The dream of owning our own home, the American dream of being able to own and enjoy our home wherever we are, and whenever we relocate is live and well. Since everyone is different, and the thought process is influenced by endless factors, some end up buying at an early age, other individuals later on in life, and some may never buy. Keep in mind that we have to live somewhere, whether the person is single, married, with or without children, we still need a roof over our heads. What is the secret of being able to purchase a home, how do we go about it and what does it take to make this bold step?
First and foremost, you need to want it so bad, to have this as a very important goal, to make a realistic plan on how you will go there, explore all aspects of assistance or discounted specials for first time buyer with different types of loans, specially those ones that are specifically targeting first time buyers, be very familiar with the process, the requirements and the players. May I add to all this, just a little discipline of opening an account; your home account, for that purpose and depositing in it a minimum amount every month.
Employment: Self employed may need to provide to the lender more documentation; such as year to date income. Whatever your source of income is, a source of income and or a stable job is needed in order to convince the lender of your ability to make the monthly payment.
Down payment: When you purchase a home, you have to come up with the cash to pay the Seller. The larger portion of the cash is provided mostly by way of a new first mortgage with a lender. The remaining portion of the cash is your down payment.
There are so many types of finance, and you need an experienced Realtor to help you thru the process of shopping for a loan. There is the 100% finance, this is basically for buyers that have good income, great credit score and little or no cash.
There is also offer of lower down payment, such as the Federal Housing Administration loan programs that is tailored to help first time buyers. You may go to HUD's web site for details or talk to your loan officer and Realtor agent. There are loans with 3% down payment, 5%, 10%, 15%, 20% of the purchase price & any buyer can put as much down payment as they desire.
Get a copy of your credit history. Free copies are available, you can check annualcreditreport.com. Your credit score affects the interest rate you get. If there are issues, or errors, have your loan officer help you in correcting it and bringing your score back up.
Comfort level: Your monthly payment should not exceed 33% of your gross income. If you have a lot of debts and obligations, you may like to be more conservative, and limit your total housing cost to 28% of your gross income even if the lender says you qualify for more. You need to feel comfortable and have a little money left for an emergency. Do not over extend yourself. Make sure you plan for the unexpected, so that surprises are less stressful.
Mortgage calculations: Remember, we are talking about getting ready to understand the process. It is a good idea to go to one of the web sites, and find out what is the loan amount you can borrow with the current interest rates, taking into consideration the 28% ratio of your gross income, and what approximately the amount you may be able to borrow under selected types of finance. Go to Bankrate.com or E-Loan.com, work with different options, you want to decide ahead of time the price range, and your loan officer will help you with that, but, this process helps you make a decision ahead of time and reduces the temptation to overextend your budget.
The bank wants to know all the details about the home you purchase, as well as qualifying you, finding out about your assets, liabilities, & credit score. The bank is advancing all this money, must protect their security, and this is the reason, the lender looks carefully at the appraisal and what is written about the condition of the home. If the home is a real fixer upper, or selling for the value of the land only, or has environmental contamination or mold issues, this becomes a higher risk to the lender, and the bank will most likely decline the loan, Remember, the home you purchase is the main security for the lender.
Here are some tips to help you during your search:
1. Make a list of needs, must-haves, wants, would like-to-have in a new home. Prioritize both lists and be realistic.
2. Have a plan, don't spend a lot of time viewing and inquiring about homes you cannot afford. Do not get side tracked, you will be disappointed if you like a home so much, but cannot afford the monthly payment.
3. The location and neighborhood you select is very important, it may be more important than the house in the sense that you may compromise and purchase a smaller house in a nicer neighborhood. Be sure you will be comfortable there. You can always upgrade a house, but the neighborhood is what it is.
4. It is a good idea to take a second look at the home before making an offer, this confirms your feeling about the home, and you may find more or less features that you did not see in the excitement of the first visit.
5. There is more home work and responsibility when buying a property. You may like think of the time when you will be selling, who will be your buyer, what will make this home attractive to a future purchaser, does it have any improvement or expansion possibilities. Is it high maintenance or low maintenance home, is it in a busy street, or is it close to schools or shopping?
6. Be sure to have the home inspected by a licensed home inspector. Even if the inspector gave you a clean bill of health, it is money well spent, if the inspector pointed out to you items of concern or that needs attention, it is still worth the money you paid to the inspector, it gives you an idea of what to expect, the type of repairs, maintenance and the anticipated cost. This will give you peace of mind, and the ability to avoid or at least reduce unpleasant surprises.
7. Congratulations, it was a long process, a lot of preparation, home work and planning; and it paid off. Once you secure a home, and it is in escrow, please do not be shy about asking questions and more questions. This is not your area of expertise, and no one expects you to know everything. When you receive the escrow instructions, title search, and HUD statement, it may all seem foreign to you. If you do not understand things in the document, say so to escrow, to the lender, and especially, to your agent, all of them are there to serve you.
I will be delighted to answer all of your questions. You can find my contact information at either:
http://4u-web.com or http://islandhawaiihomes.com or http://osman1.com
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