Crucial Steps to Buying a Home and Getting a Mortgage
Buying a home is a big step towards living the American dream. However, it can be confusing for those who have never gone through the process. There is new terminology to learn, rights to learn and a whole lot more. Arming yourself with this knowledge can help you to not only find the home of your dreams, but one that you can enjoy for years to come.
1. Knowing What You Can Afford
First time home buyers often make the mistake of getting attempting to get approved for a mortgage they can’t afford. This amount is based upon your total income, the down payment, credit rating, current monthly expenses, and the interest rate too. When you go through the approval process make sure you consider all of your monthly expenses you may incur in the new home.
How much can I really afford? – This will depend on a lot of factors such as your current income, cost of the area, your credit score and other financial points. Remember that the cost of the home determines the cost of the mortgage payment only. Check out our Mortgage Calculators to find out how much you can afford.
Rent or buy your new home? – Renting does offer some benefits, but it is rarely better than buying. When you purchase a home you not only gain a place to live, but you are investing into your own future. Click here to compare the price of buying versus renting.
Are there home buying programs in your state? – These programs can assist potential buyers in different ways. They range from knowledge based programs designed to help you avoid predatory lending and some programs are designed to help those that fall into low-income brackets. Be sure to visit Hud.gov to see if you state has programs available.
2. Know Your Rights
Fair Housing – You are not allowed to be discriminated against when purchasing your home. Read more on the Fair Housing Act
Real Estate Settlement Procedures Act (RESPA) and Borrower’s Rights – This act was put into play in 2011 in order to inform consumers about the cost of settlement. Borrower’s rights allow you to shop around. To read more on RESPA to learn your rights visit the HUD website.
Beware of Predatory Lending – Loan fraud is a growing crime. Hud has a great article to help you learn tips on spotting these practices.
3. Shop Around
Find the best mortgage – this could mean extra leg work for the buyer, but it can really pay off to shop around. It can save a lot of money in the long run. Remember you can compare pricing and even negotiate your terms. Learn more by visiting the HUD Buying Guide.
Use FHA – If you’re a first time buyer, a senior citizen, looking to purchase a home in need of repairs, or looking to purchase a manufactured or mobile home then you may be able to get a FHA mortgage. This offers buyers lower down payments, lower closing costs and they are more lenient with credit qualifications. We specialize in FHA Mortgages.
Interest only loans – These are mortgages that have you pay interest only for a set number of years. They can be beneficial to some home buyers, to find out more contact Michelle.
4. Learn about the available home buying programs - State by state programs – each state has different programs available to home buyers. Arizona has many programs available to home buyers.
See if you qualify for FHA loans – Seniors, first time buyers and those purchasing mobile or manufactured homes can benefit from FHA loans. See for more information.
HUD Programs – They offer four different buying programs. - Good Neighbor Next Door – for teachers, police officers and firefighters. - Hurricane Evacuees – offers discounted sales to those who have been displaced due to hurricanes. - Home ownership for public housing residents – is for those living in public housing looking to buy a home. - Indian home loan guarantee program – is a program especially for Native American Indians, Alaskan Tribes, Villages, and Natives.
5. Shop for your home
Choose your realtor – It’s best to find one that is local, and that you are comfortable with. Don’t be afraid to shop around.
Know what you want – Jot down a list of features you would want in your new house.
Make a list for comparison – write down what you liked and didn’t like with each home you visit.
Have a list of homes you would want to see – It’s good to have a variety of styles and locations.
6. Making the offer
Submit your offer to your realtor – This process can take time, so don’t become discouraged. It’s also not abnormal to have the seller come back with a counter offer.
7. Have the home inspected.
Find an inspector – this is one step home owners never want to skip. There is no price that can be put on knowing your home is 100 percent in working order and stability.
Make a list of questions – to ask the inspector. Here is a list of 10 questions but feel free to add your own too.
8. Find home owners insurance
Shop around for home owners insurance – You may wish to start with whoever you have car insurance with, but ask other companies too. You never know if you’ll find a lower price.
Discover ways to lower your costs – Here is a list of 12 different ways you may be able to save money
9. Sign the papers and become a home owner!
You’ve studied all the documents, read all the handbooks, and the final day has finally arrived. Now it’s time for you to become a home owner, but remember to read the settlement documents carefully, and to ask any questions prior to signing.
Helpful information when you’re ready to settle on your home – remember RESPA and that you have rights as a home buyer. Contact Michelle for more information on the process of settlement or closing.