Preparing for Homeownership!

So you are thinking about looking into buying your own home, but you don't have any idea as to where to begin, what to do, who to talk with first, what type of mortgage to get, how much money to put down, what documents you will need, so what should you do. If this sounds anything like your current situation, don't worry because you are not alone and plenty of people ask these same questions each and every day. Although, chances are if you are reading this article, then you are heading in the right direction.

Where do you begin then, and who should you talk with first in order to prepare for homeownership? First, before you do anything else, you and your spouse should sit down, figure out a good budget that still allows for you to live the lifestyle you are accustomed to, and invest the amount of money that you need to, in order to be ready for retirement when you have to. Do not, and I repeat do not, get caught up in the game of "keeping up with the Jones's" or the "status symbol" of having a huge house that everyone envies. I guarantee they won't envy the payment, nor will they help you make the payment each and every month (for most likely the next 30 years). Life is too short to stress about whether or not you will be able to make your mortgage payment, pay for your child's braces, buy your child new school clothes, etc... Live within your means and enjoy what you do have.

After figuring out your budget you should also figure out what you need from your house. Do you need to have 4 bedrooms because you have 3 children? Do you need to have 3 bathrooms because you have 2 teenage daughters who get up for school at the same time you go to work? Do you need to be in an excellent school district because you have school aged children? What are your needs and what functionality do you need from your home. Buying a two story home with one bathroom upstairs would not be a good idea if you have someone who can not walk up stairs living in the house. Make a list of "needs" and make another list of "would like to haves." Don't settle on the "needs", but learn to settle without some of the "would like to haves."

Now you are ready to begin and next you should start off by talking with neighbors, friends, relatives, co-workers, etc... to find a reputable mortgage company or a reputable Realtor to begin working with. If you find a great Realtor first, then start off with the Realtor. If you find a good Mortgage Professional first then you should start off with the Mortgage Professional first. Many times it makes things easier to get pre-approved for a mortgage first so that you know you can indeed buy a house, how much you can afford and also it to show Realtors and sellers that you are serious and ready to buy. Good Mortgage Professionals and good Realtors can be very hard to find and once you find one, hold on tight and never let go.

Your Realtor will be able to find the houses for you to look at based on your needs and your Mortgage Professional will be able to put together your mortgage options, down payment options and program choices based on your financial situation and financial goals. You may qualify for a zero down mortgage loan or you may need to put down 5-10% in order to buy a home, depending on your financial situation, credit scores, debt to income ratio, etc... The most typical mortgage program right now for a home-buyer is a 30 year fixed rate mortgage. This offers the most comfort and affordability of almost any other mortgage program because the rate is fixed for the life of the loan and you are stretching your mortgage out over 30 years. You can always pay extra whenever you want if you desire to pay off your mortgage quicker as well. There are many other programs available as well, but especially in this real estate market right now, the 30 year fixed will usually be the best and most reliable option. Do not get "suckered in" to one of those television advertised deals of a 300,000 mortgage for only $800. If it sounds too good to be true it usually is.

You will need to have ready for your mortgage professional: 

• Your last 2 year's of W2's or tax returns
• Your 2 most recent pay stubs
• You 2 most recent bank statements (for checking and savings accounts)
• Any other liquid asset statements (401k, IRA, mutual funds, stocks, bonds, money market account, etc..)
• Bankruptcy discharge papers (if applicable)
• Divorce Decree (if applicable)
• Purchase agreement (if you already have one)
• Name and phone number of your insurance agent (if you know who you will place your homeowners insurance through)
• Any applicable supporting documentation for additional income, credit documentation, assets, etc...

Following the above directions to be prepared for homeownership won't guarantee that everything will go as smoothly as possible, but they will help to make everything goes much smoother and lessen your chances for future problems with your experience of the homeownership process.