First Time Home Buyers – Part 1
You can do it. You can buy your own home with low money down, without perfect credit, paying a mortgage less than your rent. It takes a little work but it can be done. Below are some tips to get you on the right path.
https://www.youtube.com/watch?v=bWYl_9DLVNQ
FINANCES
Get your finances in order. First of all get with your spouse, and get serious about your budget. What are you REALLY spending your money on? You want your new home to be a blessing, not a curse, right? You and your spouse go over these questions:
- You do not necessarily need to put 20% down. Ask yourself, can I make at least a 10% down payment?
- Can I keep the house payments at or below 25% of my monthly take-home pay? I am a HUGE believer in Dave Ramsey. My husband and I took the Financial Peace Universityclass in 2008 and it literally changed our life.
- Get $1000 in a savings account for emergencies
CREDIT
Start working on getting out of debt, starting at the smallest debt to the biggest. Get rid of all those small balances and close those accounts, cut up the cards and throw them away. (SERIOUSLY!) (This step will take most people a very long time, once you are not paying on your debt every month you will be able to begin saving money quickly)
Nova Debt: http://www.novadebt.org. They have a Debt Management Plan to provide debt relief for applicable consumers.
EMPLOYMENT
- Have you been at the same job or same line of work for over 12 months?
- Are you self-employed? Claiming the correct income on your tax returns is an important variable.
DOWN PAYMENT – NO MORE 20% DOWN!
There are loan programs available offering 3.5%-5% down. What does that look like?
House Purchase: $200,000 — $7000 down.
House Purchase; $100,000 —-$3500 down
Did you know you can borrow from Life Insurance or 401K to use as a down payment on a home?
CLOSING COSTS
Most likely you will need anywhere between $2500-$6000 or 3% – up to approximately 10% of purchase price towards closing costs.However, your Realtor can negotiate seller contributions towards closing costs.
APPROXIMATE HOME BUYER COSTS TO BE PAID DURING CONTRACT:
- Escrow Deposit +- $1500.00
- Appraisal $500.00
- Home Inspection -$400.00
- Termite Inspection -$200.00
- Property Survey – $300.00
PAPERWORK
Be prepared to provide A LOT of paperwork! It may feel like an invasion of privacy, but EVERY buyer has to go through it!
- It is for YOUR protection, to make sure you’re not getting in over your head!
- The government has set new guidelines that now demand that the bank prove beyond any doubt that you are indeed capable of affording the mortgage. During the run-up in the housing market, many people ‘qualified’ for mortgages that they could never pay back. This led to millions of families losing their home. The government wants to make sure this can’t happen again
- The banks don’t want to be in the real estate business. Over the last seven years, banks were forced to take on the responsibility of liquidating millions of foreclosures and also negotiating another million plus short sales. Just like the government, they don’t want more foreclosures. For that reason, they need to double (maybe even triple) check everything on the application.
Be on the lookout for my next blog. As a first-time home buyer, you’re on your way to being better prepared for getting a mortgage and buying your first home. Don’t take chances. Do your research and ask lots of questions. Contact me anytime if you would like more information 386-589-9037; email: danielle@dontworrysignhappy.com.
