Home Buying Guide: Buying Your First Home

Home Buying Guide - Buying First Home

After just buying my first home (no, not the one above), I thought I’d provide some tips to anyone else out there looking for a home right now. This is the story of my experience of buying a home, but I tried to make this a helpful home buying guide for first time home owners.

First of all, Michelle and I just started randomly searching websites such as HudForeclosed.com. For us, I think it was a great place to start, because we weren’t ready to have the pressure of a real estate agent yet and didn’t want to feel like we were wasting the agents time either.

Searching for homes first also gave us a lot of time to prepare before meeting with an agent.

We were able to find homes we liked, in neighborhoods we liked and a much better idea of what kind of homes we could get in our price range.

So once we had all of this information together, we decided to find an agent. This can be tough, but from my experience it’s not a great idea to go with a friend of a friend, unless of course you know that he’s a good agent. Do a little research before you choose.

We couldn’t get our guy to show us any houses at all. Michelle actually bumped into Scott and Amber or “The Meadows Team,” who do real estate in northern Colorado, while she was out looking at houses by herself.

They started a conversation and Michelle knew that these were the two who were gonna find our new house.

So we fired the other guy which also caused a bit of drama because like I said earlier, he was a friend of a friend, but we realized that something as important as buying a new home had to be done right. We hated to waste the guy’s time, the little of it he gave us, but we had to think of ourselves in this case.

So now we had some good real estate agents, who also hooked us up with a lender they preferred to work with and things finally felt like they were moving forward.

From talking with Scott and Amber, we realized that buying foreclosured homes and HUD homes aren’t really different from “For Sale By Owner” homes, which is definitely something you need to know. Michelle and I both had a misguided perception of both of these types of homes.

Here’s the difference:

For Sale By Owner: Exactly as it sounds and can often be very time consuming depending on the owners accepting the offers and getting things in order

Foreclosures: These are bank seized homes that the previous owners couldn’t make payments on. These homes can be very nice, but sometimes the previous owners neglect or even purposely destroy the house knowing they won’t be living there anymore.

HUD homes: HUD homes are exactly the same as Foreclosures except that they are homes that were foreclosed on while the owner had an FHA loan. Not sure on the details of the loan, other than that’s the kind of loan I got. Oh yeah, and you can get a HUD home with only a $100 down payment.

Short Sale: Short sale homes are homes that are usually up for sale, but can take forever to get. We were told by our real estate agent that these are usually best avoided. What happens is, that the owners put it up for sale at a great price, get people to come in and then wait for the best offer. This can take months and sometimes even longer than a year. Whatever price you see on these homes, you can expect to pay a lot more. Just avoid them unless it’s a house you absolutely love and have to have.

So once we knew what the differences were, we decided to stick with only HUD and foreclosed homes because they were the cheapest and we could get a much bigger house in our price range.

We only had to search the internet for these homes for a short while. We would gather up the homes we liked and take recommendations from our agents and then check them all out each day after work.

There were some foreclosures that we’re really bad. I guess when someone finds out they’re losing their home, they aren’t usually very happy about it and oftentimes take it out on the house.

We would find huge holes in the walls, completely destroyed carpet, and two homes we looked at smelled like urine so bad we couldn’t even go in.

But then we found a great place in Thornton. We loved it.

We visited it twice and then put down the contract for it, the $1,000 earnest check and waited for the inspection, which I think is required by the lenders. We also decided to hire a sewer inspection as well.

The inspections came up bad.

The house looked great at first, but closer inspection showed a ton of things wrong. The roof needed repair, there was a leak in the bathroom that destroyed the inner walls and even damaged part of the garage. Because of these and many other little issues, we decided to cancel the contract, get our earnest check back and search some more.

This is why I’ll always recommend to everyone that they get a complete inspection of a house before buying it. You never know what might be wrong and the inspectors search every little square inch of the home.

About a week later, we found another great house. It was a 4 bedroom, 2 1/2 bath, partial basement, huge yard and built in 2004 so it was relatively new. We put the contract down immediately.

Again, we awaited the inspection…

And much to our relief, everything came back great!

We signed the large stack of papers from the lending company and the paperwork for the title and we got our keys.

We got a home at a 4.85% interest rate (lowest in 30 years) and a 30 year fixed loan. This is definitely affordable.

One word of note also; If you receive money from someone to help pay for the house, you better document everything.

I borrowed some money from my brother for the down payment, which we had to call a “gift” and I guess receiving money as a gift isn’t something the loan companies like. They want to make sure that the money you got isn’t another loan from somewhere or someone else. You have to show every possible document you could ever imagine to prove who gave you the money, where they got it from, when they gave it to you, bank receipts, etc. so you better save any paperwork you have.

So anyway, once you get a new home, there’s a few things you’ll need to do immediately

– Change the locks
– Get the water turned on
– Get the electricity turned on
– Get the gas turned on
– Set up mail forwarding
– Set up trash service
– Call the cable and internet company

Everything except cable and internet will usually go through the next day. You might have to wait a couple weeks for the cable guy to come out so you might even want to consider making an appointment before you even get the house and cancel if the deal falls through for some reason.

I hope this long, long story can help you in some way during your own house search, and if you have any tips of your own, post ’em in the comments below.

Feel free to ask any questions also, and I’ll do my best to answer them.

Happy Home Hunting!

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