Seven steps (and one giant leap) to buying your first home
BY JEFF BENNETT
Knight Ridder Newspapers
DETROIT -- My phone rang at about 4 a.m. It was my fiancée, Kimberly Kozlowski, in tears. A few hours before we had completed an hour-long conversation and reached a decision. We would raise our offer on the house it had taken us three months to find. Kim, however, had changed her mind and it wasn't long before I followed. Instead, by 10 a.m., we would make an offer on a new contender, another house we had laid eyes on only a few days before.

But I am getting ahead of myself. After all, just to get to this point involved months of intense work and the seven basic steps of first-time home buying. For those entering the housing market it can be one of the most stressful, mentally demanding, sometimes confusing, but exhilarating journeys in life.

1. Decide where to live
Although it seems simple, choosing where to live is crucial and is the first decision we made together. Every week, there are scores of houses listed for sale in real estate sections. The information can be overwhelming if you haven't mapped out a specific area beforehand. Even within our defined location area, we looked at more than 50 houses.
We discussed what we wanted out of this first house. We agreed this would only be a starting point, instead of a place where would spend the rest of our lives. Since we have no children and schools aren't yet an issue, we decided to choose an area that fit our lifestyle.

2. Pick a real estate agent
The mere mention of the words "we are looking for a home" will generate a hailstorm of cards from and recommendations for real estate agents. If you're stuck, ask a coworker or friend for some ideas.
Out of all the suggestions, the decision came down between a family friend, Plymouth builder Walter Menard, and Kim's brother Kirk, who had just received his real estate license and was working for Island Realty in Grosse Isle.
We decided on Kirk, but it wasn't because of his family ties. He was the one who could devote the most time and attention to our needs. If you are serious about finding a place, you need an agent who, first, can match your pace and, second, knows the area you've selected for your search.
It was the end of March when we started our house hunt. Our goal was to be in a house by the end of June so we could escape renewing our yearlong apartment leases.
As we discovered, Sunday is the big open house day across metro Detroit. But open houses usually run only from 1 to 4 p.m., and many houses you may want to see -- especially the latest ones to hit the market -- require prospective buyers to make appointments. The real estate agent must handle that chore and must be with you at every house you enter. The size of your selection pool depends on how many houses your agent can get you into. At the height of our house hunt madness, Kirk managed to get us inside six houses in 90 minutes one night.
But that is just the beginning of the Realtor's role. He or she also handles making the offer, which involves completing all the paperwork. Each offer requires forms that must be signed in triplicate. The copies go to you, your real estate company and the seller. Our agent had to prepare at least 35 pages of documents for each offer. We ended up making three offers.
The clock is always running and others are out there shopping. Any delay could cost you your chance at your dream home.
Real estate agents representing buyer and seller split the average 6 percent commission they make on the deal, so we had no hesitation about calling Kirk four to five times a day and peppering him with questions.

3. Find a mortgage lender
Before starting our hunt we needed to know what we could afford. Like real estate agents, there are plenty of home mortgage lenders out there.
You have to shop around and find someone you can trust. That means going on a few office visits, asking a lot of questions and comparing what the lenders will do for you.
We chose Mark Savitskie of Argent Home Loans in Plymouth. He met with us near our jobs and answered all our questions.
During the loan process you'll get a financial snapshot via a credit check that reviews your financial history for debt and how much credit you use. The higher your score, the better your chance of getting a lower-interest loan.
You will be asked one of the most difficult questions at this point: What type of loan do you want? There are 30-year fixed rate loans and the 15-, 5- and 3-year adjustable rate mortgages. Adjustable rate mortgage loans can offer lower starting interest rates than fixed-rate loans. That translates into immediate savings on interest costs. You lock in the rate, for instance, for five years. After that, however, the rate can increase or decrease depending on where current interest rates stand.
We chose to go with a five-year ARM because we aren't planning on being in our home for 30 years.
You must decide how much money you can put down, too. All loans are structured to allow you to invest a down payment of any amount. But if possible, try to put down 20 percent, even if it means borrowing from family or friends like we did. Anything less than 20 percent and you may end up paying private mortgage insurance (PMI). This insurance protects the lender against any loss arising from the borrowers' default on the loan. Paying PMI, however, is just an extra cost and does nothing to lower your mortgage.

4. Set your requirements
With our background work complete, we could finally begin our hunt. We decided to start by using a Sunday to visit 10 open houses. The visits helped us form a list of things we wanted in a house. This list, like choosing an area, is crucial, because your agent uses your requirements to cull through new properties that appear on the market. The more requirements you provide, such as that the house must have central air or it must not face a busy street, the less time is wasted.
We wanted a house between 1,300 and 1,600 square feet. The size meant we would get a house that was big but not too big, because we like to spend our weekends camping and golfing rather than cleaning and doing yard work.
We wanted three bedrooms and at least two bathrooms, one of which would have to be on the second level. This requirement would prove a pivotal point in our house hunt because most houses in the area we were searching have only one bathroom. Because Kim loves to cook, we needed a place with a good kitchen and a separate area for eating. We were willing to compromise on this requirement, but not much.
Also, we wanted a garage where we could fit at least one of our cars, if not both.

5. Hunt for the right house
For any project you need a good set of tools.
For us it was an e-mail account, a three-ring binder, a notepad and a highlighter. At the start of the week, Kirk would send a list of houses to our e-mail account. Most had pictures and the technical information. After viewing the houses, we told Kirk which ones we liked and wanted to see. I would then print out the selections and put them in the three-ring binder. The binder became our shopping blueprint so we could move from one house to the next. Considering that you could see up to a half-dozen houses in one day, it is helpful to take a few notes while touring each home.
We helped in the house-hunting process by driving by homes that were up for sale. We jotted down the addresses and telephone numbers of the real estate companies. We fed this information to Kirk and he would set up appointments.
The trick to efficient house hunting is to control the process. You have to make the decision whether you want to see a home or how long you want to tour one. The real estate agent can offer suggestions or point out different considerations, such as water damage on the basement wall, but you are in charge.
After a few weeks you will become pros at house hunting and know within the first 10 minutes whether the home you entered might be right for you. If it's not, don't spend a lot of time there. Eliminate it and move on.

6. Narrow the choices
After five intense weeks of searching, we narrowed the field to two houses -- one we had walked through three times and another we walked through once.
The first was a 1,342-square-foot, two story-home located about five blocks north of downtown Ferndale. The living room had a fireplace flanked by two stained glass windows.
There was a separate, hardwood-floor dining room off a large kitchen that featured a breakfast nook. The upstairs had three bedrooms and a bathroom. There was no downstairs bathroom, but we were willing to comprise because of the home's internal charm. Outside was a patio and a small backyard.
The house was in an excellent location, an important consideration because we knew that in about five years we would be selling it again. Buying a house is as much a business decision as an emotional one.
The only drawbacks were the small master bedroom and an odd little feeling in both our stomachs that the house is great but it may not be us.
The other choice was a 1,400-square-foot home southeast of downtown Ferndale. The hardwood-floor kitchen was huge, allowing enough open space for a dining area. Since we weren't cramped, we were willing to forgo a dining room separate from the kitchen.
There was a deck on the back and, best of all, 2 1/2 bathrooms.
The only drawback, we were told, was that the location might hurt our chances of getting a quick sale when it came time to resell the house. We weren't willing to accept that assessment on its face, so we did our homework on Monday. We went to the police station and inquired about crime in that area. The information is public and the police department was more than helpful in telling us the types of situations that they had handled in the area. We drove up and down the streets surrounding the house to see if neighbors were investing in their properties. Sure enough, people were not only investing, but two properties on the end of the street had new homes.

7. Make the decision
The second house was the winner.
We had made an offer of $215,000 on the first property about a month before we toured the second home. Initially, that owner did not want to come down from the asking price of $230,000, but later said she would come down some if we could increase our bid. We told her we would think about it that weekend, then we decided to look at a few more houses.
It was then we walked into the second property and right away Kim and I knew that this was the home for us.
We talked about it Sunday night and decided that we should go with the first property. It was a sure thing when it came time to resell.
Then, at 4 a.m. Kim called and said she had had a change of heart. She liked the second house, as did I. We agreed that although a house is a business investment, too, it's a place where you are going to live, and the emotions drawing you to a place you can call home can't be disregarded.
At 1 p.m. we made an offer of $190,000 on the second property listed at $200,000. After a bit of negotiating we reached a deal of $194,500. We closed on our first home June 19.