Did you know that buying a home is like getting up and getting ready for work each day? It doesn’t matter where you work or even what you do; you need to prepare each day. A single parent, an independent business owner, construction worker, work from home entrepreneur or office worker; no matter what your calling in life you need to prepare daily for your life style.
Wearing the appropriate clothing, getting other household members ready for the day, choosing foods for meals, planning schedules and the list goes on and on! This is all preparation for home ownership as well.
Would you jump out of bed one morning and decide, “I think I will get a career today!” of course not. You need schooling, planning and preparation before you even decide on a career. It is the same way when you are looking at home ownership.
Before making the big step of actually looking for a home, you need to prepare for home ownership. This can take several months or years, depending on your situation. Here are a few steps to preparing for home ownership. If you treat it like part of your daily planning schedule it won’t be hard at all.
1. Make sure your finances are in order. This comes after accumulation of months and years. How much unsecured debt you have is a huge factor. While building credit is essential, keep balances as low as possible. Secured debt is not as bad, unless you have a large amount. Having a boat payment, RV payment and 1 or 2 car payments does not look good.. Lenders consider whether or not you will be able to make monthly payments on a home and still maintain other debts as well. No matter what you feel you can handle; the lenders will use their ratios on ‘debt to income’ to decide if you are a good candidate!
2. Down payment and financing. There are several different types of financing out there, and they all have different down payment options. Conventional usually requires 10 or 20% down; FHA requires 3.5% and USDA can be 0 down depending on the area. The biggest factors in determining a down payment is how much do want your payment to be. The more you are able to put down, the less your monthly payment will be. Remember to factor in closing costs when deciding on a down payment. Some sellers will help with closing costs in a buyers’ market; however, this is not the norm and needs to considered.
3. Get a pre-approval. This will help you and your REALTOR find a home that you love in a price range you can afford. It is always best to shop around or check with 3 or more lenders. Find which one charges the least points or has the best interest rates.
4. Find a REALTOR; spend time with your realtor getting to know each other. Make sure they know exactly what you feel you can afford and your personal needs and wants from a home. Even if you are approved for $500,000; if you feel more comfortable with a payment for $350,000 then you need to make sure your realtor is aware of this. This helps both of you look for the exact home for you!
5. Now you are ready for the best part! Finding the home and fulfilling the dream of becoming a home owner! WELCOME HOME!
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