There is a lot of press these days about the foreclosure mess. Still, home ownership remains a dream for many Americans. Here are eight ways to prepare to purchase your version of home-sweet-home.
1. Pull your credit report. Now is the time to clean it up. Request in writing to all the credit bureaus that all mistakes are fixed. Get ready: most credit reports have errors.
2. Start researching prices in your area. Some good websites for this include realtor.com and zillow.com
3. Work down your debt. A lot of lenders look at your debt-to-income ratio. Along the same lines, don’t suddenly purchase some other large thing, like a new car.
4. Save, save, save. Hopefully you already have a down-payment. Still, you’ll need extra cash for closing costs and other expenses when you’ve found the right house.
5. Figure out how much you can afford before you start shopping. How? Have your bank pre-approve you. That’s your range. Don’t borrow more than you need or can realistically afford considering the rest of your budget.
6. Estimate your down payment and closing costs. Your lender will help you do this. Even with good faith, brace yourself to pay a little higher just to give yourself peace of mind. It’s lovely to find you have to pay less, but worse to discover when its all said and done that you actually need to pay more.
7. Organize your paperwork. You’ll get a LOT of paperwork. A collapsible, expanding file that closes shut works well. If it fastens you can carry it with you and not worry about items falling out.
8. Start shopping for a realtor to act on your behalf. As a first-timer I think a realtor is well worth his or her commission. Make sure you find one that you like and trust.
What’s your view of the housing market? Great time to buy, or hold off? Discuss it here or in any number of our real estate groups.
March 20th, 2008 at 8:36 am
Even without all the crazy things going on right now, I am too afraid to step into home ownership.
Luckily, we have a place where the landlord is super-cool, and it helps that we have known him for many many years. And the rent is fairly cheap for the area. I have no desire to move right. Let me get rid of debt, and then MAYBE, just MAYBE I will start thinking of having a more permenant house to call my home.
March 27th, 2008 at 4:38 pm
I would also suggest that people make sure they READ and UNDERSTAND what people are telling them. So much of the mortgage garbage is from people taking a person’s word because they don’t fully understand the terms of their deal or offer.
For our first house, one lender tried to convince us that because of our credit, we needed to have two mortgages. And one was at about 13%! Luckily we smelled the bulls!@t and went somewhere else.
August 26th, 2008 at 2:51 pm
Also extremely important is having an understanding of the process. There are some terrific non-profit organizations that offer free seminars and classes to help educate you in the ins and outs of 1st time home buying.
I am very good at self education, but when I tried to explain all the things I had learned to my wife, she gave me a blank look and I was unable to explain the newly discovered things to her in terms she would understand.
We live in the San Francisco Bay Area, and went to a 3 hour class offered by CCCS (Consumer Credit Counseling Service) a non-profit organization that has been teaching these classes for years. The person who taught us the information was a seasoned real estate professional, and was able to explain things in terms that were very easy to understand, including how to figure out affordability and debt to income ratios.
When we left, my wife felt so much better and was then able to confidently discuss things with me about our upcoming decisions together.