Home Buying & Financing Your 1st Home Loan

If you believe you’re old enough and have a secure job, but you are nervous, but you feel ready to take that huge leap into the real estate market.  Financing your 1st home can be difficult. You don’t have home equity in an existing home to apply toward a down payment. Not to worry though.   Everyone who has ever purchased a house has stood in your shoes. There are some simple steps to ensure that you will be able to buy your first home, even without help from your parents:

Get pre-approved for a home loan. It’s easy if your credit is good (if it’s not, see my last column). Go to a licensed mortgage broker. I recommend an independent broker. They will have many more options than a bank. Be prepared with 2 years of tax returns. The application takes about 20 minutes and you should have your answer within a couple of days at the most.  If you have poor credit scores, make sure you are approved for bad credit home loan options with FHA or a subprime lender that puts it in writing for you.

Establish your budget.  Getting a pre-approval may not be enough anymore. Only you know you know your own spending habits. Can you afford to make that jump from $1000 per month in rent to a $2000 PITI (principle, interest, taxes and insurance) payment? Ask your mortgage lender to help you or use this affordability calculator.

How to Get a First-Time Home Buyer Loan > 

 

Do not start shopping until you are pre-qualified with a written pre-approval letter in your hand. Most real estate agents won’t even show you property without a pre-approval letter from a mortgage company. You don’t want to waste their time, but more importantly, you don’t want to set yourself up for disappointment. There’s nothing worse than finding the perfect house and then realizing that everything within your price range pales in comparison.  You will need to a documented saving for the deposit and down-payment. In an ideal world, you would have a 20% down-payment and a few extra thousand for closing costs. However, very few people are in that situation, so the FHA loans that cover 96.5% of the home, with closing costs built in. There are also some grants designed to help first time home buyers, who are defined as anyone who hasn’t owned a home in the last three years.

Make a list of what you need in a home, not just what you want. Do you have children or are you planning on having they in the near future? Then good schools and low crime rates will probably be a larger priority than proximity to nightlife. If you’re looking to green your life, then access to public transportation will be a priority. Are you prepared to maintain the property? If not, you might want to look at condos or townhomes, where outside maintenance is taken care of for you.  For example, if you have a dog, might want to consider a house over a condo. How many bedrooms do you need?  Read the complete article>

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