For the average American, buying a home will be the biggest purchase you ever make. The thought of owing that much money can be quite daunting, especially if you don't make a lot of money or live paycheck to paycheck. But even taking this into consideration, buying a home is the best investment of your money that you can make for you and your family's future. In this day and age, most people are paying rent and all of the utilities anyway- so why not own your own home?
Once you are at a point that you feel you are ready to take that leap into home ownership, getting approved for the loan is the next big step. It is key to be sure that you do all of your research and not just take the first mortgage loan that you are approved for.
Before you even apply for a mortgage loan, sit down and figure out your budget so that when you apply, you know the amount of the mortgage payment that you can afford. Just because you are approved for a certain amount does not mean you can afford that amount!
The bank or mortgage lender should then be able to tell you what your price range for a home would be, based on the amount you can afford to pay for your mortgage payment.
Another thing that you will need to ask about is taxes. Taxes vary from location to location. Your taxes can be paid in one lump sum or they can be included into your mortgage. Including your taxes into your mortgage is highly recommended and sometimes required of first time home buyer's which could be to your advantage because you won't need to worry about coming up with a lump sum of money at one time. On that note though, it is very important that if you are going to build your taxes into your mortgage that you know how much that will increase your payment and if you are going to be able to afford that. If it makes your mortgage too much, you may want to consider lowering your price range of the homes that you will look at. Many people may be unaware of the fact that you can apply to multiple banks and mortgage loan businesses within ten days and it will only effect your credit score one time. Be sure to get a Good Faith Estimate from all of the establishments that you apply with and take them home and read EVERYTHING. Once you do that, you can then go with the one that offers you the best deal (ie, low fees, lowest interest rate, etc.)
Once you have your loan approved, it is time to shop for a house! Obtaining a Realtor is a good idea because they are professional's who know what they are doing and will be able to steer you in the right direction. They will also take all of your requirements you will need for your home and conduct searches for you and set up the showings for you also. Remember, they work for you. If they don't sell you a house they do not get paid so they will be more than willing to do what they can to meet your needs - especially in this volatile market with the housing market down, which is called a ?buyer's market.? This is to your advantage because housing prices are at an all time low. So you may be able to get more house for your money.
1)Before You Begin, Ask Yourself One Question Will you live in your next home for at least 3 years? If the answer is ?Yes,? you should probably purchase, rather than continue renting. With average appreciation, you'll break even on your closing costs after 2 years, and start making money at year 3. Every year after that will put more money in your pocket! The most expensive aspect of real estate is buying & selling, so the longer you can live in the home the better. However, purchasing makes sense if you can make as little as a 36 month commitment.
2) You Don't Need a Down Payment! It always surprises me how many people want to purchase a home, but don't because they believe that a hefty down payment is required. Zero down programs are very common, and are quickly becoming the norm, rather than the exception to the rule. Because your new home is collateral for the loan, there are many banks that will jump at the chance to loan you 100% of its value. Perfect credit isn't a requirement, either. Because real estate typically appreciates in value, it's often easier to be approved for a 100% mortgage than it is to borrow 100% for a car!
3) Get Pre-Qualified Pre-qualification is a very important step, and the step that first time home buyers dread the most. Qualifying to buy a home is pretty easy and requires relatively little work for you. Pre-qualification is what gives you buying power and allows you to make an offer on your dream home when you've found it. More importantly, pre-qualification will let you know how much your new home will REALLY cost ? in monthly payments. A $150,000 or $300,000 home doesn't mean a lot to most buyers ? but $1200 per month and $2500 per month are tangibles that everyone can understand. After your lender pre-qualifies you, ask them for a ?payment table? that shows you a rough estimate of TOTAL monthly payment based on purchase price. Pick your payment, and you know the price range to shop in.
4) Consult a Realtor ASAP Many first time home buyers avoid contacting a Realtor because they dislike high pressure sales. However, Realtors have an advantage over traditional salespeople because they have access to the Multiple Listing Service, which is a database that lists roughly 99% of the homes for sale in a given market. This means that your Realtor doesn't have to sell ? he/she merely presents your options. The most important qualities to look for in your Realtor are his/her knowledge of your specific market and their willingness to help. Interview a few agents and choose one that will help guide you through the process. You'll find the help & insight will be invaluable ? and you'll be glad you contacted your Realtor sooner, rather than later.
5) Make a List of ?Must Haves? & ?Wants? Many new home buyers mistakenly think that they will ?just know? when they ?walk into the one.? While some buyers DO fall instantly in love with a home, this is not the norm. You'll find your search is easier, and you will be more confident in your decision, if you take a systematic approach to your search. The best way to organize your search is to make two lists: Your ?must haves? and your ?wants.? Your ?must haves? are the absolute necessities in your new home ? in fact, you don't even need to view a home if it doesn't have every ?must have.? Great examples of your ?must haves? are price, school district, size, etc? Your ?wants? are the qualities that you would like for your new home to have, but it's not a necessity. Great examples of ?wants? are color, flooring, kitchen appliances, surround sound, and type of exterior. By taking the time to articulate what you need and want in your new home, you will know exactly what to look for when viewing prospective homes.
6) Pick Your Favorite Neighborhoods You can always make changes to your house, but you can never change its location. Most home buyers already have a good idea of where they would like to live because of school districts, work, or other factors. However, neighborhoods can be pretty different, even in the same area of the city. Ask your Realtor to email you a list of homes in the specific area of town you're interested in. Take a drive through the different neighborhoods on the list your Realtor sends you, and choose your favorites. Pay attention to area amenities, how well the yards & common areas are kept, and if you see a lot of ?for lease? signs ? which can be an indication of a heavy rental area, and lacking in ?pride of ownership.? After you have picked your favorite neighborhoods, and you know your ?must haves? and ?wants,? you can literally make a list of EVERY home available that meets your criteria, and view those homes.
7) Make Your Decision!!! Homebuyers often hesitate after they've found the right home because they're not confident about their decision, or their decision-making process. Your home is probably the largest investment of your life, and it's normal to feel butterflies in your stomach before putting your first home under contract. However, if you do your due diligence - and you have if you followed the steps above - then you will have your bases covered. If you've found a home that meets all of your ?must haves,? most of your ?wants,? is in the right neighborhood, and in your budget ? it's the home for you! Don't wait and let another buyer take YOUR home!
Buying your first home can seem very intimidating, but can be extremely exciting. If you think that buying a home is right for you, it probably is. Make sure and follow these important tips and you'll know you made the right decision when you find your first home.
Both Debbie Dragon & Eric Bramlett 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.
Debbie Dragon has sinced written about articles on various topics from Finances, Credit Cards and Kitchen Home Improvement. For additional help visit our at DestroyDebt.com. Debbie Dragon's top article generates over 165000 views. to your Favourites.
Eric Bramlett has sinced written about articles on various topics from Free Credit Report Score, Real Estate and Tanning. Eric Bramlett is the Broker and co-owner of One Source Realty in Austin Texas. Visit Eric's Guide, visit his. Eric Bramlett's top article generates over 135000 views. to your Favourites.