Posted by Elizabeth Dennis on July 1, 2010 | No Comments
First Time Home Buyer
Regardless of your personality type, there are specific characteristics all first time home buyers should have. If only for the duration of the home buying process, you must consider yourself the following:
A Realist
Carefully and honestly distinguish between what you want in a home and what you need in a home. Be careful not to stretch your budget for features that you simply don’t need and won’t use much.
Analytical
Never hesitate to ask questions no matter how silly you may think they are. Remember, this is one of the biggest financial decisions you will make in your life time; you deserve to have every bit of information you need.
A Negotiator
Negotiating plays a significant role in the home buying process. To make sure you are getting the best possible deal on your home, it is a must. If you are working with a real estate professional, you will have somebody to do this “dirty work” for you but you are the ultimate decision maker in this regard and it pays to be strong and decisive.
Patient
Your home buying process may end up being quick and simple or it may be a bit more challenging and take quite a while. Be prepared for either case and remember every decision you make today should be made for the long haul. Your goal is to get the best home for you and your family; not to get in one quickly. Never settle for something you may regret later; your patience will undoubtedly pay off.
If you find it difficult to be the person with these traits, work with somebody who can be these things for you. Choose somebody in addition to your real estate professional: a friend, family member or colleague.
Posted by Elizabeth Dennis on June 29, 2010 | 1 Comment
If you are planning to buy a home, it is important to get your financial information and documents in order as soon as possible; even before you look at your first house. By doing so, you will significantly speed up the loan application and mortgage approval process.
Let’s take a look at what you will need.
- The very first thing you should do is request a copy of your credit report. Make sure there are no outstanding problems or errors that may prevent you from taking out a mortgage. It could take some time for discrepancies to be cleared up, so get this process going immediately. Along the same lines, be mindful of activity that is happening with your accounts during the home buying process. Avoid transferring large sums of money or taking out new debt.
- Now it is time to create a file of your financial records. Here is what you will need:
- W-2’s and tax returns for the last two years
- Pay stubs for the last two months
- If self employed, two years of tax returns plus a current profit and loss statement (i.e. income statement). If your income has been irregular you may need to produce account information from the last three years.
- Two months of checking account statements
- Two months of statements from other accounts (IRA, savings, money market, etc.)
- Documentation of other assets such as stocks, bonds, and CD’s
- Records proving that derogatory credit report items are paid off
- Social security numbers for those buying the home
- Two years of employment history; preferably steady work in the same industry
- Balances of other debt including car loans, store charge cards, credit cards, etc.
- Current landlord’s contact information, monthly rental payment amount, and previous landlords for the last two years
- If you currently own a home, have ready the address, mortgage lender, account number, payment amount, balance, and current market value of your home.
- The following are particular circumstances that may or may not apply to you:
- If you are separated or divorced, you will need your divorce decree or separation agreement. Include also child support payment amounts to be included in your income.
- If public assistance is part of your income, you will need to provide the amount you receive.
- If you have declared bankruptcy or have gone through a foreclosure or any other credit-related judgments against you in the last seven years, produce documentation of the proceedings.
The thought of gathering these items may seem tedious to you but is a critical step in the home buying process. Make copies of all documentation or better yet scan each piece and store it on your computer to be printed or forwarded electronically as needed. Stay organized by purchasing a portable accordion-style folder to store the originals and hard copies.
Posted by Elizabeth Dennis on June 21, 2010 | 1 Comment
There is a great chance that buying a home will be the largest item you will purchase within your lifetime. It is extremely important to consider the matter carefully before making the decision to become a homeowner. Ask yourself these questions:
- Do you take in enough income to cover the cost of owning a home?
It is not just the monthly payments you need to consider. The other costs involved with the purchase of a home include:
- Origination fee
- Inspection fees
- Survey
- Appraisal
- Credit report fee
- Tax services fees
- Attorney’s fees
- Title insurance
- Homeowners insurance
- Taxes
In addition to the closing costs above, think about what you might spend to fix up the home and yard after you move in.
- Is your credit history in good enough shape to allow you to get a mortgage? These days it can be especially difficult to get a mortgage with bad credit. Obtain a free credit report immediately, review it carefully, and clear up any problems before you begin the mortgage application process.
- Do you have enough cash to cover the down payment on the home as well as the closing costs we discussed above?
Ideally, you will want to put down as much as 20% of the purchase price for the home. While, some buyers can get away with putting down less, often times the mortgage fees and higher interest rates that come along with a low down payment will outweigh the benefits.
- Are you mature enough to take on the responsibility of owning your own home?
As exciting as it can be to move into your own place, you will also be your own landlord and will need to take care of your own repairs and maintenance, or find the money to hire somebody to take care of them for you.
- How long do you plan to stay in your new home?
A good rule of thumb is to not buy a home if you plan to live there for less than two years. There are very few areas that appreciate fast enough to cover the fees that are involved in the purchase of the house.
By answering these questions honestly and thoroughly, you’ll know if you are truly ready to buy your first house.
