Janis Peterson, GRI, ABR, CSP Realtor®
Philadelphia Main Line Homes and Real Estate
Montgomery, Delaware, and Chester Counties
Relocation Specialist
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Subject: Buying Your First Home May Be Easier Than You Think

Many first time home buyers wait for months or even years before pursuing their dream of home ownership due to fears that the process will be difficult or even impossible. With the help of a qualified real estate professional, you may find that buying your first home is easier than you think. These first time home buyer tips can turn that dream house into your house.

Check your own credit. All consumers have the right to request a credit report on themselves for a small fee. When you check your credit with a major credit reporting agency, review it for accuracy.
Report any discrepancies to creditors and request corrections. If you have serious problems, try contacting a non-profit credit counselor in your area to determine how to "repair" your credit.

Ask yourself what price range you can afford. While it is possible to purchase a home with little or no down payment, there may be advantages to making a conventional down-payment of up to 25% of the total purchase price.

Let's say you have searched every possible source and found $25,000 with which to make your initial purchase. On a $100,000 home, you may have closing costs around $5,000. This means you will have $20,000 left with which to make a down payment and that you will need to borrow $80,000.
If you are unable to make a sizable down payment, this will limit your options for financing somewhat and reduce the price range for which you might qualify.

Pre-qualify to determine how much you can borrow. Many first time buyers make the mistake of picking a home they want to purchase first and then trying to arrange financing later. While this seems like a logical approach, the system works better the other way around.

Before you shop for a home, you should make an appointment with a loan agent representing a single lender or a mortgage broker that can lead you to any of several lenders. Your lender will "pre-qualify" you for a purchase. The pre-qualification letter from your lender will tell you what price range you can afford based on the down payment you can make.
Later on in the process you can shop for a loan the way you would for a car or any other major purchase by comparing value. But for now, your pre-qualification will help you and your real estate professional find the home that is right for you in a value range that you can afford.

Select a real estate professional. As a first time buyer you'll want to work with a qualified real estate professional willing to help you find the home you want at a price you can afford.
Interview potential real estate professionals by asking questions about their company and what they are willing to do to help you make your purchase. Find out who your real estate professional owes allegiance to -- you or the seller. Ask about commissions. What tools do they have available to find a home that is right for you?
Make it clear that you want to be kept informed of all steps in the process and to be alerted if any problems arise. Above all, choose a competent and experienced real estate professional whom you trust.

Develop your wish list. Homes are almost as varied as people. They come in all sizes, shapes and colors. You should develop a personalized wish list to share with your real estate professional.
Some of your most important considerations will be price, location, size, floor plan, style, amenities and overall condition. How many bedrooms do you want? How important is curb appeal?
Your real estate professional should be able to help you develop this list and rank the importance of all factors according to your needs and desires. Make sure you think about future needs while being realistic about what you can afford.

Keep score. You can turn your wish list into a score sheet by assigning a point value to each of your criteria. As you view homes that seem to meet your major criteria such as location, price and size, keep track of the individual scores for each of your criteria.
Then total these individual scores to find an overall score for each home viewed. In the end, your final decision may be more subjective, but these scores will help you to keep a variety of factors in mind based on the importance they have for you.

Make them an offer you can't refuse. After you have seen a variety of homes that meet your major requirements, you should be prepared to act. Choose wisely. Have you evaluated the neighborhood, schools or other community benefits? What prices have been received for similar homes in the area? Is the home realistically situated for commuting, shopping and other needs?
If you are satisfied that you would be happy in the home, work with your real estate professional to make an offer. Don't let the fact that other offers have been received deter you. Buying a home that is in demand is a good sign for long-term value.
When you make an offer, be realistic and work within both your price range and that of the seller. You are in control. Ask for what you want by setting your own terms and making an offer that you can't refuse. If a counter offer is made, evaluate it carefully before accepting. Pay attention to details and ask your real estate professional to explain anything you don't understand.

Shop for the best financing. Numerous government and financial institution programs are available for first time home buyers. Ask your real estate professional about low down payment options through agencies like the Federal Housing Administration (FHA).

You are under no obligation to purchase from the lender who pre-qualified you. If you talk to other lenders, make sure you know their qualifying ratios. This will give you a good idea of whether or not you will be approved.
Be sure to evaluate points and other loan servicing fees as well as interest rates, the term of the loan and the total cost of home ownership. Think carefully about the advantages of fixed versus variable rates.

Remember closing costs. A common mistake among first time buyers is to forget the somewhat burdensome but necessary closing costs often associated with a loan. Occasionally buyers with excellent credit may be able to use loan proceeds to pay these fees but normally you will need cash, in addition to your down payment, to cover these costs.

While these tips are a useful general guide for the first time buyer, they are no substitute for the individual advice that a seasoned real estate professional can provide. The good news for first time buyers is that you are starting off the same way nearly everyone else did. The whole system works financially only if you succeed in purchasing your new home. Financial institutions, government agencies, loan brokers, real estate professionals and sellers all want you be successful in making your purchase. By proceeding with determination and confidence, your dream home could become your home in no time.

"Real Service in Real Estate." For a personal consultation on buying or selling real estate, Janis Peterson, GRI, ABR, CSP Realtor® can be reached at (610) 642-3744, e-mail: jp4re@pahomes.com. Prudential Fox & Roach Realtors® is an independently owned and operated member of The Prudential Real Estate Affiliates, Inc.

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