MiamiRealEstateKing

10 Steps to Prepare for Homeownership

In Uncategorized on February 29, 2008 at 1:59 pm

Though quite general, follow the next 10 steps as a guideline on how to prepare for homeownership.

1. Decide how much home you can afford. Generally, you can afford a home equal in value to between two and three times your gross income.  A mortgage professional can help you get pre-qualified.2. Develop a wish list of what you’d like your home to have and a list of what you must have in your home. Then prioritize the features on your list.

3. Select two or three neighborhoods you’d like to live in. Consider items such as schools, recreational facilities, area expansion plans, and safety.

4. Determine if you have enough saved to cover your downpayment and closing costs. Closing costs, including taxes, attorney’s fee, and transfer fees average between 2 percent and 7 percent of the home price.  In many instances, gifts from family members may be used.  Make sure to consult your mortgage professional to see which programs allow this.

5. Get your credit in order. Obtain a copy of your credit report HERE.

6. Determine how large a mortgage you can qualify for. Also explore different loans options and decide what’s best for you.  Again, a mortgage professional can help you.

7. Organize all the documentation a lender will need to preapprove you for a loan.

8. Do research to determine if you qualify for any special mortgage or downpayment-assistance programs.  Depending in your profession, there may be programs available for teachers, police, fire and other such employees among others.  Your mortgage professional can help you determine which program you may qualify for.

9. Calculate the costs of homeownership, including property taxes, insurance, maintenance, and association fees, if applicable.

10. Find an experienced REALTOR who can help you through the process.  Though many feel they can skip this step, a real estate professional could be invaluable when buying a home.  If this is your first home, this resource alone could save you much time, aggravation and money, while guiding you through the entire process from finding a good mortgage professional to post-closing.

Also, consider that in today’s market, it is highly advisable to get pre-approved by a mortgage professional before you begin your search.  This very important step will ensure you don’t spin your wheels looking for property you cannot afford, possibly frustrating you from continuing your search and buying your first home.

To avoid being bombarded with calls from creditors, make sure you register with the National Do Not Call Registry (click HERE), and Opt Out from receiving junk electronic and postal mail (click HERE) BEFORE having your credit pulled.  Typically lenders pay special subscriptions with the national credit bureaus (Experian, Transunion, Equifax) and buy your contact information, thus causing a sleugh of calls, emails and junk mail, all triggered by your credit file being pulled by any mortgage professional.

How Big a Mortgage Can I Afford?

Not only does owning a home give you a haven for yourself and your family, it makes great financial sense, too.

This calculation assumes a 28 percent income tax bracket. If your bracket is higher, your savings will be, too.

Rent: _________________________

Multiplier: X 1.32

Mortgage payment: __________________

Because of tax deductions, you can make a mortgage payment—including taxes and insurance—that is approximately one-third larger than your current rent payment and end up with the same amount of income.

For more help, use Fannie Mae’s online mortgage calculators at http://www.fanniemae.com/homebuyers/calculators/index.jhtml?p=Resources&s=Calculators.

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