.....According to househuntnews.com, the answer lies in basic home buying skills.
The current market makes it tough for everyone, buyers and sellers alike, albeit for different reasons. A recent Realty Times article places emphasis on basic home buying skills as the key to home ownership.
The current slow housing market and the recent risky lending scandals have led to lenders tightening their purse strings overall. Lenders now want to make certain that borrowers are gainfully employed, can afford to pay their mortgage during its full term and have the extra cash to cover additional costs that crop up during home ownership.
What does this mean for you as a buyer? It means that you need to have all your ducks in a row before shopping for a home. "If people were really responsible for their own financial behavior that would have taken the power away from people who put them in these [risky] loans," says Shawneequa Badger, a real estate agent with CENTURY 21-Alpha in San Jose, California. "There's still a market out there for people to keep things moving. Just stop the irrational financial behavior."
First, you need to realize that the benefits of owing your own home are far greater than any sacrifices you need to make to get into that home now. Next, follow these steps to prepare yourself for the now-rigorous home buying process.
• Set a budget and follow it. The key to responsible finances, and therefore to successful home ownership, is to understand where your money goes and how you can cut costs. If you're not sure where to start, you can check out the Better Business Bureau's budget template at www.bbb.org/ALERTS/article.asp?ID=709.
• Save, save, save, then save some more. Lenders today will expect you to not only have a sizable down payment, but also to have money left over for general home buying expenses, such as taxes, insurance and home maintenance. If your budget reveals that you are spending on some areas in which you can cut back (such as dining out or stopping at Starbucks every morning), make the necessary sacrifices and put the money aside in a savings account. Other recommendations for saving money include clipping coupons, renting movies through the mail instead of going to the movie theatre and entertaining yourself at home rather than going out. As a starting point, you should have three to six months of your net income in savings in case you aren't able to work. You will then have to save for a down payment and other costs on top of that.
• Know your credit report. Order your credit report off AnnualCreditReport.com (the only federally-approved Web site that offers a truly free credit report once annually) and read it completely. Check your report for errors and correct any you find. If your credit score is less than stellar, visit MyFico.com to find out how to improve your report and your credit score.
• Ask for help if you need it. Does your credit report not make sense? Are you not sure how to set up a budget? Do you not know how to calculate what you need to save? Buyers, especially first-time buyers, often need help in these areas and smart buyers will ask for it. Options for help include financial planners or counselors, real estate agents or mortgage brokers, as well as friends and family who are knowledgeable in these areas. You can also ask trustworthy friends and family for references for these types of specialists. Get help setting up goals, understanding mortgage programs, knowing what to expect during the title and escrow process and understanding how to finding and keeping a home - all before you are actually in the market to buy a home. Before you shop for a home, you should also understand market and economic conditions that could impact your home buying decision, including home prices, mortgage rates, home buying costs and other related issues. Another option for self-education is to attend real estate workshops, seminars and classes. You can also browse for information online. Start with MyMoney.gov and the Better Business Bureau. Above all, the best thing to have on your side is a good advocate, which means finding a reliable, trustworthy Realtor to guide you through the process, from start to finish.
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