Yes, however, when choosing a home inspector, get recommendations from other professionals in the Real Estate field. Get some references from previous buyers.   The most important quality in a home inspector you should look for is their actual field experience.  Many inspectors only have to take a two week course and know little more than an average homeowner.  Consider their experience in the real estate field before they became a home inspector.  A professional home inspector will be able to find defects in materials ands workmanship. Your inspector should be able to give you recommendations on maintenance and repairs. Check this site to help with the selection of a good home inspector.  Choosing a home inspector as a first time home buyer.

Determining a homes value is not always as easy as it seems.  While your real estate agent and ultimately, a real estate appraiser will determine the true value of the house you are buying, it’s a good idea for the first time home buyer to have some basic understanding of how home valuation works.

Your Real Estate Agent should be able to give you sales in the areas you are interested in. In addition to sales you should be looking at active sales. Your Real Estate Agent can supply you with active sales in addition there are several websites that show sales for the area.  You can also access MLS listings in your area on line through a number of free real estate websites

Please Note:

Comparing sales and active listings to homes you are interested in you need to make sure you understand what is comparable. What meets FNMA guidelines in comparing properties.

If homes in your area have basements, make sure you compare the living space (above grade finished square feet) to living space and basement (below grade finished square feet) to basement. Other words you can’t consider rooms and finished square feet in the basement and compare them to rooms and finished square feet in the living space. They must be separated and compared accordingly.

FNMA requirements for split foyers/split levels state that the “lower level”, regardless of its percentage of finish or percentage of area above grade, unless it is 100% above grade, be considered as “finished basement” and only the area fully above grade be considered finished living area.

When dealing with finished expansion areas you need to consider ease of entry and to make sure the ceiling height meets local codes and/or FNMA guidelines. Also the area must be finished similar to the main level. (Check local codes)

When dealing with bedrooms – the bedroom must have a closet and it needs to be separate from other rooms by closing a door or doors. It can’t be a room that is used to get to another room or bedroom, etc.

These are some of the most common misconceptions about homes. These and other factors affect value of the home.

Other factors that need to be considered and may or may not affect value. Scenic views, corner lots, busy streets, function utility, etc.

If you need more help on these matters please leave a comment or email us at firsthomeguy@gmail.com

This is a difficult and somewhat controversial question. Yes Radon Gas is a problem at high levels. Radon Gas at high levels is a concern for all. It is especially important for those homes that have basements and especially for those that are using it as finished space. Please note that, in some areas throughout the country radon is at high levels in just the soil that you come in contact daily.

Testing is easy and inexpensive. If you have concerns you can check on line and get information on what is radon, causes, testing and remedies. Go to www.epa.gov/radon/ . This link will take you to the main site for information on radon. You will find several articles, links and other pieces of useful information. A direct link to Basic Radon Facts can be found through this site or go to www.epa.gov/radon/nram/public.html and look under Learn About Risks From Radon and click on Basic Radon Facts. Its in English or Spanish.

This is great news for most American who did 100% mortgages at the top of the real estate market and now they owe more than their house is worth. This will give all those people who qualify a chance to refinance into today’s low rates giving them a lower house payment.

If your loan is held by Fannie Mae or Freddie Mac and you are current on your mortgage payments, you may be eligible to refinance your mortgage loan even if your LTV is up to 125%. LTV, or loan-to-value-ratio, is a measurement that compares the principal balance of your loan (the amount you currently owe) to the actual value of the house. For example, if your loan amount is $300,000 and the current value of your home is $240,000, your LTV is 300/240, or 125%.

This applies to Minnesota mortgages so if you are in this boat and you want to explore your options, call Dominic DesMarais at 612-247-8233 at Metropolitan Financial Mortgage company or you can click on this link to read the FHFA news release

I highly recommend you get personal references for each of these individuals. You should interview them just as you would interview a prospective employee.  Note; Expertise or quality does not necessarily mean the length of time in a business or profession, but the time, effort and care that one puts into each assignment. 

1) Attorney: May not need one for the purchase of your home but they are helpful to have in case a need arises.

2) Accountant – Financial Advisor:  May not need a professional, however, at least get advice from someone you trust or do research to help with making the correct financial decisions. Real Estate is an investment.

3) Real Estate Agent: Find an agent with expertise. An agent will help to locate properties that are listed for sale with your needs and represent you when purchasing your home.

4) Mortgage Company – Loan Officer: Find at least three different sources for your mortgage to insure you get the best program, pricing and rate. Have good faith estimates prepared.

5) Insurance Agent: If you have an agent that handles homeowners insurance check with them first. However, it is also nice to shop. Know that having all insurance at one company can save money.

6) Home Inspector: If you are purchasing an older home it is wise to have a professional check the home. Make sure the inspector has a good background and practical field experience.

7) Appraisal – Appraiser: The appraisal is ordered through an appraisal management company or a separate division of a mortgage company. However, you should review the appraisal.

8 Title: Title is ordered through the mortgage company or real estate agent. However, you have the right to choose. Differences in costs can be significant. Highly recommend getting title insurance.

Ask yourself these questions
What needs do we have? (Define your needs and wants in a Home – Make a List) Bedrooms, Baths, Garage, Kitchen Area, Living Area, Dining Area, Storage, Yard, Amenities, etc.
What design/style, size of home do we want?
Where do we want to live? (such: as a particular school district or close to public transportation, etc) Make a list.
What can we afford? Create a budget (Do not forget expenses for maintenance on a home) Ask family and friends about costs.
After you have completed these items, stick with your plan and find the best house at your price. Once you start looking stay true to the needs and parameters you have set. Don’t be disappointed that it takes time and do not rush into a decision.
Your next step will to find professionals to help you with your purchase and future needs

Please cast your vote at http://twtpoll.com/zexc7w

By @firsthomeguy | Twtpoll created about 13 minutes ago | This poll closes on Aug 1, 2009

First-time homebuyers should begin planning now to take advantage of a new tax credit included in the recently enacted Housing and Economic Recovery Act of 2008.  This is a great deal even if it must be repaid over 15 years as it is interest free.

Available for a limited time only, the credit:

  • Applies to home purchases after April 8, 2008, and before July 1, 2009.
  • Reduces a taxpayer’s tax bill or increases his or her refund, dollar for dollar.
  • Is fully refundable, meaning that the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax that they owe.

However, the credit operates much like an interest-free loan, because it must be repaid over a 15-year period. So, for example, an eligible taxpayer who buys a home today and properly claims the maximum available credit of $7,500 on his or her 2008 federal income tax return must begin repaying the credit by including one-fifteenth of this amount, or $500, as an additional tax on his or her 2010 return.

Eligible taxpayers will claim the credit on new IRS Form 5405. This form, along with further instructions on claiming the first-time homebuyer credit, will be included in 2008 tax forms and instructions and be available later this year on IRS.gov, the IRS Web site.

If you bought a home recently, or are considering buying one, the following questions and answers may help you determine whether you qualify for the credit.

Q. Which home purchases qualify for the first-time homebuyer credit?

A. Only the purchase of a main home located in the United States qualifies and only for a limited time. Vacation homes and rental property are not eligible. You must buy the home after April 8, 2008, and before July 1, 2009. For a home that you construct, the purchase date is the first date you occupy the home.

Taxpayers who owned a main home at any time during the three years prior to the date of purchase are not eligible for the credit. This means that first-time homebuyers and those who have not owned a home in the three years prior to a purchase can qualify for the credit.

If you make an eligible purchase in 2008, you claim the first-time homebuyer credit on your 2008 tax return. For an eligible purchase in 2009, you can choose to claim the credit on either your 2008 (or amended 2008 return) or 2009 return.

Q. How much is the credit?

A. The credit is 10 percent of the purchase price of the home, with a maximum available credit of $7,500 for either a single taxpayer or a married couple filing jointly. The limit is $3,750 for a married person filing a separate return. In most cases, the full credit will be available for homes costing $75,000 or more. Whatever the size of the credit a taxpayer receives, the credit must be repaid over a 15-year period.

Q. Are there income limits?

A. Yes. The credit is reduced or eliminated for higher-income taxpayers.

The credit is phased out based on your modified adjusted gross income (MAGI). MAGI is your adjusted gross income plus various amounts excluded from income—for example, certain foreign income. For a married couple filing a joint return, the phase-out range is $150,000 to $170,000. For other taxpayers, the phase-out range is $75,000 to $95,000.

This means the full credit is available for married couples filing a joint return whose MAGI is $150,000 or less and for other taxpayers whose MAGI is $75,000 or less.

Q. Who cannot take the credit?

A. If any of the following describe you, you cannot take the credit, even if you buy a main home:

  • Your income exceeds the phase-out range. This means joint filers with MAGI of $170,000 and above and other taxpayers with MAGI of $95,000 and above.
  • You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.
  • You stop using your home as your main home.
  • You sell your home before the end of the year.
  • You are a nonresident alien.
  • You are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year.
  • Your home financing comes from tax-exempt mortgage revenue bonds.
  • You owned another main home at any time during the three years prior to the date of purchase. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another main home at any time from July 2, 2005, through July 1, 2008.

Q. How and when is the credit repaid?

A. The first-time homebuyer credit is similar to a 15-year interest-free loan.  Normally, it is repaid in 15 equal annual installments beginning with the second tax year after the year the credit is claimed. The repayment amount is included as an additional tax on the taxpayer’s income tax return for that year.  For example, if you properly claim a $7,500 first-time homebuyer credit on your 2008 return, you will begin paying it back on your 2010 tax return. Normally, $500 will be due each year from 2010 to 2024.

You may need to adjust your withholding or make quarterly estimated tax payments to ensure you are not under-withheld.

However, some exceptions apply to the repayment rule. They include:

  • If you die, any remaining annual installments are not due. If you filed a joint return and then you die, your surviving spouse would be required to repay his or her half of the remaining repayment amount.
  • If you stop using the home as your main home, all remaining annual installments become due on the return for the year that happens. This includes situations where the main home becomes a vacation home or is converted to business or rental property. There are special rules for involuntary conversions.  Taxpayers are urged to consult a professional to determine the tax consequences of an involuntary conversion.
  • If you sell your home, all remaining annual installments become due on the return for the year of sale. The repayment is limited to the amount of gain on the sale, if the home is sold to an unrelated taxpayer. If there is no gain or if there is a loss on the sale, the remaining annual installments may be reduced or even eliminated. Taxpayers are urged to consult a professional to determine the tax consequences of a sale.
  • If you transfer your home to your spouse, or, as part of a divorce settlement, to your former spouse, that person is responsible for making all subsequent installment payments.

Click here if you want help finding a real estate agent or you want to see homes for sale online .

A recent survey by the NAR (National Association of Realtors) listed some facts about first time home buyers.  Check it out and see if you fit the profile.  The median age for a first time home buyer was 30 and their median income was $60,000.  The average price for first time home buyer homes was $165,000 and they planned to live in the house for 10 years.  As you probably know,  home values have been going down in most markets which is great news for first time home buyers. The median down payment doubled from the year before to 4% down as no down payment mortgages have pretty much dissappeared.  Follow this link for more cool first time home buyer stats

It kind of looks like the whole worlds economy is going down the tube lately.  How did this happen?  Where did we go wrong?  Who is to blame? Yada, yada, yada.  I hate to break it to you but the world economy is on the brink of collapsing because of the US housing market.  It’s true! You see for the past 5 years or so, as a result of easy money and complete disregard for credit risk, home prices have been going up at an alarming rate.  Yes alarming but nobody bothered to sound the alarm or warn anybody because we were all to busy making money, and in the case of the home owner, spending money like there was no end in site.  All a home owner had to do was refinance every two to three years with cash out to wipe out their high interest credit cards and pick up a couple of hundred dollars a month in cash flow.  I can’t imagine what people were telling themselves as they met their trusted mortgage officer for the third time in 5 years to do it again.

Here is the bottom line if you are a first time home buyer today.  Don’t ever use your home as a bank, save for a down payment, protect your credit score like you would your own new born baby, and never go over 90% loan to value on a refi.  Owning your first home is great but it’s not worth it if you are house poor as a result.  I hope the home buyers and home owners of the future learn from the home owners of the past and don’t end up building another house of cards.

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