1) Be informed

It's important when you start thinking about buying a house to have all the information you need at hand. That's why we recommend reading the Fannie Mae tutorials. This will give you a basic understanding of the loan, mortgage, credit, and home buying process, and put you in the right frame of mind to decide if you're ready to purchase a home or not.

• PDF Fannie Mae Borroeing Basics
• PDF Fannie Mae, Choosing the Mortgage Thats Right For You
• PDF Fannie Mae, Opening the Door to a Home of Your Own
• PDF Fannie Mae,Understanding your Credit

2) Learn Your Credit situation

Your credit score affects the size of any loan offer you're given and the interest rate it's set at. By looking at your credit report you can spot and correct any credit inaccuracies that might negatively affect your score.

When deciding on which credit service to obtain a report from, you should keep your needs in mind. For example, a constant credit watch service is a good idea if you're worried about identity theft, however if all you want is a check of your credit before applying for a loan then it might be more then you need.

When applying for a loan it's wise to obtain a credit report containing information from all three credit reporting agencies, as any one of them might contain an inaccuracy that can damage your overall score.

Our credit page contains links to three different credit services; pick the service that best suits you.

3) Become Prequalified/Preapproved

Most realtors require you to be pre-approved for a mortgage before they consider your offer sufficiently serious to bid on a property. Pre-approval is also a good idea as it lets you know up front how much house you can afford and lets you bid right away when you find your dream home, rather then having to go to the bank and risk someone else coming along and snapping it up.

Pre-Approval acts as a binding agreement from the lender to loan you up to the specified amount pending certain conditions such as a satisfactory home inspection, the purchase of insurance for the home, etc.

4) Work out a budget

Working out a household budget is desirable, as it allows you to determine exactly how large a monthly mortgage payment you can manage. Buying your dream house is wonderful, but not if it requires a higher monthly payment then you can afford.

It's important to remember that there are more costs involved in a house than just the mortgage. That's why you should determine your total household expenses and compare it with your income.

If you're a first time home buyer and don't have any previous experience with home related costs, it's a wise idea to talk with a friend or family member who has a house similar in size to your planned home. This should give you a rough idea of how much you can expect to spend.

When you create your household budget remember to take into account:

• All current monthly loan payments.
• All other monthly expenses (such as membership dues, Credit card fees, etc.).
• Records of variable expenses (for example, utilities, food and car repairs) from the last 12 months. This will give you an estimate of your monthly expenditures.
• Records of annual or semi-annual expenses (such as insurance and taxes).
• An estimate of what your new mortgage payment will be.
• Records of other non-fixed expenses (for example, medical expenditures) for the last year. This will give you an estimate of average expenses of this type.
• Records or an estimate of personal expenses (entertainment, travel, etc.)
• Planned savings (IRA, investments, rainy day fund, etc)

Please feel free to use our online form when calculating your household budget. You can either print it out and fill it in by hand or complete the form online before printing the finished budget.

• Budget form
• Budget Form Calculator

5) Determine your hosing needs

Single Family Home

The most common form of housing in the United States is the single family home. Ranging anywhere from a tiny cottage to a sprawling mansion the distinguishing feature of a single family home is that it sits on its own piece of land and isn't attached to another residence.

Multi-Family Home

A multi-family home is a great choice for people who are interested in making their home pay for itself and are comfortable with the responsibilities of being a landlord.

Condo

The easiest way to understand a condo is to think of it as an apartment you own. Your ownership begins at the walls, ceiling, and floor and moves inwards towards the middle of the room. Everything else is owned in common with the other condominium owners.

Land

Why buy when you can build? Starting from scratch gives you the opportunity to build your dream house from the ground up rather then searching town after town for the perfect fit or settling for "Good enough".

6) Find the right house

Sign up to our website if you haven't already. Joining is free and will allow you to view detailed MLS reports on the housing you find via our search tools. Secondly joining allows you to use our BRE Property Finder which will E-mail you houses matching your search criteria as they come on the market, giving you an advantage in your house hunting.

Now that you're signed up, search the Multiple Listing Service for your dream house. Our search parameters allow you to search by house type, cost, geographic area, or number/type of rooms. Once you find a house that interests you we recommend either printing out the attached MLS sheet or using our Property Scorecard to write down housing attributes.

Once you finish locating properties that interest you, it's a wise idea to write the significant features down on our Property Recap form for easy comparison before viewings. Use our Inspection Checklist during the viewing to identify specific features or problems you'll want to remember.

Our Home Scorecard and Property Recap forms are fully interactive and can be printed out and filled out by hand, or completed online and printed out complete. Use them in whichever way is most convenient for you.

• New member registeration/login
• BRE Property Finder
• Property Recap
• Home Scorecard
• Inspection Checklist

7) Contact us and arrange a viewing

You can conatct us for arranging and viewing.

8) Negotiate an offer

Home buying is one of the last instances in American life where negotiation is the rule rather than the exception. Given that so few people have had much experience with negotiation, it's important to have a good understanding of the process before you start making offers on homes.

Negotiation in real estate is based upon three steps.

Step 1: Information

One of the first things you should do is acquire a Comparable Sales Search. This will give you a list of comparable houses that have recently sold in the neighborhood. This will give you an idea on what the average price of a home is in the area you've selected and what the seller might be willing to accept.

The Comparable Sales Search you receive will give you some general information about the housing that was compared, number of bedrooms/baths, square footage, and sold price. Make sure that the houses on the CSS and the house you're interested in are indeed similar. An additional bedroom, bathroom or other difference can significantly raise the price and make the comparison of limited value. Likewise make sure that the houses shown in the CSS are near the house you're looking at, as property values can vary widely depending on geographical and zoning differences.

Once you have the CSS in hand it's a good idea to drive by the properties listed as sold in the report to get an idea on what condition you get for a given price range, once you know this you can determine if the house you're interested in shines above or falls below others in its class. Information such as number of rooms, lot size, and living space can only tell you so much, driving by and seeing the condition the house is in will tell you more. Once you've seen the houses which have recently sold you'll be able to compare it with the one you're interested in and determine if it's over or under priced.

Perhaps the most important piece of information that you can possess is the sellers motivation for moving. The difference between a seller who needs to sell soon and one who's just testing the waters can be tens of thousands of dollars. Getting this piece of information depends entirely on how comfortable you are with talking to other people. Sometimes the seller will give you this information even though it's not in his best interest; sometimes a friendly chat with his neighbors will work better.

Another good thing to know is how long the property has been on the market, this information should be right on the MLS detail page you gained access to when you signed up to our website. Anything 60 days or less is considered to be "Recently placed" what this means is that the seller is less likely to be willing to negotiate substantially on the price and that you might be competing with other home buyers when you make your offer.

If a property has been on the market for 60 days or longer then it's more likely that there's some lee way between the listing price and the price the seller is willing to accept. It also means that you should investigate why the property has been on the market for so long. If a property has been available for a long time it could indicate that the seller has over priced the house, the house is in an undesirable location, or there is some defect or flaw that wasn't disclosed in the MLS description. In this case it becomes even more important to arrange a home inspection and make the satisfactory conclusion of that inspection a term of sale.

Step 2: Preparation

Just having the information at hand isn't enough, you also have to be prepared to use it effectively and, if necessary, walk away from the house. This can often be an extremely tough thing to do. Obviously you love the house or you wouldn't be making an offer. However the purchase of a house is emotionally charged and letting those emotions override your common sense is a bad idea. You have to be prepared to let the house go if the sellers stick to a price that's significantly higher then the house is worth. There's no sense in paying too much now and regretting it every time you make your mortgage payment.

Step 3: Realism

Just as important as being prepared to walk away if the sellers maintain a price that's too high, is to make an initial offer that's realistic. It's important to understand that you're not just buying a house from these people, you're buying their home. While you have nothing to lose by searching for a deal on an over priced house, nothing will turn a seller off more then a ridiculously low offer on a realistically priced home.

Once you've determined a fair price and placed yourself into the right frame of mind, it's time to write your offer.

Writing the Offer

A common misconception among first time home buyers is the belief that an offer represents a tentative commitment that can be modified later. This is untrue, if the seller accepts your offer (rather then rejecting or submitting a counter offer) then you've just bought a house. In most areas the offer form is itself a legal document that becomes binding as soon as the seller signs it and notifies you. This is why it's important to make sure that any offer you write is one that you can live with if it's accepted.

All offers need to include this information:

• Proposed price (Your offer)
• Concessions you wish the seller to make
• Contingencies to the sale (Such as sale pending on a successful home inspection)
• All objects included in the sale. (Don't assume that objects such as appliances, porch swings, and drapes are included. If it's possible for an item to be detached from the house it's a good idea to be specific.)
• The size of the deposit being tendered with the offer

When writing your offer it's essential that you remember to include contingencies in your purchase contract/offer. Such contingencies can include a successful home inspection, a lending institution offering you a loan (assuming that you haven't been pre-approved), or any other term that you feel is necessary before you take possession of the house.

Remember, you're signing a legally binding document, thus if you omit a condition such as a home inspection it doesn't matter if you later discover that the house is in imminent danger of collapse due to termite damage, you're still obligated to buy.

9) Arrange a home inspection

The importance of home inspection cannot be over stated. Many homebuyers either through ignorance of the need for home inspections or a desire to save $200-$500, spend thousands of dollars in home renovations to fix problems that a inspector would have caught in time to demand they be repaired before sale. Any offer you make should be contingent on a satisfactory home inspection, don't let anyone convince you otherwise.

Not only will you have the satisfaction of knowing that your roof isn't in imminent danger of leaking like a sieve, but a home inspection can give you a safety net in the event of a house defect. As long as the contract specifies sale after completion of a satisfactory inspection, any defects must be either repaired or monetarily compensated for, if the problems aren't addressed you then have the option of walking away.

Home inspections are designed to inform you of any defects in a house that could affect its safety, livability, or resale value. Cosmetic problems such as cracking paint will likely not be covered and need to be detected on your own walkthrough of the property.

Lastly don't wait until you've made an offer on a house before searching for a home inspector. Often there will be a limited time frame specified by the contract for home inspections (generally between 7 and 14 days) and it might take longer than that to arrange for the services of a reputable home inspector, if you miss that deadline then you'll be faced with the choice of either going without a home inspection or running past the deadline (possibly freeing the seller of any responsibility to take care of repairs) neither of these is a wise alternative.

10) Select Insurance

If you plan to borrow money to pay for your house one of the requirements that will be made by your lender is proof of a valid home owner's insurance policy secured before closing. Possessing insurance protects both you and the lender in case something goes wrong.

Generally there are three types of insurance you'll need for your home.

Casualty: Fire is of course the most common hazard protected by this plan though it may cover other damage as well (Hail, Wind, Etc). It's important to determine exactly what your plan does and does not insure against. In areas where one particular hazard is more common then others (such as flooding) you may need to obtain a separate policy to cover that damage type.

Liability: This is to protect you from accidents or injuries that occur to visitors or guests to your home. The more of this type of insurance you acquire the more protected your assets will be in the event of a lawsuit.

Personal Property: While Causality insurance protects your house, personal property insurance protects the items inside. Coverage varies widely so it's important to determine exactly what the limits are. For instance does it cover the cost of an item as it is today or at the cost when you first bought it?

An important thing to remember after you purchase insurance is to keep it updated. Many people insure their house when they first buy it then forget to update their policies as time goes on. What this means is that while your house has appreciated in value and construction costs to replace a destroyed home have risen, you still only receive the value of your home when you took possession of it. This could leave you paying tens of thousands of dollars out of pocket just in order to recreate the house you once had.

If the monthly insurance costs seem too high, there are a number of ways to save money:

• Shop Around: Insurance prices can differ greatly between companies. However it's important when deciding on insurers to consider their customer service as well as their price.
• Raise your deductible: The higher your initial deductible the higher your monthly savings, just be careful not to select a deductible so high that you're unable to pay it.
• Combine insurance policies: Some Insurance companies will lower your costs if you purchase multiple plans with them (Home, Auto, Life, etc).
• Improve your home safety: Installing a security system, smoke detectors, or other safety devices can lower your insurance premiums significantly.
• Seek out discounts: Some insurers offer discounts for special groups such as seniors.
• Rethink insurance yearly: It's important to assess your insurance needs at least once a year. While most people will want to increase their insurance as their home appreciates, you may find a cheaper insurance option or discount that you now qualify for.

11) Moving Preparations

It doesn't really matter if this is your first move or your fifth, moving never seems to get less strenuous. It's wise to being preparing to move now; this will give you ample time to deal with any unforeseen complications that arise during the moving process.

When moving it's wise to:

• Agree with the sellers on possession and moving dates. This gives you a solid timeframe to work with.
• Start planning early. Dispose of unwanted possessions and determine if you need to purchase anything new (such as draperies, shower curtains, etc) for your new home.
• Decide if you want to self move or hire a moving company to assist you. If you plan to hire out, it's best to book well in advance and shop around for the best price. Also determine how much assistance you'll need, the more you do yourself the cheaper the overall expenses will amount to.
• Prepare a list of everyone you'll need to contact with your new home address.
• Start packing early with items you won't need before the move and mark every box and carton with content information and where it's going in the new house.

12) Final Walk through

It's a good idea right before closing to take one last walk through the house in order to determine everything is as expected. Now that the sellers have mostly packed up it'll be easier to access spots once hidden by heavy furniture and see what exactly is and is not being left behind.

• Check the entire house over from top to bottom, examine closely any problem areas identified in the home inspection and make sure repairs have been performed.
• Make sure that everything that's supposed to be included with the house (such as light fixtures and appliances) is still present.
• Look over any areas that were previously obscured by furniture or rugs. Often problem areas that were covered during your first walk though are now visible.
• Remember that this is your absolute last chance to address any problems you find. If you discover any problems let your agent know before the closing.

13) Close

Now that you've arranged for a mortgage, selected a home, inspected it, and negotiated a price it's time for the closing. Basically this is the signing of the dotted line that will put the title of the house in your name and the keys to the door in your hand.

Closing procedures vary from town to town, in some areas both the buyers and sellers (and their real estate agents) will be there while in others only the buyers will show up. The closing will take place at the office of an Attorney, a Title Company, or an Escrow Company.

Items that will be addressed at closing include:

The Settlement Statement
This form lists exactly how much is owed, for what, and if the seller or the buyer is responsible for paying it. The Settlement Statement will usually only be available to you a few days prior to the closing. It's important to review the statement to make sure that everything is accurate and as previously agreed.

The Contract
The Contract is the binding agreement between buyer and seller and includes: The address of the property, the selling price, mortgage specifics, size of deposit, inclusions and exclusions, home inspection details, warranties, well/septic/pest inspections and who will pay for them, possession date, insurance, and property disclosures.

The Loan Papers
The Loan Papers will be given to you by your lender prior to the closing and list the details of your loan such as length, terms, and amount. Be sure to examine the loan papers carefully and clarify any points you don't understand. These are the terms you'll be living with as you repay your loan.

Title Insurance
Title Insurance protects against problems with the title of the property such as undisclosed liens, errors in the public record, or any fraud that may be involved. This insurance is a onetime premium due at closing. Which party pays for it varies area by area.

Homeowners Insurance
All lenders will require proof of home owners insurance secured before closing. This must be taken care of before closing and you may or may not be required to bring proof of insurance to the closing ceremony.

The Title or Deed
The Title or Deed lists the owner of the property, ownership will be transferred at closing.

The Down Payment and Closing Costs
In addition to the loan commitment letter given to you by your lender, you will be required to bring a check for the down payment plus any other costs previously agreed to such as property taxes, recording fees, first payment due, etc.