Preparing to Own a Home

  1. How much can you really afford? Sometimes, lenders will qualify you for a purchase price higher than your comfort level. Only you can decide if you want to spend that much of your income on a house payment.
  2. Prioritize your wish list. There is no such thing as a perfect house, so prioritize your needs, wants and desires. Chances are you will need to compromise on some of those items.
  3. Narrow the location. Looking in too many areas can confuse buyers. Choose up to four neighborhoods that you like by evaluating schools, transportation, shopping, safety, etc.
  4. Down payments and closing costs. Occasionally buyers will qualify for special financing requiring no down payment, but most will need 3.5% to 20%. Typical closing costs are about 3% of the purchase price, but can vary. Sometimes a buyer can negotiate with a seller to pay those costs on their behalf, but usually at a higher sales price. Talk to your loan officer and understands the various loan programs and their related costs.
  5. Do you have good credit? Look at your credit scores. Take the necessary steps now so that you are ready to buy when you find your dream home.
  6. Work with a qualified lender. There are many different types of loans. One will be right for you. Be sure to explore the options with a good loan officer.
  7. Get organized now. Your lender will need a number of documents for loan approval. Don’t wait until the last minute and jeopardize your loan approval. Put together the past three years of tax returns, six months of pay stubs, and any other documents such as paid-off liens, etc. that a loan officer may want to see.
  8. Special down payment assistance. There are special programs for first-time homeowners and buyers looking to purchase in special geographical areas. Check with me or your lender to see if you might qualify for this type of assistance.
  9. What’s the cost of owning a home? Your monthly payment will most likely include loan principal, loan interest, prorated property tax, and prorated hazard insurance. Will there be a homeowner’s association monthly fee? Have you allowed for ongoing house maintenance in your budget?
  10. Find a qualified REALTOR to help guide you through the process.

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Updated by Doretta Smith,