First Time Home Buying

Realtors, Mortgages, and Inspections

Oct 14, 2009

Buying a home can be a dream come true with the right real estate agent, mortgage broker, and home inspector.

Home ownership is a goal many people have. Not only does it offer a sense of stability, but it can be a great foundation on which to build wealth.

When buying a home, there are several areas prospective buyers must be cautious of. Among them are:

Choosing the Right Realtor

Many first time home buyers don't always know what to look for in a realtor. If they walk into a real estate office without an appointment, they'll get the next person in line for walk-ins, who might be great, and might not.

Great realtors often have much experience over many years. Ken Brandon, an office manager for Century 21 American Properties South in Jacksonville, North Carolina tells the realtors that work for him that "the quality is in the quantity," meaning that as a person has more practice over a shorter period of time, he will become more adept in the necessary skills it takes to sell homes effectively.

With this reasoning, a person taking clients out every Saturday and Sunday while working somewhere else during the week is much less likely to serve clients as well as agents who work in real estate exclusively.

Finding the Right Mortgage

First time home buyers in most states qualify for a first time home buyers program. It is best to research these programs rather than count on a mortgage specialist to be informed on every product on the market.

Mortgage brokers are not much different from real estate agents. Most times, they are commissioned sales people trying to make a fair income to support themselves and their families. Some are full-time while others are doing it on the side of another job.

They will be most familiar with the products that are easiest to move, and first time home buyer loans carry extra paperwork for the borrower as well as the lender with rates that are inflexible, leaving them to seem less attractive to some brokers

With conventional loans, brokers can make money up front by charging clients for lower rates, and afterward by selling them a mortgage with a rate that is above prime.

For example, Ted and Sharon are looking to borrow $100,000 to buy their first home. Their mortgage broker, Shawanda, sees that the prime rate for the day is 5%. The first time home buyer loan has that rate locked in while other mortgage products are determined by the broker and borrowers' negotiation.

Shawanda will present Ted and Sharon with a 6% mortgage that they can get down to 5.5% if they'll pay one discount point. One point on $100,000 is $1,000. They decide to get the lower rate. Shawanda earns her commission of $1,000 up front. When the mortgage goes through, the bank that is lending the money appreciates that she was able to sell her clients a loan that was half a point above prime. For her good work, they'll pay $500 afterward.

This up front fee and higher rate could have been avoided had Ted and Sharon looked up first time home buyer rates and loans on the Internet before seeing a broker.

Home Inspections Can Save a Lot of Headaches Later

Once a buyer has had an offer accepted on a house, an inspection is usually done at his expense.

The home inspector's job is to find the home's faults and report them to the buyer. The buyer will then have his realtor present an offer with problems that must be addressed, such as out-of-date wiring, leaking faucets, or holes in the walls or ceiling.

Once the seller agrees to make certain changes by a specific date, the process moves forward. However, it is still up to the buyer to ensure the changes are made to an acceptable standard. For example, if something is done poorly and no follow-up inspection is done, then the work performed may be believed to have been done to the buyer's satisfaction.

A second home inspection may bring to light that the seller is in breach of his contract, which would warrant refund of the earnest (good faith deposit) money put down when a price was agreed upon.

When it comes to buying a first home, there are so many things to worry about between credit scores, down payments, and local schools that a realtor with a lot of experience is too important to bypass. A professional realtor will want to refer her clients to an honest mortgage person and a home inspector that will find what a first time buyer wouldn't know to look for.

The copyright of the article First Time Home Buying in First Time Home Buyers is owned by Christopher Pascale. Permission to republish First Time Home Buying in print or online must be granted by the author in writing.