Step 2: Search for a home

Correct! There are so many cases of abuse by “affiliated” lenders that you should be very wary. It’s best to deal with your own lender. If the seller comes up with a finance deal that seems unbeatable, show it to the lender of your choice. He may not be able to beat it, but you can ask him to have standby financing available just in case the seller turns out to be less than honest and comes up with a totally different, less attractive deal at closing.

Incorrect. There are so many cases of abuse by “affiliated” lenders that you should be very wary. It’s best to deal with your own lender. If the seller comes up with a finance deal that seems unbeatable, show it to the lender of your choice. He may not be able to beat it, but you can ask him to have standby financing available just in case the seller turns out to be less than honest and comes up with a totally different, less attractive deal at closing.

Correct! You don’t need to, and shouldn’t,  take the seller’s word regarding the price of their home; estimate the value online using tools such as this free home valuation service. You should also consult with your realtor; he or she will have a good sense of whether the seller’s price is in the ballpark.

Incorrect. You don’t need to, and shouldn’t,  take the seller’s word regarding the price of their home; estimate the value online using tools such as this free home valuation service. You should also consult with your realtor; he or she will have a good sense of whether the seller’s price is in the ballpark.

Correct! Be warned: Buying foreclosures at this stage -- “on the courthouse steps” -- is a realistic strategy only for sophisticated buyers, not you; you are often required to buy the home without seeing it, and to pay cash. This is not a good idea for a first time home buyer.

If at the auction there are no bids high enough to cover the loan amount, the lender will assume ownership of the property and will try to market it in order to recover its losses. At this stage – once the foreclosed home has been transferred to the lender’s ownership – you may want to consider buying the foreclosed home.  A lender who has just assumed ownership of a foreclosed home MAY make for the most negotiable seller, especially if that lender has a number of foreclosed properties in their possession.

Incorrect. Be warned: Buying foreclosures at this stage -- “on the courthouse steps” -- is a realistic strategy only for sophisticated buyers, not you; you are often required to buy the home without seeing it, and to pay cash. This is not a good idea for a first time home buyer.

If at the auction there are no bids high enough to cover the loan amount, the lender will assume ownership of the property and will try to market it in order to recover its losses. At this stage – once the foreclosed home has been transferred to the lender’s ownership – you may want to consider buying the foreclosed home.  A lender who has just assumed ownership of a foreclosed home MAY make for the most negotiable seller, especially if that lender has a number of foreclosed properties in their possession.

Correct! The legal definition of a condo may vary from state to state, but the common denominator is that you own the portion of space within your particular unit, rather than the entire building in which it resides. You have the right to occupy this box and sell it to someone else, but the responsibility for the physical structure and maintenance of the building in which it resides lies with the condo association, of which you become a member. This can be a good thing (for example, if your roof collapses, the cost of repairs would be shared across all owners in the condo association). It can also be a bad thing, especially if the condo association is not financially sound, and you and your fellow condo association members are required to pay high monthly dues due to lack of proper cash reserves. Condos can be a great deal for first-time home buyers, but do your homework. Make sure the condo association is financially sound.

Incorrect. The legal definition of a condo may vary from state to state, but the common denominator is that you own the portion of space within your particular unit, rather than the entire building in which it resides. You have the right to occupy this box and sell it to someone else, but the responsibility for the physical structure and maintenance of the building in which it resides lies with the condo association, of which you become a member. This can be a good thing (for example, if your roof collapses, the cost of repairs would be shared across all owners in the condo association). It can also be a bad thing, especially if the condo association is not financially sound, and you and your fellow condo association members are required to pay high monthly dues due to lack of proper cash reserves. Condos can be a great deal for first-time home buyers, but do your homework. Make sure the condo association is financially sound.