Steps to Home Ownership

1. Visualize yourself owning a home.
This is the most important step. Most renters believe that home ownership is out of their reach. You need to see yourself as a homeowner and quit paying your landlord's mortgage.

2. Take care of past credit problems
If you want to be able to purchase a home, you need to make sure that most negative issues on your credit report are taken care of. A lot of first time homebuyers believe their credit is horrible, when in reality, for most, it isn't. But if you know you have an account in collections, or you have been making payments later than 30 days, now is the time to get these things taken care of. Even if you have an account in collections, it does not mean you are years away from home ownership. It could mean that today you may not qualify for a loan, but in a few months you could be. Credit issues and credit reports are usually what first time homebuyers are afraid of. If you haven't looked at your credit report recently, you may be surprised on what you find. There may also be accounts on your credit report that don't belong to you, but don't worry. If an account is not yours, you can write to the credit bureaus and get them taken off. Not knowing what is on your credit will only hurt your chances of getting a home loan.

3. How much can you afford?
A bank is not going to loan more than a person is able to afford (usually). This doesn't mean that it doesn't happen, but you don't want to borrow more than you are comfortable with. Typically, you can borrow up to 28% of your gross monthly income for a mortgage. But this doesn't include other debts you owe. You may have a number that you feel comfortable paying, but the best way to know how much you qualify for is by going to a mortgage lender. I usually recommend going to a lender, but getting a second opinion. The first lender might give you false information that could destroy your dreams of home ownership. A good lender will work with people even if they cannot buy today.

4. How much money down do I need?
The amount of down payment needed is really based on your credit and the type of loan you get. Some loans have no money down, while others like FHA loans require about 3.5%. Depending on the size of the loan, their are also closing costs involved, and sometimes the seller is willing to pay these fees. Everyone will need some time of consideration, usually ernest money. This is money you submit with an offer. It is your money, unless you break the contract. The amount of ernest money is based really on the amount of the home and/or the amount the seller is requiring. Remember this ernest money is telling the seller that you are serious about purchasing the home and you are not going to walk away from the contract. If circumstances arise that prevent you from purchasing the home that are beyond your control, the ernest money should still be yours.

5. Decide what your needs and wants are
We can't always get what we want in a home, so the first thing you need to decide is what do you need. How many bedrooms and bathrooms? Do you need a large yard? Do you need a garage? Knowing what your needs are, are very important. You should make a list of the "must haves" and then make another list of the "would be nice to have". With this information, your real estate agent will know what to search for. He or she will search for everything you need, and then try to find some of your wants within your price range.

6. Finding a home
The easiest way to find a home is with a real estate professional. We have thousands of listings at our fingertips, and usually the commission is paid by the seller, so as a buyer, this is a free service. We do all the work so all you have to do is look and decide.

7. Making an offer
Once you have decided on a home to purchase, you need to make an offer. This requires a contract and consideration (ernest money). Your real estate professional will put the offer together and go over everything with you. Once you agree with the terms, you will sign the contract and the offer will be submitted to the seller (or seller's listing agent). If the seller agrees with the contract, they will sign, and the contract will be given to your lender.

8. Home Inspection
A home inspection is very important. This is typically written into the contract and you will have X amount of days to complete an inspection. Inspections should be done by a professional that you will have to pay out of pocket. A home inspector will try to find and issues to the property and then give you a full report. If the home inspector finds something unacceptable you will be able to tell the seller to fix the problem. Depending on what the contract says, you either both agree to have it fixed, or not fixed. Inspections can be very important because they are sometimes able to find problems that the seller did not know about.

9. Closing
Once the lender is ready to give the money to the seller, you will have to sign the mortgage paperwork. This is typically done at a title/escrow company. This is the final step in the homebuying process. Once all paperwork is completed, you just wait for the loan to be funded and for the deed to be recorded. After this is complete, the home is yours.

10. Moving
After you are given the okay, you will receive the keys and you now can move into your new home. Home ownership gives you a sense of pride and security. Although this may be a long and sometimes stressful process, the joy of home ownership makes it all worth while.


Brooks Hunt
Exit Real Estate North
(509) 263-4333

http://www.houses360.com