Had it with rentals and roommates and think it’s about time you took advantage of low mortgage rates and became a first-time home-buyer? Below are a few tips that can help you get started with Owning your own home.
1. Check the selling prices of comparable homes in your area
Contact a Realtor for a fast and easy way to determine the current market value of homes in the area. This would also be a good opportunity to ask them if they believe prices will remain the same, fall or do they think your area has hit bottom or will rise soon?
2. Find out what your total monthly housing cost would be
Include taxes and home insurance in your cost. In some areas, what you’ll pay for your taxes and insurance escrow can almost double your mortgage payment.
To get an idea of what insurance will cost you, pick a property in the area where you want to live and make a call to an insurance agent for an estimate. To estimate what you’ll pay in taxes, check your property appraiser’s website. This amount will give you a good estimate but remember that it can either decrease or increase depending on what you paid for the property compared to what the existing home owner paid.
3. Find out how much you’ll likely pay in closing costs.
The upfront cost of settling on your home shouldn’t be overlooked. Closing costs include origination fees charged by the lender, title and settlement fees, taxes and prepaid items like homeowners insurance or homeowners association fees.
4. Look at your budget and determine how a house fits into it.
Fannie Mae recommends that buyers spend no more than 28 percent of their income on housing. Push past 30 percent and you risk becoming house-poor.
5.Look at the big picture.
While buying a house is a great way to build wealth, maintaining your investment can be labor-intensive and expensive. When unexpected costs for new appliances, roof repairs and plumbing problems crop up, there’s no landlord to turn to, and these costs can quickly drain your bank account. Make sure that you have a “rainy day” fund that can cover some of the unexpected.
6. Examine your credit.
Blemished credit or the inability to make a substantial down payment can put the kibosh on your home ownership plans. That’s why it pays to look at your creditworthiness early in the home buying process. Get your free annual credit report and examine it for errors and unresolved issues. If you find mistakes, contact the credit reporting bureau to make sure they are corrected. It’s also a good idea to get your FICO credit score, which will cost you a small fee.
7. Get your Financial Documents Organized.
Collect pay stubs, bank account statements, W-2s, tax returns for the past two years, statements from current loans and credit lines, and names and addresses of your landlords for the past two years. Have all of that paperwork ready for the lender.
8. Find lenders and get pre-approved.
Getting pre-approved for a mortgage helps you bargain from a position of strength when you are house hunting. The institution where you bank and a local credit union are good places to start your search.
9. FHA Loan – Instead of Conventional
If you would like to take advantage of a smaller down payment requirement, consider getting an FHA loan. The FHA requires a down payment of only 3.5 percent from first-time home buyers.The Federal Housing Administration has a program that insures the mortgages of many first-time home buyers.
10. Government Assistance
Check with your local, county or state Government Agencies for first time buyer programs. Some, included the one for the City of Marathon, offer down payment assistance. Other examples are tax breaks and beautification grants.
To begin your real estate or Realtor search, please visit our website at www.keysproperties.com.