first time home buyer guide

As you begin the exciting journey towards buying your first home. We have put together a comprehensive list of “Ten Important MN First Time Home Buyer Tips” below:

• Realize that buying your first home, condo, townhome, it is a process. Take it slowly. Our team is a firm believer in first, gathering information. With that in mind, our team offers free First Time Home Buyer Class each month in Bloomington. At this seminar, we cover so many of the important aspects of buying your first home.

• Next, as you begin this process of looking to buy a home, meet with a lender/loan officer and work with him or her in getting pre-approved to purchase a home. By exploring just exactly what your buying power will be, you will then be able to determine what area, type of properties, and price ranges to look. So many first-time home buyers unfortunately make the mistake of getting out to look at homes first before getting prequalified. This can definitely create frustration for you as a buyer without knowing exactly what price range of home you should be looking at.

• As you meet with the lender, you may determine right now is not the right time to purchase. Perhaps it is an issue of income or assets. Perhaps there are some minor issues with credit. Don’t worry. Simply by taking the step to meet with a lender to see where you stand, you are taking a great first step towards buying your first home. In spite of some of these “bumps” in the road, we work with buyers helping them explore solutions. As an example, for tougher credit, our team works with lenders and companies who can help you improve your score. Even if you are not in the place to purchase right now, we can work with you to help you get your credit score to the level needed to purchase. Also, as you look to meet with a lender/loan officer, look for one that has knowledge in all of the various special first-time home buyer financing options

• After determining what amount of home you can afford and price range you are looking to purchase, it is crucial to meet up with a top realtor. It is important to work with a hard-working, honest, full time agent. Someone who has your best interests at heart, and someone who will not be pushy. Our team really prides ourselves on working with our first-time home buyer clients on their timeline, not ours. At this meeting, we are going to go over your list of needs versus wants. Really narrowing down what you need to have in a home is crucial. This will allow us as your agent to set you up with a search on the actual MLS system for properties that meet you criteria. Only a licensed Realtor has access to the actual MLS. And we always enjoy setting up setting up searches for our clients at that first meeting based upon their needs versus wants.

• You will begin receiving daily emails showing you all of the various listings that meet your criteria you desire: location, price range, beds, baths, certain amenities, style of home, etc. As you look over these emails with the lists of properties, start picking those properties that you would like to physically take a look at. And yes, now the fun starts! It’s time to start looking for homes. As a buyer, it makes the most sense to only look at homes that fit your budget. This may seem obvious, but as a buyer it can be tempting sometimes to look at homes more expensive than what your budget may allow. We also recommend: don’t look at too many properties in any given outing. We have found for many buyers: once you look at 3 plus properties in a day, one starts blending into the next. More in one day is not always better. However, get comfortable with the process and with what you do and do not like about the homes.

• As you are looking at these homes with your agent, find what you do and do not like about the properties. And of course, realize that there probably will not be the “perfect” property. However, when looking at your list of needs versus wants, our goal for you as your agent is to help you get all of those “needs” in the property you have found. It is important as well to think of the resale value of a property versus just an emotional purchase. For example, things that can make resale of a home more difficult: properties on a busy road or a home with no backyard. Once you find a home that you like, you will begin the process of making an offer. Most importantly, you as the buyer always decide what to offer. But many clients ask, “How do I know what to offer?” As your realtor, our job is to send you similar comparable sales that have closed in recent months. By you seeing the prices of other similar properties, you are then able to determine what is a fair price to offer. When you do offer, don’t hesitate to ask the seller to pay some of your closing costs. This will reduce what cash you will need to bring to closing to purchase the home.

• As we present your offer to the seller, there are only three responses the seller can give: accept your offer, reject, or counter. Eventually, when an agreement is reached between you and the seller, your earnest money check that you wrote with the offer will be cashed by the seller’s real estate brokerage. At this time, we then set up a time for you to do a home inspection. At this inspection, you will be given an opportunity to look more closely at the home with a home inspector of your choice. Our team has worked with and can recommend two to three top home inspectors, but it is always your choice on who you want to hire. Cost is anywhere from $300 to $500 for a home inspection. After the home inspection, you will receive a detailed list showing you the results of the inspection. You and your agent can then review this list to see if there are items you as the buyer want to ask the seller to fix. This is another point in the negotiation process where you can either back out of the transaction entirely based on the inspection (and get your earnest money returned to you), or ask the seller to fix specific items. The seller of course does not need to agree to fix the items you request. And if no agreement is reached post inspection, a cancellation of purchase agreement is signed. However, if no items are requested to be fixed, or when buyer and seller agree on the inspection to do items, now all parties move forward to closing.

• During this time period, it is important to not make any large purchases or do anything that could negatively impact your credit. Realize that the buyer’s credit score will be checked right prior to closing. If anything has changed negatively during this time, the loan officer can deny the loan at the time of closing.

• In addition, as you move forward towards the day of closing, you will need to get homeowners insurance on the property. Our team works with two outstanding insurance agencies that can be sure to give you your various options for home owners insurance. And be sure to leave some extra funds available for possible moving expenses, maintenance and repairs as you get ready to move into your new home. Putting every last penny into your down payment at closing can leave you cash poor and without the proper resources in case something needs to be fixed.

• It’s the day of closing! Time to do a final walkthrough with your agent to ensure that the home is in the same condition as the time of writing the purchase agreement. Provided that things are ok, you now move to closing. At closing, there is whole bundle of papers that you will sign: mostly your mortgage documents that you too will receive a copy of. On the day of closing, your loan officer will also let you know what amount of money is needed for you to bring to close. Generally, a cashier’s check (not a personal check) is needed for the funds needed to close the sale.

• Congratulations! You have now finished signing all the documents, and your agent hands you the key and garage door openers to your new home!  It is now time to move in and enjoy your First Minnesota Home!