So, you want to buy a new house for your family and want to go through the whole process independently! That can be a good idea to save a lot of money from brokers if you know how to buy a home. Buying a home can become very simple if you follow some very simple steps: What is your budget? If you do not want to curse yourself in future for buying such an expensive home, the ideal first step should be a shameless calculation of your budget. A budget does not mean the maximum amount you can spend. A budget should ideally mean the amount you can spend every month after leading almost a similar lifestyle or a lifestyle agreed upon. The actual amount that you can afford depends on your monthly income, your credit rating, current monthly expenditure including previous loans and installments, down payment and present interest rate. You can calculate it easily using a finance calculator offered be almost all loan agents online. Normally this service is no obligation and free of cost. Or you can use the simple FHA formula. The formula goes like: you can afford to spend 29% of your gross monthly income depending on your debt. Otherwise you can invest up to 41% of your monthly income on housing or house related expanses if you do not have any previous debt to repay. Find your Lender: Get a lender but do not surrender to his or her wishes or plans. A lender is a businessman and he can hardly be your friend. Do all necessary home works and get up to date with the latest market trend and interest rates even before you set any appointment with your loan agent. Make up your mind on what kind of a loan will best suit your financial condition. You can select from a conventional mortgage loan, sub prime mortgage loan or a FHA loan. Calculate the repayment options available before opting for any of them. Get the best bargain possible and get the most out of it. Always remember that he is not the only lender in the market. Other things you need to calculate is primary down payment amount, monthly mortgage payments and even the trustworthiness of the lender and it’s market reputation. Last but not the least, read the offer document carefully and critically before signing up for any agreement. Do not hesitate to ask a question if you can not understand a clause or a technical term. The other person is bound to clarify all the details to you. If you follow these simple steps meticulously, you can save a lot of money while buying a home.
I recently received a newsletter from one of my favorite stock gurus. His name is Alexander Green, Chairman and Investment Director for the Oxford Club, a private investment club. In the newsletter "Real Estate: Why Greenspan Is Right This Time", Alexander Green comments on remarks made by Alan Greenspan regarding falling home prices. Mr. Greenspan had said that home prices were nowhere near the bottom.
I don't have credentials like Greenspan and Green whom I greatly respect. Before I retired, I was a mortgage broker for many years. Before that I was a real estate agent. Before that my husband was a real estate agent. Jointly, we have been professionally involved in over 3 consecutive decades of real estate markets and more than 5 decades in totality.
The reason I share this is to let you know that I have passed through every financial cycle and survived to tell about it.
Our introduction to working in real estate began in Long Beach, California. It was 1979 and we were in the middle of the Savings and Loan Crisis, a crisis that was just as devastating to the real estate market as the Credit Crunch we are experiencing today.
Here is what I learned. Timing the market can be frustrating and discouraging. But this is a fact. When news of doom and gloom overtake TV, radio and the internet, know that the worst of the credit crunch has passed. I have seen many people try to determine the exact time to buy a house, believing that they could pick the perfect low point in the market. It was seldom successful and ended up in frustration.
Here is what I think. In spite of what some professionals claim, the home you live in is not an investment. I tend to follow Robert Kiyosaki's view in this regard, the author of "Rich Dad Poor Dad". When he explains in his book that a house is not an asset, he is saying an investment is something that puts money in your pocket. For the most part a home is something that takes money out of your pocket.
However over time, home ownership brings financial stability to a family as long as the mortgage payments are affordable. In addition, if you look at home ownership statistics over a 20 year period instead of a 2 year period, it is almost impossible to lose.
So, here is my recommendation. First stop waiting for the media to tell you it's okay to buy a house. They don't know how to time the real estate bottom or the direction of mortgage rates. Truthfully, no one else does either. Even the so-called financial gurus received a surprise by the magnitude of this present crisis.
Second, start now to investigate your market. Start by deciding which areas that you would prefer to live in. Study the prices. Use real estate websites to request notification every time a new listing comes on the market. Many realties now offer this service.
Third, on weekends take a little time to relax by visiting open houses. This can be fun. Talk to real estate agents. Get the lay of the land, so to speak. Familiarize yourself with your market.
Fourth, use the services of a mortgage company to become pre approved. The most important part of buying a home is knowing how much you are qualified to borrow. Make the decision to get pre approved before shopping for your most important purchase, a home.
Fifth, save, save, save. One of the most important reasons for mortgage pre approval is to determine how much money you are going to need for down payment and closing costs. These are important numbers to know before shopping for a home, not after you make an offer. The safest way to eliminate surprises and remain realistic while searching for your new home is mortgage pre approval.
When the housing market is going to turn around is anyone's guess. No one knows.
However you can easily know this. This housing downturn will end. But don't wait to prepare. The buyers who do their homework now by following these 5 steps will be ready to strike.
Both James Jean & Kate Ford are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
James Jean has sinced written about articles on various topics from Finances. James Jean is a home landing agent with years of experience in the same field. For more information and ,. James Jean's top article generates over 1300 views. to your Favourites.
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