10 Things You Must Know Before Buying Your First Home

10 Things You Must Know Before Buying Your First Home

Before buying your first home, you must know how to protect yourself by learning important legal requirements and rights. Even before you sign a contract, there are many steps you need to take to ensure you’re safe from liability or seeing a dream home turn into a nightmare!

Follow these 10 steps and you’ll set yourself up for success as a first-time buyer!

1) Mortgage Pre Approval

Every first-time home buyer should first get preapproved for a mortgage. It’s advised that you do this before you even start looking for a property.

Why? Because in the competitive world of modern real estate, sellers will be more likely to accept your offer, if you’re pre-approved – giving you a headstart on potential rival buyers.

Thankfully, pre-approval is relatively simple. You’ll need to provide your preferred lender proof of income and assets and then receive a credit report. The preapproval doesn’t guarantee you’ll get a loan but that you qualify for one.

During this process, you’ll need to determine how much cash you can allocate for a down payment. Then, you’ll receive a preapproval letter detailing the time and loan amount. This can be used to show a seller you’ve been preapproved.

2) Be Careful with Home Purchase Offer Documents

Before buying your first home, you will need to make a home purchase offer. This is effectively a contract waiting for a seller’s signature. It’s inherently a complex document.

It is highly advised that you consult a real estate lawyer to review your purchase offer documents to ensure you are doing everything optimally and to protect your best interests. There are many online contract and purchase offer creators, but these are considered risky and not advised by legal professionals.

3) Don’t Skip a Home Inspection

Many people like to think they can save some money by skipping home inspections before buying a first home. As real estate lawyers, trust us when we say, don’t! It’s not worth it.

By including a home inspection provision in your contract, you gain the right to hire an inspector to find any potential problems with the property.

If problems are revealed, sellers can either be asked to make repairs or reduce the price. The provision can also allow you to back out of the deal if problems are revealed.

But imagine that if you don’t perform a home inspection, you could be in for a nightmare scenario. Imagine you open the door to your new home and a day later there is a huge plumbing problem, moldy walls or windows that don’t close properly.

Without the provision, you would be stuck there, unable to leave and then forced to make the repairs with your own money!

If in doubt, hire a real estate lawyer to include provisions such as these in your residential real estate contract.

4) Think About Contingencies.

Contingencies listed in contracts are your friend! They protect you from being liable when things go wrong.

There are various contingencies, such as those for appraisals, financing, inspection and more. However, if you have too many, you risk scarring a seller as they’ll go for someone ‘easier’.

You need to find a balance, which is why it’s advised that you work with a real estate attorney during the contract drafting process.

5) Title Insurance

Mortgage companies will require you to purchase title insurance for the property. Title searches must be performed to reveal:

  • Outstanding mortgages
  • Leases
  • Unpaid Liens
  • Unpaid Homeowners Association (HOA) dues easements

Put simply; title insurance proves that the title is valid and free from claims from other people and land owners.

It protects the lender from claims in the future that someone else has the rights to the home.

Similarly, you should purchase a separate owner’s title policy to protect yourself.

6) Consider Your Student Debt

Before buying their first home, most people will still have student debt on their hands as they’re still young.

These days, student debt is considered real debt. Borrowers will be charged with 2% of the outstanding balance of their student loan when determining purchasing power.

If your student loan is in deferment, you may be able to enroll in an income-based repayment plan. This can provide you with documents that lenders can use to assess your future liability.

7) Strengthen Your Credit Score

Credit scores dictate your ability to qualify for mortgages and the related interest rates.

You should always perform the following steps before buying a first home:

  • Ask for free copies of your credit report.
  • Dispute any errors that are damaging your score.
  • Pay all bills on time, keeping credit card balances at a minimum.
  • Keep credit cards open. If you close it, the portion of evaluable credit used can lower your credit score.
  • Keep track of your credit score.

8) Choose Ownership Type Carefully

During closing, you’ll get your hands on the deed to the property. This is your legal ownership and describes the property, property lines and restrictions.

Deciding how you want to take ownership of your first home is an important decision and can significantly affect you if you get divorced, sell the property or how it will be distributed after your death.

You should consult a real estate lawyer to determine the best type of ownership, which may include:

  • Joint tenants
  • Joint tenants with rights of survivorship
  • Joint tenants by the entirety

Read related: How Should Unmarried Couples Hold Title in Florida?

9) Be Aware of Fraud

Unfortunately, mortgage fraud schemes take advantage of excited and often desperate first-time homebuyers. The best way to avoid being taken advantage of is to work with qualified professionals.

10) Work with a Real Estate Lawyer

As you’ll see, we’ve mentioned many times above that it’s advised to work with a real estate lawyer when buying your first home. From contract drafting to real estate ownership decisions, an attorney can help guide you through the complicated process and protect your rights.

Sure, you can save money at first without hiring a lawyer, but the risk of having to pay for fees and repairs later is seldom worth it.

Contact a Real Estate Attorney in Florida

If you’re buying your first home, our Florida real estate attorneys can help protect your and your rights, so your dream purchase goes smoothly.

They’ll also guide you with property ownership decisions so you make the best investment for your family.

Free Consultations

If you’re purchasing property or land in St Petersburg, Florida or Riverview, Florida, contact us today. Our St Petersburg & Riverview real estate attorneys have extensive experience that can help you through these tricky moments, reviewing your contract, advising you on the next steps to secure your transaction, and successfully finalizing the purchase of your home.

Contact us today to schedule a free consultation.

By |2022-06-07T14:28:59-04:00June 7th, 2022|Real Estate Closings, Real Estate Contracts|0 Comments