19 January 2008 - As mortgage rates continue to drop, you may be thinking that now is the time for you to make a move and buy that first home. Since purchasing real estate can be an unfamiliar and complicated process, here are some useful tips to guide you through this important transaction.

Meet with a Realtor
When you buy your first home, you'll experience a lot of firsts, which is why you need to contact a Realtor first.

Your preliminary meeting with a Realtor will help you know what to expect in the buying process and the details of what you'll need to have a successful transaction.

As a buyer, you will also want to consider hiring a Realtor to act as your buyer's agent. Unlike the listing agent, who has a fiduciary duty to the seller, a buyer's agent will work only for you. Plus, most buyer's representatives are paid out of a seller's commission payment.

Mortgage pre-approval
It's best to meet with a mortgage lender before conducting a home search because he or she can help you know how much you can afford.

The lender will work to pre-approve you for a mortgage by reviewing your credit history, earnings information, employment history and assets. With a pre-approval, you'll know the amount you can borrow, and you'll receive a pre-approval letter to let sellers know you're a serious buyer.

You can also find out approximately how much money you will need to have at closing.

The home search
Before conducting your home search, examine your home-buying objectives. Will you sale the home after a few years or do you plan on staying long term? How concerned are you about resale value? What features are you willing to sacrifice? No home is perfect so it's nice to have your must-haves determined before you begin your search.

After discussing objectives, price range, home size and home style, your Realtor will conduct a property search. After researching acceptable homes, your Realtor will make appointments for you to visit the properties.

Offers and contracts
After you find the property you want, your Realtor will prepare your offer, which is a purchase agreement. The offer should include how much you're willing to pay for the house as well as certain contingencies like getting an acceptable inspection, obtaining a mortgage, closing by a certain date, etc. Ask your Realtor which contingencies you should include in your offer.

Properties often move quickly so if you see a property you really want to buy, don't wait too long to make an offer. Slow buyers often see the homes of their dreams sold to other buyers. Once presented, the seller can either accept, reject or counteroffer.

When the seller agrees to your offer, you will have a ratified purchase contract. As part of this contract, you will need to provide an earnest money deposit that will be placed in an escrow account. The money will later be applied to your closing costs. If you fail to meet the terms of the contract, you will lose the deposit.

Preparing for settlement
Several important steps need to be taken in the weeks before closing, which your Realtor will help you coordinate.

First, you will need to have a title search conducted to make sure the property is free from liens, judgments, etc., and you will need to get title insurance. If needed, your Realtor can recommend several reputable title companies.

Then your mortgage lender will order an appraisal, and send the applicable documents to the title company.

Third, you must arrange for a home inspection and conduct a final walk-through inspection if part of your contract.

Finally, you will need to order homeowner's insurance.

Settlement
Your Realtor will arrange a settlement meeting for you at the title company. At settlement, you will review and sign documents, and the title company will complete the loan funding and recording. The transaction is then considered closed, and you may proceed with moving in as outlined in the contract.

Buying a home is perhaps one of the most complicated transactions in which you will ever participate. Make sure you have an expert to guide you through the process. Make sure you are working with a Realtor.