTON, Va., Nov. 9 /PRNewswire-USNewswire/ -- Recently media attention has been heavily focused on the difficulties home sellers face with the current glut of inventory and the tightening of the sub-prime mortgage market. However, according to a Fall member survey and report from the National Association of Exclusive Buyer Agents (www.naeba.org), home buyers are also facing new challenges. The report, titled "Under-Reported Home Buying Issues: How home buyers can overcome the latest buying challenges" contains survey results, case histories, and strategies buyers can use to best meet these challenges. The report is available as a free download at the association Web site: http://www.naeba.org/challenges.

The report highlights many important issues for buyers, but the rising use of buyer agent bonuses and difficulties when buying foreclosed homes were two of the most revealing.

"One of the top issues for buyers, in what industry insiders refer to as 'buyer agent bribes,' is when a seller offers a bonus to the buyer agent to put a full price contract together on their home. A buyer's agent should be loyal only to the buyer and sometimes buyers don't find out about these bonuses until the deal is done," reported Jon Boyd, President of the NAEBA.

The report also includes recommendations buyers should keep in mind when considering a foreclosed property including tactics on contract addenda and contract timing. "A challenge that scored high in the survey was the difficulty associated with buying foreclosures. Awareness of the five tips we offer in the report can make the process of evaluating and purchasing a foreclosure a lot less frustrating," Boyd said.

The National Association of Exclusive Buyer Agents was founded in 1995 to help consumers become educated home buyers. NAEBA is a nonprofit organization whose purpose is to be the "champions of real estate buyers' rights and representation." NAEBA offers industry standard certifications, ongoing education, client referral services, technology and information sharing. The NAEBA Code of Ethics pledges undivided loyalty to real estate buyers only. More information about NAEBA can be found at www.naeba.org.
Website: http://www.naeba.org/

End of press release

Note: One of the areas of difficulty mentioned in this press release was the act of buying a foreclosed home. You can learn more about buying foreclosed homes on our website.

Buying a Home in Texas - New Article

We've begun a state-by-state campaign to offer home buying advice to buyers across the United States. The first article in the series is related to home buying in Texas.

Why start with Texas? Because that's where the Home Buying Institute resides.

In this guide to buying a home in Texas we offer a step-by-step guide to the buying process. This will prove especially helpful to first-time buyers, people who are new to Texas, or first-time home buyers who are also new to Texas.

Article Excerpt:

Buying a home in Texas is similar to home buying elsewhere in the country. It requires some careful research, some financial preparation, and a solid game plan. You will have to do the research and preparation on your own, but I can help you with the game plan. Here is a guide to buying a home in Texas to steer you along the way.

Read the full article here:
Buying a Home in Texas