Steps for working toward home ownership
Home ownership is always a landmark moment in a person's life but before you can move into that dream home there are several questions to ask and steps to take. While everyone dreams of having that piece of something (be it condo, house or estate) to call their own the savvy home buyer will approach home ownership as a process. One of the keys to making the home buying process easier is planning. If you plan carefully you will be able to anticipate requests from lenders, lawyers and other professionals who are involved in the home buying process along the way and if you carefully plan you may even find some shortcuts to help you. So if you are looking to own a home here are some steps for working toward home ownership-
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- Do You Know What You Want? If you are a first-time homebuyer or entering the marketplace as a repeat buyer, you need to ask why you want to buy. Are you planning to make a move to a new community due to a lifestyle change or is buying an option and not a requirement? What would you like in terms of real estate that you do not already have? Do you have a purchasing timeframe or time not a factor for you?
- Do You Have The Money? What you want in a home and the financing you can get are closely intertwined. (Financing is the difference between the purchase price and the down payment, commonly referred to as debt or the mortgage.) The good news is that over the year's lenders are offering new and innovative loan programs. In fact, a number of programs now allow purchasers to buy real estate without putting any money down. In addition to a down payment, purchasers also need to be aware that they will need cash for closing costs (the final costs associated with closing the loan). While there are several newly emerging loan programs that underwrite closing costs a purchaser should not depend on getting one of these loans.
- Is Your Financial House in Order? Every prospective home buyer should be aware that those great loans with little or nothing down are not available to everyone: You will need good credit. For at least one year prior to purchasing a home, you should make sure that every credit card bill, rent check, car payment and other debt is paid in full and on time. In addition paying off debt will leave you with a much higher credit score that in turn makes you much more attractive to potential lenders.
- Figure out how much you can afford. At this point you will need to do a careful review of your finances to get a clear picture of what you can really afford. Keep in mind that circumstances can change throughout the years so the mortgage that is easily affordable now may not be down the road. For example if you are basing your mortgage payment on two incomes keep in mind that down the road should one person lose their job, change jobs or decide to stay at home your mortgage payment can be much more difficult to make. In addition be realistic in how much home you really need. While 5 bedrooms-5 bathrooms may be impressive do you really want to heat/cool, furnish and even clean that much home? The bottom line is to make sure that the home you choose works for both your lifestyle and your budget.
- Shop for a loan. Now that you know what you want and how much you can afford you can begin the home buying process by shopping for a loan. There are many different options available and taking the time to do your research can pay off in big money saved. In addition keep in mind that pre-approved buyers are much more attractive to sellers and in a tight housing market are more likely to win in a bidding war. Once you are pre-approved you can begin hunting for that home of your dreams.
