1. Check your credit score
Lenders base your mortgage qualification on a variety of factors, including your income and assest, your debt-to-income ration, your pattern of savings and your job stability. But the most important factor in today's tightened credit world is your credit score. Lenders tie the interest rate you must pay to your credit score, so that borrowers with a score of 720 and sometimes 740 and above are the only ones who will pay the lowest mortgage rates. Borrowers with a credit score below 620 may not qualify at all for a mortage until they can improve their score.
2. Set your housing budget
A lender will tell you how much you can borrow, but each potential homeowenr should create a simple budget for themselves with income and spending to determine how much they are willing to spend on housing payments. Financial experts recommend that homewoners spend a maximum of about 30% of their gross montly income on principal, interest, homeowners insurance and taxes. Don't forget to budget about 1% of the home price for condo or homeowner associaion fees and maintenance costs.
3. Start saving stop spending
Once you have an estimate of your mortage payment, start saving the difference between that payment and your current rent every month. In addition to building your savings, this allows you to get comfortable with a higher housing payment.
4. Meet with a lender
Get pre-qualified for a mortgage loan before you look at homes so you can avoid falling in love with a home you cannot afford. You may be surprised to discover you can afford something pricier than you thought since interest rates are so low. Make sure you ask your lender about your variety of loan options and get an idea of how much cash you will need for a down payment and closing costs.
5. Find a reptuable realtor
All buyers should have a realtor to represent their interest during negotiations and to help buyers recognize the value in different homes and neghborhoods. Your realtor should be experienced, knowlegeable and familar with where you want to live. Trusting your realtor is vitally important to buying your first home.
6. Narrow your priorities
Decide whether it is more important to you to live in a particular type of home (a single family home with a garage or a condo in a high rise) or in a particular neighborhood. If you cannot find or afford everything you want in your first home, you may need to make some compromises.
7. Chose a neighborhood
Some neighborhoods hold onto thier value more than others during a housing downturn. Work with a knowlegeable realtor to find a neighborhood that meets your needs - somehwere you will be happy as well as feel safe that home values are stable or rising.
8. Make a reasonable offer
If you love a house and don't want to lose it, don't make a low-ball offer. Some sellers are willing to negotiate and others are not. A trustworthy realtor can wal you through the process to make sure you are dealt with fairly.
9. Have a home inspection
Never buy a home without having it inspected. Not only ae you looking for serious flaws in the home, but you can learn a lot about home maintenance and what to expect in terms of repairing or replacing systmes and appliances as an owner.
10. Finalize the details
After the contract has been signed, make sure to stay in constant touch with your realtor and your lender to be sure your financing is taken care of along with all insurance needs. A good realtor will have a checklist to make sure everyything is accomplished in time for settlement.
The bottom line
Buying your home can be an exhilarating experience, provided you do some research, stay withing a comfortable buget and work with a reputable professionals who will guide you through the process.
