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Home Buyers Reveal: 'What I Wish I Had Known Before Buying My First Home'

Home Buyers Reveal

Love. Terror. Giddiness. Teeth-gnashing desperation. Buying your first home involves all these emotions, and more. And like so many other milestones in life, you won’t fully understand it until you go through the process yourself.

In an effort to clue you into some of the challenges you'll face as a first-time home buyer, we asked some folks who've already gone through the ringer to spill what they wish they'd known earlier that would have saved them a ton of time, effort, and tears. Here's to hoping their 20/20 hindsight will help pave your own path to homeownership.

Even if a home looks 'perfect,' it has problems

First-time home buyer Hunt Ethridge fell hard for a recently renovated house in Jersey City, NJ, which looked like it was in absolutely perfect condition. What could go wrong?

The home inspection, that's what.

"My home inspector found a laundry list of issues," Ethridge says. "He pointed out that the hardwood floor had been lacquered without sweeping, so dirt was sealed into it. Kitchen appliances were broken. Some windows were missing caulking. Worst of all was an old underground oil tank."

After recovering from his shock, Ethridge used this info to renegotiate a lower price with the home sellers. He is grateful he didn't pass on the home inspection and urges all home buyers to never skip this step.

“The last thing you want to discover after you buy is a major problem that could have been identified early on,” he says.

The takeaway: No matter how nice a home looks, a home inspection is the only way to make sure you aren't buying a lemon, says Jane Peters, broker and owner of Home Jane Realty in Los Angeles. “You don’t have to ask the home seller to make repairs,” she adds, “but you do need to know whether you should proceed with the purchase or not.”

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Step away from the computer

Jonathan Cooper and his wife had a baby on the way, so they were ready and raring to buy their first home in Royersford, PA. They spent hours scrolling through real estate listings and Googling questions such as "how much home can I afford?"

This was all well and good, but at some point, a mortgage broker gave him some sage advice: "Stop Googling, move away from the computer and into the real world.”

Sure, online surfing and research serve a purpose, but if you're serious about buying a home, “it’s not until you get pre-approved for a mortgage that the home-buying process gets real," Cooper points out.

The takeaway: “You can’t get pre-approved by plugging in simple numbers on a mortgage calculator,” Peters says. “You need an experienced lender who will take a detailed history and require documentation of your assets and income. This is the only way you'll establish if you qualify for a mortgage and for how much.”

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Never miss a deadline

When Steven Mingilton and his brother found the perfect condo in Denver and their offer was accepted, they wanted to celebrate. However, their lender informed them that the closing process would take about two months. "And within those 60 days, we had a hefty to-do list,” Mingilton says.

Mingilton and his brother struggled to keep up with the copious paperwork and nearly missed an essential appointment to complete their loan.

“We had to beg and plead our case," Mingilton remembers. "Thankfully, we were able to hustle and finalize."

The takeaway: “Buying a home requires you to stay on top of your to-do items, especially during the escrow process where there may be penalties for missing a deadline,” says Peters. “Prime among this is the three-day requirement to send in your deposit. Miss that and you may miss out on the deal.”

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Choose a lender you like

Newbie home buyer Aaron Norris loved the real estate agent who helped him find his Riverside, CA, residence, but his lender was a “total jerk."

"I couldn’t believe how disengaged and unprofessional he was,” Norris recalls. “He wouldn’t return emails or phone calls in a timely manner. He dragged his feet on a transaction that required speed, and he simply did not communicate."

Although everything worked out OK in the end, he regrets not shopping for a lender he liked: "I felt like I was working for him and that he was not on my team."

The takeaway: “A lender can make or break a deal, so choose wisely,” says Peters. “One of the main things to look for besides the loan rate is the responsiveness of the lender. They need to move fast or the deal may fail."

Here are some questions to ask mortgage lenders to help you decide which one is right for you.

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Summon reserves of patience

While hunting for their first home in Omaha, NB, Jordan Bath and her partner put in several offers on different properties—all of which fell through.

“At the time, it was a major disappointment,” she recalls. Their real estate agent kept advising them to be patient. Sure enough, after a year of losing out on properties, the perfect home fell into their laps.

“Our agent overheard a contractor mention he was doing work on a house in our dream neighborhood,” Bath recalls. “She asked him for the address and seller’s information, and we were able to purchase the house without it ever hitting the market.”

Now, Bath says, they can look back at those frustrating “misses” and realize “they weren’t meant to be.”

The takeaway: It’s tough not to get disheartened while house hunting, says Peters. “Competition is fierce, and you need to prepare yourself for the long haul.”

You may need to adjust your criteria so more possibilities are opened up. In the meantime, “keep making those offers,” Peters says. “One of them will get accepted.”

8 Real Estate Documents to Keep—and What Happens If You Don't

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So, of the hundreds of documents you’ll encounter during the home-buying process, here are the ones you should keep—and why.

1. Buyer’s agent agreement

When you choose a real estate agent, you sign a buyer’s agent agreement—a contract between you and the brokerage, stating that the agent represents you in the purchase of your home.

This agreement outlines the terms of the relationship with your agent—including who pays the agent’s commission (in most cases, the seller), the length of the agreement (90 to 120 days is standard in most markets), and the terms for terminating the agreement.

Why you should keep it: This contract spells out what services your agent agreed to provide you with—and it can come into play if you have an issue with your agent after the transaction closes.

2. Purchase agreement

Every home sale starts with a real estate purchase agreement—a legally binding contract signed by home buyers and sellers that confirms that they agree upon a certain purchase price, closing date, and other terms.

Why you should keep it: The provisions stated in this contract must be followed to the letter. If you or the seller fails to fulfill these duties, there could be legal ramifications.

3. Addenda, amendments, or riders

These types of documents alter or amend the terms of your purchase contract. For example, if a survey reveals that there’s an encroaching fence built by a neighbor, and you’d like the fence removed, the sales contract has to be formally amended.

Why you should keep them: Addenda, amendments, and riders are often related to home inspections or appraisals, and because they change the original terms of the signed contract, they’re worth holding onto.

For instance, if both parties signed a repair addendum, where the seller agreed to make certain repairs based on the home inspection, you’ll need this addendum if you find issues with the repairs down the road.

4. Seller disclosures

Sellers are required by law to disclose certain problems with the home, both present and past, that they're aware of that could affect its value. While laws vary by state, these disclosures might include lead-based paint, pest infestations, and renovations done without a permit.

Why you should keep them: If major problems crop up with your home after you move in, these disclosures can be the basis for a future lawsuit against the seller. If you lose them, you might have trouble holding the seller accountable in a court of law.

5. Home inspection report

After your home inspection, your inspector should produce a report with detailed notes on the condition of the home and any potential problems.

Why you should keep it: This document is an extremely detailed list of everything that the home inspector finds, and it typically includes photos of problem areas. By keeping this report, you’ll have a record of any repairs that you may need to make to the property in the future.

6. Closing disclosure

Mortgage lenders must provide borrowers with a closing disclosure (also called a CD) at least three business days before settlement. This document spells out things such as your loan term (typically 15 or 30 years), loan type (a fixed-rate or adjustable-rate mortgage), the interest rate, and closing costs, among other financials.

Why you should keep it: Your CD is an itemized list of all the costs associated with closing and your mortgage, and it’s important to have for future reference. It’s also the document you’ll need when you go to file your taxes, since you can take deductions for things such as mortgage points.

7. Title insurance policy

Title insurance offers protection against any competing claims to a home. As part of the process, the insurer will run a title search of public records, seeking loose ends such as liens against the property or fraudulent signatures on ownership documents.

Why you should keep it: You’ll need this document in the event another party, such as a previous owner, tries to claim the property. Note that there is separate title insurance to cover lenders versus buyers, and you would do well to get a policy for yourself.

8. Property deed

When you take title and become the sole owner of the property, you’ll receive a deed—a legal document that confirms or conveys the ownership rights to the home, says Anne Rizzo, associate vice president of Detroit-based title insurance company Amrock.

"It must be a physical document signed by both the buyer and the seller," Rizzo says.

Typically, the property deed is mailed to you after the title transfer documents are recorded in your county’s public records office.

Why you should keep it: Presenting a property deed is the only way to show someone you legally own the home you’re residing in. Because the deed is sent to you directly, neither your mortgage lender nor title company is required to keep a copy of it.

Terrified to Buy a Home? Your Top Fears Debunked

By Margaret Heidenry | Oct 25, 2016

You wake up in a cold sweat. There’s something lurking in the dark, visible by flickering computer light. Something’s haunting you. It’s… the real estate listings! Deep down, you’d love to own a home, but whenever you take steps beyond idle window-shopping, a chill runs up your spine, and paralyzes you from moving ahead. We get it—you’re about to make a life-changing purchase, and you’re spooked. The main thing that home buying has in common with horror flicks: The fears are (mostly) mere figments of your imagination.

So in case you’re harboring some heebie-jeebies, here are some of home buyers’ top concerns—tackled head on so you know what you’re really dealing with.

Fear No. 1: ‘I’m afraid I can’t afford a home’

Some house hunters are possessed by worries that their entire savings account will get sucked into a black hole if they buy. Then they’ll never be able to afford vacations, or new clothes, or food beyond beans and rice or mac ‘n cheese ever again.

The reality: Depending on what and where you’re buying, you’re not likely to drain your savings account, according to Bill Golden of RE/MAX Metro Atlanta Cityside. “There are many loan programs out there that can help first-time home buyers with down payment assistance,” says Golden, “or that don’t require a severed arm and leg in order to get a mortgage.”

The best way to determine how financially ready you are to buy a home is to talk to a loan officer. Alternatively, you can also enter your income, debts, and other info in realtor.com®’s home affordability calculator, to see exactly how much you can afford to spend on a home without going broke.

Fear No. 2: ‘I’m worried I won’t be able to buy a home I actually like’

The current economic climate may lead some buyers to believe that buying means they’ll end up living in a version of a “Saw” movie set—a windowless pit with exposed plumbing. (Without the severed limbs, however.) Fact is, interest rates are low, allowing homeowners to snag a great deal and pay less over the course of their loan. “Also, with the economy being in a downturn, many fantastic properties are being sold for under value,” says Tyler Ferguson, owner of Stone Reinvented.

Fear No. 3: ‘What if I buy a money pit?’

We’ve all seen that movie of the same name where Tom Hanks‘s life and bank account are shredded, thanks to a rapidly disintegrating old house. But hey, that’s just a movie—most houses aren’t money pits, and even if there are potential issues lurking in the shadows, like a leaking pipe, you can do plenty to protect yourself. Before the sale, “hire a good home inspector,” says Green. He or she should be able to see signs of water damage, or any electrical and plumbing red flags. A home inspector will also advise you on potential repair costs, which can provide leverage for you to go back to the sellers and lower the price you pay.

Fear No. 4: ‘I’m worried I’ll overspend’

The asking price for a house may seem like an unholy amount of money. But keep in mind, that’s just what the sellers are asking for—what they get could be a totally different picture. Your Realtor can help guide you to a realistic offer. “A good agent will know the price points of the areas you’re targeting and can back them up with historical data and comps,” says Crystal Green, a Manhattan real estate agent for Level Group. Since you can search the prices of homes that recently sold in any area, it’s easier to find out what the neighbors paid and gain better insight before you place an offer.

Fear No. 5: ‘I’m leery of buying during an election year’

A presidential election year makes many buyers want to hide under the covers until Nov. 8 when the political curse lifts—especially this year. “Everyone talks about uncertainty during campaign season,” says Green. But think about it: Unless you’re one of those people who really will move to Canada if so-and-so becomes president, will the election actually affect where you choose to live? “If you’re fairly confident that you’ll remain in a home for three to five years, you should net a profit at resale,” says Green.

Fear No. 6: ‘It’s just safer to rent’

Sure, renting means you aren’t trapped in one place, as you are with homeownership. Yet for Scott Forman, divisional vice president of Cross Country Mortgage,” rent money disappears without allowing you to build any equity over time. That’s truly scary.” He estimates that by paying about $100 a month more, many renters could own their own home—and receive tax deductions. If in doubt, use a rent vs. buy calculator to crunch the numbers and see whether it’s renting or buying that wins out in your area.