Things every first-time homebuyer should know

The prospect of buying a house for the first time can be intimidating – especially since it's the single largest purchase you may ever make. Before you begin the search, there are some things you should know.

Thoroughly review StreetWise Homebuying and Mortgages. The information you'll read can save you a substantial amount of money and aggravation before and after the purchase. You'll find more detail on the points we raise below.

Research the process by attending community-sponsored classes. Each year, DCU holds first-time homebuyer seminars. Also, check out books such as Home Buying For Dummies by Eric Tyson and Ray Brown, (IDG Books Worldwide, Inc.).

Strive to save as much as you can towards the purchase price of the house as well as closing costs. Though minimum down payments start around 3 to 5%, the greater your down payment, the more favorable your terms. If you can purchase a home with at least 20% down, you won't need to buy private mortgage insurance (PMI).

A Note About PMI and DCU - DCU will do everything possible to help you avoid paying PMI, even without the industry standard of 20% down.

Make sure you are saving enough toward retirement and other goals when deciding how much to spend each month on mortgage payments.

Remember to plan for homeowner's insurance, property taxes, private mortgage insurance (if required), utilities, repairs, and maintenance.

There are many options out there including traditional 15-, 20- and 30-year fixed-rate mortgages, adjustable rate mortgages (ARMs), and fixed/adjustable combination mortgages. If you are having trouble saving for a large down payment, investigate low-money-down programs for first-time homebuyers.

Prioritize what you are looking for in a neighborhood. Then talk to the people who live in the neighborhoods you're considering. Neighborhoods with highly-rated public schools tend to be more expensive. That's critical if you have school-age children. Plus, communities with good schools have higher property resale values.

Get referrals from friends, relatives, and co-workers, and then interview several agents. You want an agent who's familiar with the neighborhoods you're interested in. Listen to your agent, but make your own decision.

An agent's job is to know how much properties are worth, facilitate the sale process, and bring your offer to the seller's agent. Unless you have chosen a buyer's agent compensated directly by you, the agents on both sides of the sale work for and are compensated by the seller. They earn a commission based on a percentage of the sale price. The more you pay, the more money they get. Consider what they say within that context.

Hire a full-time, professional home inspector. Again, referrals from friends, relatives, and co-workers are a good place to start. The Better Business Bureau can also provide information. Be wary of recommendations from your real estate agent. It's in the agent's interest that the inspector not find problems that would block the sale.

Land surveys associated with home sales are not detailed and may not uncover a disputed property line. Title insurance doesn't cover boundary line disputes. If there's any question, a full survey could save you thousands down the road.

Your loan officer will prepare an estimated list of closing costs, along with your down payment, and you need to make sure you have enough money set aside to pay them.

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