To-Do List for First-Time Home Buyers

Buying your first home may seem intimidating at first, but the process becomes much easier when you have a checklist of things to follow. The steps on this First-Time Home Buyer's To-Do List should include:

1. Save

Before you even consider looking at houses, you'll need to save money to cover your down payment and your closing costs. Rework your budget and find ways to put as much money as you can into a savings account on a regular basis. Shop around to find a savings account that pays a relatively good interest rate on your hard-earned cash.

2. Improve Your Credit Score

While you're working hard to build up your savings, consider what you can do to improve your credit score. Catch up any late payments and stay current on any new bills that arrive. Pay down any outstanding credit card balances, but don't cancel the cards.

Any steps you take to improve your credit score before you purchase your first home will help you to qualify for more competitive interest rates on your mortgage.

3. Calculate Affordability

There's no point looking at homes to buy if you aren't certain how much you're able to borrow. Take some time to work out how much you can afford based on your current financial situation.

Regardless of what your maximum borrowing capacity is, spend the time calculating what your monthly repayments will be. There are plenty of good online mortgage calculators available to help you with this step (www.mortgagecalculator.org). Then work out if you'll be able to comfortably afford to keep up with your monthly mortgage repayments and still manage your other living expenses.

If it looks like your budget might be a bit stretched look at ways to reduce your mortgage repayments. You might choose to borrow a bit less or find ways to reduce your interest rates to keep your repayments down as low as possible.

4. Apply for Mortgage Pre-approval

Shop around and determine which lender will give you the best offer on your mortgage. Don't be afraid to ask plenty of questions. After all, it's a big commitment, so be sure you understand exactly what's being offered.

5. Decide What You Want
If you've spent some time working through step three on this to-do list, you'll already know how much you have available to spend on the purchase. Work out what things you want in a home and what things you don't want.

Determine how many bedrooms and bathrooms you really need and what square footage works for your lifestyle. Decide on your preferred locations and work out whether those neighborhoods are convenient for shopping, schools, or transportation. Work out whether you're prepared to do some renovations after you move in, or whether you'd prefer a home that is already renovated.

Create a checklist of 'must-haves' and a separate list of 'want-to-haves' to take with you when it's time to go house hunting.

6. Choose Your Realtor

Speak to realtors who specialize in working with the neighborhoods you're considering and choose one you're happy to work with throughout the transaction.

7. Visit Plenty of Homes

Take the time to physically visit lots of different homes that fit within your criteria. Browsing through listings of homes for sale online is a good start, but it's difficult to get a feel for what the property is really like until you physically visit the home. Take lots of photos to remind you which homes had what features and inclusions.

Rule out any homes that don't meet your criteria checklist items and take careful notes of those that have potential. Soon you'll narrow down your list to a few likely homes that meet your needs and your budget.

8. Research the Neighborhood

When you've narrowed down your choices to one or two homes, take the time to visit the neighborhood at different times of the day and night. Take note of what the traffic is like and what level of noise you can hear at various times. Test-drive the commute to work and determine whether the location is still convenient for your needs.

9. Make an Offer

When you're confident you've found the right home to suit you, go ahead and make an offer. Be sure you use some common contingency opt-outs, including an appraisal contingency, inspection contingency, and add a clause to cover you in the event of losing your job before closing.

10. Schedule a Home Inspection

If your offer is accepted, ask your realtor to schedule a home inspection. It's also a good idea to contact your lender and submit your formal mortgage application for approval.

11. Conduct a Final Walk-through

During your final walk-through, double check that all your inspection contingencies have been met. Compare the current state of the property to any photos you took during your initial visit to verify there is no damage to the property and be sure all the appliances are still in place.

12. Close and Move In

When you've checked off every item on your First-Time Home Buyer’s To-Do List, it's time to close on the transaction and move into your new home! Congratulations! You’re a homeowner!

Before you head out house-hunting for your first home, study this list to be sure you don't miss any important steps. Then work your way through each step until you find the perfect home for you and your family. Most importantly, have fun!

To-Do List for First Time Home Buyers
By: Ken Gordon

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Three Things That Make A Great Real Estate Investment

If you’re looking into real estate investments, you likely want to earn wealth on real estate based on risk you are taking, while minimizing the amount of time you need to spend attending to the property. In order to accomplish this, you need to make some smart choices upfront when buying investment property. Your goal should be to strive to get as close as possible on as many of these optimal scenarios as possible:

Pays a Fair Cash-on-Cash Return

When you buy property you are taking money out of your liquid financial assets – stocks, bonds, CDs – and investing it into a very illiquid asset – real estate. You were earning a rate of return on your financial assets, such as 4 percent or 6 percent, and you should strive to earn a fair cash-on-cash rate of return on your real estate. To do this, you need to pro forma your deals and buy cash flow-positive properties that earn you decent returns – not those prize properties that are negative, negative, negative. For more guidance on this, see Smart Investing – A Tale of Two Townhomes.

Isn’t Too Risky an Investment
All real estate is extremely high risk. Development of real estate, land, Tenant-In-Common (TIC) investments, private real estate funds, fixer uppers, etc., all have much higher risk profiles than just simply buying a nice established cash flow investment property. In many of those investments, you will never see a dime of your money again because there are just so many things that can go wrong! So if you want to own real estate, consider simply taking fee simple title in your own name – or an entity you wholly own – to the properties you purchase. In addition, you must do the proper due diligence, analyze, test, review reports, etc., to make a lower risk real estate decision.

Doesn’t Require a Lot of Time or Managing
Some properties just require way too much time and management to make them smart investments. Examples include vacation rentals, low quality properties in bad areas, college rentals, etc. Nice boring properties rented for as long as possible to decent credit profile tenants seem to take the least time to manage. In addition, treating your tenants fairly and with respect goes a long way towards keeping good relations with them; and reducing your hassles when there is an issue you need to address. And believe me — there will be issues!

It’s the nice, boring, wholly owned, in good shape, cash flow-positive properties that are the best investments. They are out there for your picking, but it’s not as simple as finding a property on the MLS and buying it.

You need to do some hard work, research, read up, and make smart, educated decisions to acquire the best real estate investments!

REF: Leonard Baron, MBA, is America’s Real Estate Professor® – his unbiased, neutral and inexpensive “Real Estate Ownership, Investment and Due Diligence 101” textbook teaches real estate owners how to make smart and safe purchase decisions. He is a San Diego State University Lecturer, blogs at Zillow Z +3.22%.com, and loves kicking the tires of a good piece of dirt! More at ProfessorBaron.com.

Email Your Questions to: Leonard@ProfessorBaron.com

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

Thanks for visiting.  Be sure to check my web site for current listings.

http://kengordonrealestate.com

Ken Gordon Real Estate
The Secret Agent of Real Estate

RE/MAX Interactive Realty