First-Time Home Buyer FAQ
1. What is a buyer’s agent, and how can they help a first-time home buyer?
A buyer’s agent is a trained representative that can research public records on the property in question, assess the value of the home, gather information on the neighborhood; i.e. crime rate, the proximity to fire departments and police stations, schools, churches, shopping centers, freeways, etc., help to write an offer and assist with negotiations, and make home inspection arrangements. A buyer’s agent is especially useful for first-time home buyers, providing information on funding options, such as government grants for first-time home buyers, researching the availability of loans, and making mortgage arrangements with a suitable lender.
2. How does a first-time home buyer calculate an affordable mortgage?
First-time home buyers should not even begin their home search until they determine how much they can afford for a home, and have this amount confirmed through a pre-approved loan by the lender. In order to calculate how much of a mortgage payment a first-time home buyer can accomodate, a lender will often utilize a mortgage calculator. Mortgage calculators are designed to help home buyers determine their monthly payments, and to measure the effect of principal prepayments. They also enable home buyers to determine a best rate home mortgage based on the amount to be mortgaged, the term of the mortgage, and the interest rate. Other factors include points, down payment requirements, maximum allowable ratio of house expense to income, and the buyer’s current debt.
3. What do I need to consider about a property when buying a home?
There are many things to consider about a property before signing a purchase contract and making the investment. Check to see if the house is in a low-lying area, in a high-risk area for natural disasters; earthquakes, hurricanes, tornadoes, etc., or in a hazardous materials area. Consider local zoning laws, easements, and other restrictions that could affect remodeling or making additions in the future. Find out if the property is located on a flood plain, as most lenders will require flood insurance before funding, and if there is existing airport noise, plans for future highways built near the home, or other factors that could affect appraisal value. Also, consider the cost of insurance when looking for a home; newer homes and homes constructed with materials like brick tend to have lower premiums.
Sellers are legally obligated to disclose information about the property such as encroachments, repair issues, material defects such as mold, pests, or lead based paint, and existing liens on the property, but since legal requirements regarding disclosure vary by state, it is best to hire an independent home inspector to confirm any physical problems, and a qualified real estate attorney to research any property liens or title discrepancies in order to protect the financial interests of the buyer.
4. Should I hire a home inspector before making an offer?
Yes. Sellers are required to disclose information regarding property defects, but these disclosures can often be inaccurate and misleading in order to protect the interests of the seller.
A home inspector can evaluate seller disclosures to confirm their accuracy, and to inspect the home for other defects that the seller may not even be aware of. Such areas of testing include: the electrical system, plumbing and waste disposal, the water heater, insulation and ventilation of the home, the HVAC system, water source and quality, the potential presence of pests, mold, radon gas, asbestos, or lead based paint, the foundation, doors, windows, ceilings, walls, floors, and roof.
A buyer may also include an inspection clause in the purchase contract when negotiating for a home. An inspection clause provides a way to cancel the sale of the home if serious problems are found, requires the seller to fix said problem(s) before committing to buy, and/or gives the buyer the right to renegotiate the purchase price based upon repairs needed.
5. Does a first-time home buyer need an attorney when buying a home?
Although some states require attorney assistance in certain aspects of the home buying process, such as closing procedures, it is recommended that a first-time home buyer hire a real estate attorney to assist in all areas of the process. A qualified attorney can review the purchase contract and all applicable legal documents, assist in property disclosure clauses that protect buyer investment, and research the property chain of title. Although a buyer’s agent can help the buyer with property research and other home buying aspects, a buyer’s agent is not an attorney, and cannot give legal counsel, or has clearance to protected legal files.
Buying a home is a legal transaction involving a number of lawfully binding issues that a first-time home buyer needs to be made aware of. If you are a first-time home buyer seeking legal counsel before purchasing your home, or if you have bought a home and are experiencing legal issues regarding the purchase contract, please contact our law firm to get the legal help you need with your real estate transaction.