Are you considering purchasing a Boston area home for the first time? If so, you are probably both excited and nervous about your decision. After all, purchasing a home is a major transaction and you are getting ready to embark upon a major change in your life. To ensure the process goes as smoothly as possible and to make certain you are making a sound financial decision, it is important to keep a few tips in mind when purchasing your first home.

Tip #1: Know What to Expect

Before you contact a Boston real estate agent, it is a good idea to get a clearer picture of how much home you should expect to get at what price, and how the buying process works. While your real estate agent will certainly help guide you through this process, the better prepared you are beforehand, the easier it will be for you to work with your agent. To get a general idea of what you can expect to pay for a home in your area, visit Websites such as Zillow.com and Homegain.com.

Tip #2: Determine What You Can Afford

It is also in your best interest to have a good idea of what you can afford to pay for a home. In this way, you can give your agent an idea of the price range of homes to look at. To help get a better idea of how much you can afford to spend on a home, you might want to use one of the many mortgage calculators that are available on the Internet. Also, keep in mind that Fannie Mae recommends spending no more than 28% of your gross income on your housing costs. You can follow this up by speaking with a mortgage broker, a resource that can provide significantly more detailed information about the lower and upper bands of home prices you should be considering.

Tip #3: Decide What You Are Looking for in a Home

By assessing your current and future needs, you will be better able to determine the type of house and features you are looking for. The better you communicate these needs to your real estate agent, the better he or she will be able to narrow down your options to those that are the most likely to suit your needs.

Tip #4: Don’t Be Afraid to Negotiate

One of the benefits of working with a real estate agent is that he or she should have great negotiating skills. Don’t be afraid to speak up about what you want from the transaction, including extras such as having the furniture included in the price or having the seller pick up the cost of certain inspections and repairs. The more you communicate your desires to your Boston agent, the better prepared he or she will be to negotiate a great deal on your behalf. Bear in mind that almost everything is negotiable in real estate, including inspection items that come up during the standard inspection process.

About the Author: Brian Kinkade is a broker and team lead with Brokers Guild – Cherry Creek Ltd, one of Denver’s fastest growing full service Denver real estate firm. Brian’s team of Internet savvy agents service the Denver Metro area while specializing in Denver luxury homes, Colorado horse property and International sales. They invite you to visit their advanced real estate website today to search for homes, gather local information, and learn about Denver neighborhoods. Brian and his team are standing by and ready to assist with your home purchase, property sale or relocation needs.

When it comes to buying a home, some buyers might be tempted to cut out the middleman and attempt to do all of the work on their own. While this is certainly one possible option, there are actually many reasons why a buyer should seek out the assistance of a Realtor when purchasing a home. So, why use a Realtor? Here is a look at the top 10 reasons to buy a home with the help of a Realtor.

Reason #1: Taking Advantage of Expertise

The simple truth is that Realtors are experts at what they do and buying a home can be more overwhelming and complex than many think. By working with a buyer’s agent when purchasing a home, homebuyers can take advantage of the expertise they bring with them. As a result, they are more likely to find the home they are looking for at a price they can afford in a much timelier manner.

Reason #2: Tapping into Connections

Since Realtors have experience working in the industry, they have already formed a number of connections that can help homebuyers save money and time. From mortgage loan officers to home improvement contractors, Realtors know who to work with and who to stay away from within the industry.

Reason #3: Determining Your Buying Power

Realtors know how to sit down with their clients in order to help them determine just how much they can truly afford to spend on a home. By helping the homebuyer narrow down options, the Realtor can help save time and money while preventing unnecessary headaches.

Reason #4: Saving Time

Because they are already familiar with the properties that are available on the market, Realtors can help homebuyers save a significant amount of time when it comes to finding the houses that suit their needs as well as their budgets.

Reason #5: Locating Rare Gems

Sometimes, homes that are on the market are not actively advertised. As such, buyers who choose to go it alone are likely to miss out on these rare gems. Those who work with a Realtor, on the other hand, are far more likely to learn about homes that may require a bit more investigation to find.

Reason #6: Comfort through Expectations

While you have been through the buying process at most probably 3-4 times, a Realtor does this for a living, and has been through countless transactions.  A Realtor knows the timeline and major transaction markers for home purchases in your market and can set expectations with you early on as to what to expect during the transaction process, putting your mind at ease.

Reason #7: Offering an Objective Eye

When searching for available homes, it is easy for a buyer to get caught up in the things he or she loves about a home without seeing the big picture. Since Realtors have access to a variety of different informational resources, however, they can provide objective input into the buying process that will help the buyer make a smarter decision.

Reason #8: Enjoying Increased Negotiation Power

When purchasing a home, there are many aspects that can be negotiated. This includes the price, the date of possession, the financing terms and more. With the experience of a Realtor at his or her side, the buyer will have the best chance of negotiating a favorable deal.

Reason #9: Choosing the Right Financing

Due to the experience and connections the Realtor has to offer, he or she can also help the homebuyer sort through the various financing options while also helping the buyer find the best lenders to suit their needs.

Reason #10: Knowing Someone Has Your Back

Perhaps the most important reason a homebuyer should work with a Realtor is simply because he or she can take comfort in knowing that someone has his or her back. Realtors provide due diligence during the evaluation of the property and can assist with having it inspected for asbestos, dry rot, faulty structure, termites and more. In addition, the Realtor can provide information regarding access rights and other concerns that might need to be addressed before a deal is made.

The Boston real estate market is one of the oldest markets in the nation and with a wide variety of housing available and neighborhoods that range from multimillion dollar estates to economical fixer uppers, many Boston-based homebuyers need to stop and ask themselves this one essential question: In a buyer’s market, is the potential of a property more valuable than its location?

In Potential, Potential, Potential Rona Fischman examines this very issue. As many neighborhoods are up and coming in the greater Boston area, are buyers better off paying more for an established location and perhaps sacrificing home size, or is your dream home in a less than desirable location worth the risk?

Location, Price Point, and Sacrifices

In each instance many variables apply and as Fischman points out, you can generally tell what to expect from a property by examining what the developers have left behind. Case in point, the examples Fischman gives of a modest ranch home in Newton and a fixer upper in Somerville.

The modest ranch in Newton, an affluent Boston suburb, is surrounded by homes that have been developed and turned into multimillion dollar investments. Why was this house the one stone unturned? Digging deeper, the lot on which this house is situated was not quite big enough and would not permit a two family townhome (as the developer would want to build), in fact the lot permitted the modest type of home it already housed, revealing that the maximum possibilities, (and earning potential) for this home have already been reached – this also serves as a reminder to perform ample due diligence during the purchase process.

Potential, Maximize Your Dollar, Forfeit Curb Appeal?

In her second example Fischman discusses a home in Somerville, a suburb of Boston that is evolving into a desired area, for among other reasons, expected updates to public transportation. Many homes in this area are old, run down and need extensive work. Because of the foreseeable convenience of public transportation, new schools are being built and people are beginning to move into the area. Though the location is not yet comparable to Newton, Wellesley or any other established area, the potential is building, and is far from reaching its limit.

Ask Your Realtor

There are many questions buyers must ask themselves before buying their first home. Know yourself, know your bottom line, and most importantly, know a good realtor. For some, the risk of buying a home in a growing neighborhood is not worth the safety of living in an established locale. For others, a beautiful home in a slightly less affluent area is more desirable. A good realtor familiar with your market can help you and your family find the right balance and maximize your investment.

The most recent cover of Boston Magazine offers readers a look into 23 of the most sought after communities and trendiest neighborhoods in Massachusetts – in short, the best places to live in Massachusetts. Through comparing the median home or condominium prices and spikes in sales since the market peak, Boston Magazine provides profiles of numerous cities and towns from various regions across the state. These 23 communities are then divvied up into the following three categories:

1. Gold Standards, for the tried and true real estate hot spots in Massachusetts
2. Bangs for your buck and worthwhile investments are considered to be Best Values
3. Opportunity Knocks sheds light on the communities that have major selling points but have yet to reach their full potential on the popularity scale, largely for first time home buyers looking to settle in an up-and-coming spot

By showcasing towns based on these criteria, Boston Magazine has put together a veritable guide to Massachusetts for those taking the first steps in buying a house and those selling homes in Boston and beyond.

Real estate riches in Massachusetts: Winchester, Westwood, Brookline, Hingham, Manchester-by-the-Sea and Concord.

The cities and towns dubbed Golden Standards by Boston Magazine have been so for years for their excellent school systems, staggering property values and countless perks in the form of restaurants, theaters and historic landmarks. Buying a home for the first time in these towns can be pricey, but deals can be found amongst the property listings even if home sales statistics have dropped considerably in these areas over the past few years.

Best Values for First Time Home Buyers in Massachusetts: Jamaica Plain, Norwell, Essex, Natick, Burlington and Foxboro.

With the tax credit for home purchases inspiring house hunters to seriously consider putting a payment down, communities boasting numerous perks with low living costs are a natural fit for first time home buyers. Jamaica Plain was the city pick as one of the most desirable places to live in Massachusetts for its vibrant artistic community, sprawling green spaces and neighboring proximity to Boston proper. For those selling homes and looking to move to the suburbs, Burlington, Foxboro and Natick all made the cut as fantastic values for their affordable prices, notable local attractions and easy accessibility to major highways and public transit.

Selling Homes in Massachusetts’ Up-and-coming Communities: Watertown, Pembroke, Melrose, Hamilton-Wenham, Sharon and more.

Steep tax rates, administrative tiffs and mediocre locations have these towns listed as up-and-coming communities for their potential and their tradeoffs: Owners are selling homes at reasonable prices, great school systems and lively restaurant and seasonal scenes are the big attractions when it comes to those towns in the Opportunity Knocks category. First time home buyers shouldn’t shy away from towns like Watertown, Pembroke and Sharon without carefully examining the pros and cons, as the benefits of living in one of these communities on the cusp of trendy could far outweigh the pitfalls depending on what you’re looking for.

In most instances, mortgage lenders require that home buyers obtain homeowners insurance as a loan condition. Be sure to research the best premiums for insurance on your own as you will save money. If the lender imposes insurance, it will undoubtedly cost much more, so do your homework.

If you live in a community governed by a Homeowners Association (HOA), be certain that your lender has a copy of the HOA insurance policy covering the home exterior. Reminder: you will still need your own insurance to cover the interior and contents of the unit.

It is important to determine that you have sufficient insurance to cover any and all losses before a problem occurs. You should also be sure to ask if you need special coverage for items like jewelry, art, antiques, computers and the like.

While your home should be insured, the land it stands on is typically not since the majority of home disasters will not affect the land. Be sure to subtract the value of the land when working with your insurance agent to calculate premiums or you will be paying premiums that are too high and not necessary.

“Replacement” coverage will provide sufficient insurance to rebuild your home and replace all its contents. If you opt for “Actual Cash Value” coverage, even though your premiums will be less costly, you will receive only enough to cover what the property is worth at the time of the disaster which equals depreciation for wear and tear plus your cost of the property.

You may be eligible for discounts if you are either a long term customer of the company or are a senior over age 55. Some safety features in the home may also qualify your policy for lower premiums such as smoke detectors, security doors and alarm systems, dead bolt locks, etc.

My First Place, HGTV’s hit series, is coming back for an eighth season and they’re looking for first-time homebuyers (and their agents) in the Greater Boston area right now. As either a first time bomebuyer or real estate agent, here’s your chance to be on HGTV My First Place in Boston.

HGTV is looking for fun, high-energy people who are just starting the home-buying process for their first place and would like to share their story with HGTV. Their goal is to capture all the trials and tribulations of looking for, bidding on and buying a first place.

Taping takes place spring and summer 2010. Ideal candidates will be enthusiastic buyers with a great story to tell and a desire to share their experiences. Singles, couples and families are all invited to apply!

Candidates (including Realtors) who complete taping of a My First Place episode will receive a DVD copy of their show so that they can relive their first-time home buying experience for years to come.

Request an application to be on HGTV My First Place Boston by emailing cbaggish@highnoontv.com or calling Cindy Baggish at (303) 712-3093.

What is a HUD-1 Settlement Statement and When is it Used?

The HUD-1 Settlement Statement, which is commonly referred to as the HUD or the Settlement Statement, is a standardized form which provides a line item detail of all of the charges associated with a residential real estate transaction (i.e. a purchase or refinance).

The Real Estate Settlement Procedures Act (commonly known as RESPA) requires the use of the HUD-1 Settlement Statement for transactions involving a federally related mortgage and in which there is a Borrower and a Seller. However, the industry standard is to use the HUD-1 for cash deals and refinances as well.

How is the Settlement Statement Read?

Page 1 of the Settlement Statement identifies the loan type (e.g. FHA, VA, conventional), the Buyer/Borrower, the Lender, the Seller, the Settlement Agent, the property location, and the settlement and disbursement dates. In addition, the first page provides a summary of the transaction with the Buyer’s side of the transaction documented in the left column of the Settlement Statement and the Seller’s side recorded in the right column. If the transaction is a refinance, a summary of the Borrower’s transaction will appear in the left column and the right column will be left blank since there is no Seller.

Page 2 of the Settlement Statement provides a line by line accounting of the various settlement charges with the Buyer’s fees again accounted for in the left column and the Seller’s charges listed in the right column. These settlement charges are grouped by type. For example, Items Required by the Lender to be Paid in Advance (e.g. prepaid interest, mortgage insurance premium, hazard insurance premium) can be found in Section 900 of the Settlement Statement. All of the individual settlement charges are then totaled at Line 1400 of the HUD (titled Total Settlement Charges) and recorded again on Page 1 at Line 103.

Download a sample HUD-1 Settlement Statement (1.34 MB PDF)

Summary of the HUD-1 Settlement Statement

The HUD is a standardized form which provides a line item accounting of the transaction. It is commonly used for both purchases and refinances, although it is only required by RESPA in transactions involving a federally related mortgage and in which there is a Borrower and a Seller.

In preparing for a real estate closing, be sure to review the HUD before arriving at the closing table (presuming of course that time allows for the circulation of the final HUD in advance of closing; in practice this does not always happen as oftentimes there are last minute adjustments). Do not presume that the HUD is perfect. Although the settlement agent should thoroughly review the HUD prior to circulating the final version, it is entirely possible that a mistake was made while entering the data. If you have questions, consult with your attorney and real estate agent. By reviewing the HUD and addressing any issues in advance of the closing, you are setting the stage for a smooth and successful closing.

Many people tentatively commence their house hunting by picking up a local newspaper, searching through various web sites and randomly attending open houses. This “on my own” methodology can become frustrating once folks realize they’ve been wasting their valuable time viewing homes that may not fully meet their needs or fit their budget. Furthermore, open houses are managed by a real estate agent who, by law, represents only the seller’s best interests. The question is: who best represents the buyer?

Before you go house hunting in earnest, choose a Realtor^® with an ABR^® designation next to his or her name. This highly qualified real estate professional is specifically trained to represent you, the buyer. Since buying a home is probably the single most expensive and significant purchase you will make throughout your lifetime, it’s essential to have a top guide who will be your “project manager” to handle the many behind-the-scenes details through the closing process and beyond.

Working with an ABR gives a buyer a second set of very objective eyes. A buyer can easily fall in love with a property and unwittingly become blind-sided to its shortcomings. However, when an ABR takes a buyer out for private showings, he or she uncovers the not so obvious pros and cons of each property by posing a series of focused questions to the listing agent. Knowing the right questions to ask gives the buyer important information that can make the difference between buying the right home – versus making a significant, regrettable mistake.

An ABR’s services also include researching the prices of comparable properties to determine whether a home is overpriced for current market conditions – which have been rapidly changing rapidly throughout the past few years – month by month! An ABR then negotiates a purchase price in your favor, coordinates a thorough home inspection (sometimes leading to additional negotiations), assists in finding an attorney, facilitates financing through a reputable lender, and handles every last detail to ensure that all goes smoothly toward a successful, on-time closing. Success is carefully planned!

Bottom line: you wouldn’t think of going on a safari without a guide. The same holds true for house hunting. Because it’s often the “unseen things” that cause the biggest problems, it’s smart to have a great guide who knows what to look for every step of the way.

Through the home buyer tax credit of the American Recovery and Reinvestment Act, an $8,000.00 tax credit is available for first-time home buyers on a primary residence purchased during calendar year 2009. While much has been written about the benefits of the credit, the following is intended to provide a high-level snapshot of the program’s requirements:

• A person is considered a first-time buyer if he/she has not had any ownership interest in a home in the three years prior to the day of the 2009 purchase.

• The amount of credit is determined by: (i) the purchase price (credit = 10% of purchase price); and (ii) the buyer’s income level (individual buyers with an income of $75,000.00 or less and couples with a combined income of $150,000.00 or less are eligible for the full tax credit).

• The credit is then phased between $75,000.01 and $95,000.00 for single taxpayers and $150,000.01 and $170,000.00 for married couples filing a joint tax return.

• The credit does not have to be repaid provided buyer occupies the home for 3 years or more.

• The credit is a “refundable credit” – if the purchaser’s total tax liability in the given year is less than $8,000.00, the IRS will send a refund for the balance (If, for example, the purchaser’s total tax liability = $7,000.00, the purchaser would receive a check for $1,000.00)

• A 2009 purchase may be claimed on the purchaser’s 2009 return or in the alternative, the purchase may be treated as if it occurred on December 31, 2008 thereby giving the purchaser the option of filing an amended 2008 tax return (see Form 1040X at www.irs.gov).

The Offer to Purchase is generally regarded as the first step in the real estate transaction. The Offer to Purchase will include the purchase price, required deposits, a proposed closing date, and any terms which the purchase is contingent upon. Common examples of contingencies include the mortgage, inspection, and appraisal contingencies.

Unfortunately, many home buyers and sellers do not realize that with the acceptance of the Offer to Purchase, Buyer and Seller may very well have entered into a legally binding contract. Where the following three (3) elements are met, Buyer and Seller have entered into an enforceable contract: (i) the Offer to Purchase includes all of the essential terms of the contract; (ii) the Offer to Purchase is in writing and signed by the parties; and (iii) the parties intend to be bound by the Offer to Purchase.

Moreover, the general conception appears to be that any errors or omissions in the Offer to Purchase can be rectified in the more formal Purchase and Sale Agreement (the “P&S”). However, this is somewhat erroneous as it is the Offer to Purchase that sets the outer parameters for the P&S. For example, should the Offer to Purchase fail to include a mortgage contingency, it will be extremely difficult to convince the Seller to agree to such a contingency in the P&S. Why? Because the Seller has based acceptance of the Offer to Purchase on the terms presented in said offer. To change the terms after acceptance is to change the rules of the game. This is not to say that additional terms and contingencies are categorically denied during the negotiation of the P&S. They are not. However, to ensure the inclusion of these contingencies, the Buyer will want to be absolutely sure that they are addressed in the Offer to Purchase.

To best achieve a properly structured Offer to Purchase, the Buyer should consider having their real estate attorney review the offer prior to transmitting it to the Seller. Most real estate attorneys will include this service as part of their flat fee, which has become the industry standard. Likewise, the Seller would be wise to have his attorney review the Offer to Purchase prior to the Seller’s acceptance.

With a properly structured Offer to Purchase and acceptance of that offer, the Buyer and Seller will have identified the terms of the agreement and thereby established the expectations of the parties; a critical first step in what is often one’s single largest investment.