Preparing for Homeownership in Ten Steps

 1.Decide what you can afford. The best way to do this is with a visit to your favorite lender – that way you will know what price ranges you can search in.

2. Get your credit in order. Obtain a copy of your credit report to make sure it is accurate and to correct any errors immediately. A credit report provides a history of your credit, bad debts, and any late payments.

3 Determine your mortgage qualifications. How large of mortgage do you qualify for? Also, explore different loan options — such as 30-year or 15-year fixed mortgages or ARMs — and decide what’s best for you.

4 Get preapproved. Organize all the documentation a lender will need to preapprove you for a loan. You might need W-2 forms, copies of at least one pay stub, account numbers, and copies of two to four months of bank or credit union statements.

5 Weigh other sources of help with a down payment. Do you qualify for any special mortgage or down payment assistance programs? Check with your state and local government on down payment assistance programs for first-time buyers. Or, if you have an IRA account, you can use the money you’ve saved to buy your fist home without paying a penalty for early withdrawal.

6 Calculate the costs of homeownership. This should include property taxes, insurance, maintenance and utilities, and association fees, if applicable.

7.Develop your home wish list. Separate the needs from the wants and understand that you can get some of each but maybe not all of the above.

8 Select where you want to live. Compile a list of three or four neighborhoods you’d like to live in, taking into account items such as schools, medical facilities, parks, cultural events.

9 Start saving. Do you have enough money saved to qualify for a mortgage and cover your down payment?  Ideally, you should have 20 percent of the purchase price saved as a down payment. Also, don’t forget to factor in closing costs. Closing costs — average between 2 and 7 percent of the home price.

10. Contact a REALTOR®. For help in the Brainerd Lakes Area of Minnesota- call Kathleen Lordbock with Keller Williams Realty Brainerd Lakes at 218-831-8001.