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Friday, Oct. 24, 2014

10 tips for first-time homebuyers (10 items)

Marcie Geffner

July 17, 2014

Editor's note: This list originally ran on HSH.com. It has been reprinted here with permission.

First-time homebuyers are crucial to healthy housing markets because they enable existing homeowners to sell their current home and purchase another one. That means if you're thinking about buying a home, you're important -- someone who owns a home can't sell it without you.

With that in mind, here are 10 tips to help you achieve your goal of homeownership:

1 of 10. Get prequalified

Sellers typically won't accept your offer unless it's all cash or you have a lender's letter saying you can get the financing you need to close the deal. Consequently, being prequalified for a loan is crucial, says Matt Phipps, a Realtor at Phipps Real Estate in Warwick, Rhode Island.

"You don't want to lose the house of your dreams because you weren't prequalified for the mortgage," Phipps says.

2 of 10. Target your territory

Every town has pros and cons, but casting too wide a net can make you crazy, Phipps says. Decide where you want to live and focus on that area.

"Do some drive-bys and make sure you like the setting of the house before seeing the property," he suggests.

3 of 10. Prioritize your preferences

Make a list of what's important to you and your family, whether it is location, condition, price or certain amenities, and be prepared to make sacrifices.

"You're not going to find the absolutely most perfect house," Phipps say. "If you get eight of 10 things you've prioritized, you've done very well."

4 of 10. Know your budget

Rather than guessing how much you can borrow or how much your closing costs will be, discuss specific numbers with a reputable lender or broker.

"Meet with the lender and get an idea of exactly how much you're preapproved for," Phipps advises. "You want to have that conversation so you know where you stand."

5 of 10. Be realistic

Shopping for a house that's more costly than your budget is likely to mean disappointment since most sellers receive multiple offers equal to or higher than their asking price, says Ken Pozek, a Realtor at Keller Williams Realty in Northville, Michigan. If you're preapproved for, say, $270,000, don't ask to see homes priced higher than that.