This is a guide for all first time home buyers. It will help you know where to start and when to start.
1. Figure Out How Much You Can afford.
Have you heard the saying, "House Poor?" If you haven't, it means that all your money is going towards your house payment. You want to be able to afford a house comfortably. Figuring out your mortgage payment is not just the only thing to calculate. You also need to plan for home owners insurance, mortgage insurance, and extra utilities that you normally don't pay for when renting. Here is a mortgage calculator to help you see what your payments would be. http://www.mortgagecalculator.org/
Also this Rent Vs. Buy Calculator will help you know the benefits of owning vs. renting. http://realestate.yahoo.com/calculators/rent_vs_own.html To help you see
The general rule of thumb is that if you dont have much other debt, then you can buy a home 4 times the amount of your annual income. Ex. if your annual income is $50,000 a year then you can probably afford a home for $200,000.
2. The Down Payment
Saving up for your down payment is also a must to buy a home. Check with Utah lenders for current loan down payment options. Usually 3 and 1/2 percent of the loan amount is all the down payment you need. But currently in 2010 in Utah there has been 2 different options for people to get into homes w/ NO MONEY DOWN.
Remember a few things. If you can only buy a home with no money down, then you may be running a risk of not being able to afford it. Also note that the more money you put down, the lower your mortgage payment is going to be. And no money down loans usually have restrictions on where you can buy.
3. Start Your Internet Utah Home Search
Steps 3 and 4 are interchangeable. But it is important to start getting a feel for where you want to live and what prices are going to be in the area. The easiest way to start understanding what is a good deal is by comparison research. Compare the price and the square feet are the two simplest ways to tell value. But other features like the condition, location, and amenities will also be key factors in your decision. Once you are familiar with what is out there then you are almost ready to start going house hunting.
4. Get pre-approved for a loan.
Getting pre-approved for a loan is when you meet with a lender and figure out how much of a loan you can obtain. This will help you to not waste your time with homes that are out of your price range.
5. Choose an Utah Real Estate Agent and start looking!
Choosing a Realtor is one of the most important decisions you can make. This is after all probably the biggest financial investment you will make so far in your life. The main jobs of your agent is to make sure you get a great deal on the home, protect you in the transaction and make everything run smoothly before and after buying your home. Not all Realtor are the same so choose wisely and consider some of these guidelines for your Realtor to meet.
- Does the agent have an active real estate license in good standing? To find this information, you can check with your state’s governing agency.
- Does the agent belong to the Multiple Listing Service (MLS) and/or a reliable online home buyer’s search service? Multiple Listing Services are cooperative information networks of REALTORS® that provide descriptions of most of the houses for sale in a particular region.
- Is real estate their full-time career?
- What real estate designations does the agent hold?
- Which party is he or she representing--you or the seller? This discussion is supposed to occur early on, at "first serious contact" with you. The agent should discuss your state's particular definitions of agency, so you'll know where you stand.
- In exchange for your commitment, how will the agent help you accomplish your goals? Show you homes that meet your requirements and provide you with a list of the properties he or she is showing you
Some buyers think that if they dont have a Utah real estate agent that they can save on commission. While this may be true, let me suggest a few reasons why this may not be the best idea when considering the whole picture. If a listing agent charges a 6% commission, usually he will take 3% and give the other 3% to the buyers agent for bringing a buyer. When a buyer doesn't have an agent then the listing agent can take all 6% give some money back to the seller or give some money back to the buyer. What most buyers dont realize, is that they are not the only ones that want more money! The seller will want some and so will the agent if he/she is doing double the work. So lets say the agent is willing to give the buyer 1-2% on a 150k home that could be $1,500-3,000 thats a lot of money. The first thing to think about is, if the listing agent represents you and the seller, he will most likely take some of that money for himself. He will want to make sure the deal gets done, so he may not give you the best advise. Is he looking out for your wallet? The sellers wallet? Or his wallet? Now lets say he is a great agent he is looking out for you and you get the home for 145k. Now ask yourself , "What if another agent could of helped negotiate the property lower?" If you would have chosen an agent and he helped you get the property for 140k and he was paid a commission then which was the better deal? Its obvious the 140k price is better than 145k w/ a $1500 bonus. In a declining market it is paramount that you have an agent that represents you and fights hard for your home value and makes sure your buying a well built home. You can not afford to buy a home overpriced in a tough real estate market.
6. Apply for Free Grant Money.
Did you know that several cities have grant money for people that buy homes in their city?
Likewise Federal and some States have credits as well. Click here to see if you qualify.
7.Under Contract /Closing/Closing Costs.
Once you have found the perfect home and you have written an offer that the seller has accepted then you are officially "Under Contract" This period of time in Utah is usually 30 days from acceptance. You will have several days to have the home professionally inspected, get the appraisal done, (Your Utah lender will order that) once everything is to the buyers satisfactory and the loan is done, then all you have to do is sign, and bring your down payment and closing costs. Closing cost are all the fees a buyer pays to the lender, appraiser, title insurance, and prepaid items. A good rule of thumb is to plan on bringing in about 3% of the purchase price worth of closing costs. Most first time home buyers ask the seller to help pay for some of their closing costs. (This must be agreed upon prior too closing in writing.) This will help free up a some extra money so that you can have a bigger emergency fund.
You go to the title company w/ your money and sign a bunch of closing papers and then the home is almost yours! haha. You then have to wait 1-3 days for the funds to be transferred from the lender to the title company to the sellers title company. Once that is done, your title company will "Record" your home with the county and its all yours!
Here is to YOUR great Utah home buying experience!