NewBuyer Blog

Buying a Home Can Be Intimidating

Posted by Elizabeth Dennis on June 20, 2011 | No Comments

Buying a house for the very first time is often an intimidating process. Simply deciding whether to buy or rent requires a great deal of thought and analysis. There are some individuals who simply prefer to rent instead of taking on the responsibility of home maintenance. And many are afraid of committing to significantly higher monthly payments that are required with owning a house.

But naturally, there are numerous advantages to owning your very own home. You are able to deduct from your federal income taxes the interest you pay on your home mortgage (you can also do the same with the property taxes you shell out on your home).

Knowing that your monthly payments are contributing to equity on your property is comforting – the fact that a house is considered an investment signifies that the worth of your home will likely increase. Despite the fact that housing values for a few have gone down since they purchased their properties, other buyers who hold onto their homes long enough will often see their home values appreciate considerably.

Do your Homework

You will find many books and websites on the topic of buying your first home. As with anything you are learning for the very first time, the information can at first be overwhelming and you may wonder how you will ever get it all straight. But wrapping your head around the terms used in the real estate market is a must – and with time, it will all begin to make sense. Keep reading, researching, and asking questions.

Work on Building a Down Payment

Obviously, you must consider the down payment. There are programs that are out there that help first time buyers get into a home with a low down payment. But remember that typically the smaller the downpayment, the higher the monthly mortgage payment.

And for a first-time home buyer who is used to a lower rent payment, a high mortgage payment can be a fiscal shock to their systems. Getting your fiscal house in order and starting to build a down payment should be the priority of any first-time buyer.

Work with a Financial Professional

A lot of first-time buyers feel that they can make a larger mortgage payment than realistically possible. This is where it helps to bring in a financial professional who can look at your monthly salary and allotments and can make an unbiased assessment of what you can actually afford. Obviously the mortgage lenders have their own formulas for qualifying a home buyer, but it is important not to overextend yourself when trying to get into the housing market. Don’t forget that even though you end up getting a fixed mortgage payment, property taxes can rise dramatically especially if your town decides to put in a new high school or middle school. Leaving yourself some breathing room for such a circumstance is good prior planning.

Know your Credit Score.

Your past history paying bills is paramount when it comes to qualifying for a home mortgage. If you have a history of being delinquent on car or credit card payments then this will hurt you when it comes to asking for a loan for a house. You can get your credit report for free at www.annualcreditreport.com. It is an official government site. You will be able to receive your credit report but you will have to pay roughly $20 for your credit score. If your score is low then you should work hard to raise it to acceptable levels before applying for a mortgage.

Buying a home for the first time can be a daunting task. By doing your homework, building a solid down payment, knowing what you can pay each month, and building good credit, you’ll be well on your way to the satisfaction and gratification of home ownership.

First Time Home Buyer Loans – What Information You will Need

Posted by Elizabeth Dennis on June 29, 2010 | 3 Comments

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.

Things NOT To Do When Buying a Home

Posted by Elizabeth Dennis on January 17, 2010 | No Comments

A unique look at seven things home buyers should NOT do when buying a new home. Learn about changing jobs, spending for the new house, hiring the right home inspector, filing for divorce or bankruptcy, using a specialized real estate agent, buying more home than you can afford and using logic to purchase.

An example “do not” from the resource: “Do not start to spend for the new house until you are in it. Charging up your credit card on all those new furnishings could throw your debt to income ratios outside the boundary where you qualify for the mortgage.”

Source: Gold Beach Homes

View more home buying tips and mistakes at Newbuyer.com.