Story Updated: Dec 17, 2009

When you are ready to make the dream of owning your own home a reality there are a few things you should know.

First, get a copy of your credit report and work on improving it. Your credit report is an important tool used in getting a loan from the bank.

Second, go to your bank and talk with a loan officer about purchasing a house. They will have you fill out an application and a Pre-Qual Letter. There is likely to be an application fee of $40 or so to the bank for this service.

Third, find a Realtor. Realtors can help you find the best piece of real estate to fit your needs.

They are also beneficial because they know what is available on the market and have friends within the industry. The seller pays the commission to your Realtor, so it costs you nothing to have one.

In theory, a Realtor should help you get the best price. Keep in mind that the more you pay for the house, the more the Realtor makes in commission. Choose one wisely and ask opinions from friends and family before settling on one because you want one that you can trust.

Fourth, determine the major features you are looking for in a home. This would include what part of town you want to live in, what style of house you want, and how much the bank is willing to loan you. Then, you or your Realtor should compile a list of houses that match your criteria.

After you compile the list you need to go through the homes. Take the time to visit each home and have a walk-through with the owner. Ask any questions you have.

Fifth, when you settle on a house get the disclosure from the seller. The disclosure is a list of any problems the house has that the seller is aware of. If after seeing the disclosure you still are interested in the house, you need to determine how much money you are willing to offer on the home.

Get a list of comparable homes that have sold recently in the same area so you can get an idea of how much the house is really worth. Keep in mind that it is rare to accept the original price given by the seller usually you’ll offer slightly less than they are asking.

Sixth, have the house professionally inspected. You generally have to pay for this and it will cost $350 or so.

If the inspection reveals problems not listed on the disclosure you can try to get the seller to lower the price or fix the problems before the sale. If it is not worth it to you, walk away from the deal if your contract allows.

Seventh, make an offer on the home. Making an offer is not just an exchange of words, it means signing a contract. If the seller accepts the offer then they will be willing to sign too.

At this point you’re generally obligated to buy the house and the seller is generally obligated to sell, though depending on the wording of the contract you and the seller have the right to walk away from the deal under certain circumstances.

Eighth, the bank will have the house appraised. This process will ensure that the property is worth what you’re paying for it.

Ninth, get homeowners insurance. It is highly recommended that you price shop, in other words get quotes from several different businesses. The cost of the insurance will be added to your closing costs.

Tenth, close on the home. Meet with the title company or an attorney and officially sign the paperwork.

There are many cities that have rapidly been selling real estate. One of these is Park City, Utah.

This quaint mountain city is famous for its charming and often astounding houses, great shopping, snow and great resorts, and other mountain recreational activities. It even features some of the event sites for the Olympic world games that were hosted by Salt Lake City in 2002.

As you follow these basic steps you can make the process of buying a home easy and buy the home of your dreams.

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This is a Guest Post from successful Real Estate Investor and Social Media Blogger, Chris Record.

Recently he has spent some time researching statistics related to mortgage origination, foreclosures, and our economic climate as it regards to investing in real estate.  Based on all of his research he is convinced that we are going to see a massive increase in opportunity in 2010 and he is excited to help people position themselves in front of these trends to capitalize on them!  This article is a summary of some of his findings…

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Foreclosures have been booming around the country, and with the limited ability to get funding we have seen a surge in creative real estate investing. We have also seen the average investor lay low because of the difficulty of today’s real estate market which has presented even more deals and opportunities for sophisticated investors who know how to negotiate and move properties.

Here is a summary of reasons why I feel that 2010 will be the year that sophisticated real estate investors create a tremendous amount of wealth…

SUPPLY AND DEMAND

As the population goes up, the demand always goes up as well. Many amateur investors are focused on where the market is today, rather than looking at the past to recognize trends for the future. Supply and Demand always rules but only savvy investors allow logic to lead over emotion. Remember these three words: “Numbers Never Lie”.

Currently the population in the United States is soaring and according to an article in USA Today, we are projected to reach over 400,000,000 people by 2042. According to the US Census Bureau we are gaining a new person every 11 seconds (one birth every 7 seconds, one death every 13 seconds, and one international migrant every 31 seconds). We are also seeing record numbers of births as more babies were born in the United States in 2007 than any year in the nation’s history, topping the peak during the baby boom 50 years earlier!

Soaring Population in the United States

In order to become a more sophisticated investor, it is important to understand population trends related to your local market that you are investing in as well. Use this tool to compare population growth of the states you are investing in to get an idea of whether your market is growing or not. Here is an example of the DC Metro population growth comparing Virginia, DC & Maryland.

Population Growth in Washington DC, Maryland & Virginia from 1979 to 2000

So as you can see from this graph, DC has maintained it’s population while Maryland and Virginia have shown tremendous growth. Also take into consideration that this date is only up to the year 2000.

Understanding supply and demand truly helps separate the sophisticated investor from the average investor. When we take a look at the rolling 12 month single-family permit activity across the nation, it become pretty evident that we are ready for a rebound in permit activity in 2010 and many educated investors believe that we will start to see this turnaround in 2010 for a variety of reasons.

Rolling 12-month single-family permit activity from 1960-2009

REAL ESTATE IS ON SALE

When we look at the cost of housing compared to family incomes we can see that today’s down real estate market is completely different from the real estate market of the 1980’s when the ratios reached as high as 60%! From this chart we can easily identify that real estate is on sale and is very affordable for the average family. We are currently seeing a 25% affordability ratio on homes nationwide which allows investors to move properties much faster as their are more able buyers out there.

National Housing Cost/Income Ratio 1971-2009

MONEY IS ON SALE

Next we take a look at the 30-year FRM rates vs. Prime Rates from 1971-2009. I remember back in 2004 when every loan officer and mortgage broker was urging everyone to refinance and lock in low rates before they catapulted back up to over 10%. Of course we all believed the could not possibly stay that low so record numbers of refinances started happening and people were happy they locked in such a low interest rate. However, here we are several years later and interest rates are still unbelievably low! In a traditional real estate bubble you would expect rates to jump up as high as 15-20% but we are in a fortunate situation where rates have stayed low and money is still on sale!

30 Year Fixed Rate Mortgage Rates 1971-2009

When you take into consideration that money is on sale and real estate is on sale it starts to really become clear why NOW is such an ideal time to become an investor. I.D.E.A.L. is actually a great acronym for real estate investors because real estate can provide:

• Income
• Deductions
• Equity
• Appreciation
• Leverage

FORECLOSURE BOOM

According to My Budget 360 the foreclosure filings nationwide have risen from 100 million to 300 million in the past few years alone!

Foreclosure Filings Nationwide

There are countless reasons as to why our country got itself in this mess, and it is incredibly sad for many people that are facing foreclosure, faced with losing their homes, their dignity, their equity and their credit. On the other hand if you are someone that is looking to purchase a home, the opportunity has never been better!

in 2001 only 1% of all mortgage loans originated were interest-only or neg-am loans. By 2006 that number had reached nearly 30%! The first graph below shows the Option ARM (adjustable rate mortgages) reset schedule, totaling hundreds of billions of dollars in the next two years. The next graph is the interest only and negative amortization share of total mortgage purchase origination’s for 2000-2006. Keep in mind that “73 percent of homeowners with ARM’s don’t even know how much their monthly payment will increase the next time the rate goes up.”

Option Arm Reset Schedule 2008-2012

Interest Only and Negative Amortization Share of Originations from 2000-2006

My reason for sharing these graphs with you is to help you understand that we are getting ready to see another wave of foreclosures come in as a result of the ARM’s resetting and people not being able to afford their new payments. When I really started diving deep into these statistics it became clear to me that 2010 would be a great year of investing, but that it would require becoming a sophisticated investor to take advantage of it.

• I believe that we will start to see a turnaround in the single family permit activity in 2010. Most of my professional contacts in the construction industry share this opinion with me as well.
• I also believe that we will continue to see a steady flow of foreclosures that won’t stop anytime soon. This provides a great opportunity to pick up properties at deep discounts either directly from homeowners in the pre-foreclosure phase, or from auctions and banks after they have been foreclosed.
• Due to the difficulty in getting traditional financing, the majority of these properties are going to be picked up by sophisticated real estate investors using creative acquisition strategies.
• Since real estate and money are both on sale, now is the time to take advantage of these trends and opportunities.

So in summary, I would encourage any would-be real estate investor to start studying pre-foreclosure investing as well as auctions and REO’s. There are opportunities in today’s market to pick up properties for 50% of the appraised value when you know what you’re doing and there is an influx in hard money lenders and private investors out there that are looking for better returns than they have been getting in the stock market lately.

The key to becoming a sophisticated investor to take advantage of this perfect storm in 2010 is to first get educated. Learn about Subject-To as a technique to pick up properties with no money and no credit. Learn about Wholesaling as a way to move these properties quickly to other investors who will fix them up and retail them. Learn about Hard Money Lending and how to raise private capital by helping people self-direct their retirement plans. And most importantly get connected with other local sophisticated investors in your area that you can do deals with and partner with to help ease your learning curve.

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