Buying a Home Important Steps

Buying a home or property is a big investment.

Before you make a move forward in purchasing, make sure you are prepared.

buying a home

Important Steps to Buying a Home:

Buying A Home / Strengthen your credit score…..

Keep balances low on credit cards and other “revolving credit“. High outstanding debt can affect a credit score. Pay off debt rather than moving it around. The most effective way to improve your credit scores in this area is by paying down your revolving (credit cards) debt.

Buying A Home / Figure out what you can afford as a mortgage payment…..

Your gross monthly income is very important! You need to analyze your monthly income, expenses, and future property taxes and insurance to estimate the mortgage amount that would best fit your budget.

If you make $80,000 a year, you should be looking at homes priced between $240,000 to $320,000. You can further limit this range by figuring out a comfortable monthly mortgage payment. To do this, take your monthly after-tax income, subtract all current debt payments and then multiply that number by 25%.

The golden rule in determining how much home you can afford is that your monthly mortgage payment should not exceed 28 percent of your gross monthly income (your income before taxes are taken out).

Buying A Home / You will need down payment, closing costs…..

The down payment is the cash portion of the purchase price that you use to buy a home. … Closing costs are the fees that you pay to purchase the property including loan fees, recording fees, taxes, documentation charges and title insurance. Down payments vary on the loan type.

You can generally expect the total Closing Costs to be between 1 and 5% of the price you are paying to buy your home. Payment for closing costs can sometimes be financed with your loan, in which case it will be subject to interest charges. Alternatively, you can pay your closing costs in cash, similar to your down payment.

Buying A Home / Build a healthy savings account…..

Pay yourself first! Set aside money for savings at the beginning of each month, rather than waiting to see what’s left at the end. Decide on a percentage of your monthly income (for example, 5-10%) to direct deposit or transfer into your savings account.

Buying A Home / Get pre-approved for a mortgage…..

When you are pre-approved for a mortgage, it means a lender has looked closely at your credit reports, your employment history, and your income — and has then determined which loan programs you qualify for, the maximum amount you can borrow and the interest rates you will be offered.

A mortgage pre-qualification can be useful as an estimate of how much you can afford to spend on your home, but a preapproval is much more valuable because this means the lender has actually checked your credit and verified your documentation to approve a specific loan amount for a specific length of time.

Buying A Home / Buy the house you like and fits your everyday needs…..

Before you start looking for a home you must first define and choose the type of life you want to live.

You’re the one who will be living in this home every single day, living in this neighborhood, living this lifestyle day in day out. Is it the right fit for you and your family? We want you to be happy with all of it, and that starts with what YOU want.

This self-analysis at the very start should hopefully lead you to the right home purchase for you and your lifestyle (and yes, budget!).  It’s important to ask yourself questions that dig deeper than the traditional “How many bedrooms you would like in a home?” questions. Your honest answers to more revealing questions that delve into more detailed aspects of your needs and desires are what should drive your home search.



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