Buying Your First Home

Buying your first home in a depressed housing market is much the same as for any other market. A real estate market is considered to be depressed when there are more sellers than there are buyers. Sellers in this type of market may make some adjustments in the price or other concessions to complete the sale, but your basic guidelines, as a first time home buyer, should remain the same. Here are some tips that will help you to know what to expect as you go through the process:

Contact a lender to receive pre-approval for a loan

This will give you a price range for homes that you should be looking at, and also add more clout to your purchase offer when you submit it. There is no sense wasting your time and effort looking at $400,000 houses, when, realistically, you can only afford $200,000. Checking with the lender early can also allow you to clear up any credit problems ahead of time.

Compare Mortgages

There are so many different types of mortagages available right now that you need to have your lender explain what is available to you. Though interest rates have dropped in recent weeks, the criteria to obtain a loan has been tightened. Ask the lender to explain to you, in detail, the difference between a fixed rate loan, and adjustable rate loan, and interest only loans. Then you can make an informed decision as to what is right for you.

Choose a Realtor

Ask your family, friends, co-workers and neighbors to recommend a realtor they may have worked with on their home purchase. Most will be more than willing to recommend someone that they trust and did a good job for them. Remember, the realtor you choose works for you. The seller pays the commission, but your realtor has the legal duty to work in your best interests. They are experienced with the buying and selling process and know how to work through any problems you may encounter while purchasing your first home. You are doing this for the first time. The realtor deals with it daily.

Find a Home You Like

Work with your realtor to make him or her aware of the type of house you have in mind. Do you want a low-maintanence exterior? Garage? Fenced yard? Basement? 2,3, or 4 bedrooms? Single floor plan or two story? If you already have a specific neighborhood picked out, your realtor can search all possible listings that match your criteria. If you are not sure, ask the realtor to show you homes in different neighborhoods until you find the one that feels right for you.

With the multitude of information listed on the internet these days, you can do your own search for a home without using a realtor. Just remember that you will have to do all the legwork yourself, including contacting the seller for a viewing of the home, negotiating a selling price, obtaining a title company to handle the closing, and locating an inspector to check out the property. If you are working with a realtor, he or she will handle these details for you.

Make and Offer

After you have found your dream house, it's time to make an offer to purchase. This is a binding contract between you and the seller. You will be expected to put up "earnest money", which is a sign of good faith that you will complete the purchase. This will be deducted from your down payment at the closing, so you are not just giving away the money. Make your offer subject to an inspection of the property, acceptable to you, before the acutal sale is committed. In a depressed market, the seller may be willing to accept a lower price or make other concessions to sell the house (such as paying all or part of the closing costs or providing a 1 year home warranty on the property).

Have a Whole House Inspection

Hire a reputable inspector to thoroughly inspect all areas of the house. They will be able to determine that all systems are or are not operating properly or are in need of repair, and can alert you to any problems that may arise in the near future. If there is a serious problem you can request that the owner fix the problem before you buy the house, which he may, or may not do. If he won't, it's your choice whether or not to continue with the contract.

Closing the Deal

If everything checks out with the inspection and you are satisfied with the contract, your lender will prepare the documents needed to transfer the property from the current owner to you, and set up a closing date. After the closing, the property legally belongs to you, and you have just purchased your first home.