First Time Home Buyers - Where To Start?
So you want to buy a home? Statistics show that more and more
young single people are buying homes. With mortgage rates at an
all time low, more programs to assist first time homebuyers, and
lots of homes on the market to choose from; it doesn't make
sense to keep paying rent. So, what should your first move be on
the path to becoming a homeowner?
How Much Home Can You Afford? The first step in the home-buying
process is to determine how much home you can afford. You do
this by contacting your bank, a mortgage lender, or looking
online for a pre-approval. A pre-approval is a simple
calculation that tells you the amount you'll be able to finance
through a loan and what your monthly payment will be.
Why Should You Obtain a Pre-approval? There are three important
reasons to obtain a pre-approval.
1. Pre-approval will determine the maximum you can spend
on a house before you shop, so you know what price range to
target. Many shoppers aim too high, bidding on a home that they
later learn is beyond their means because of unforeseen debts or
other financial factors, which leads to disappoint in your
search for the perfect home.
2. If helps your real estate agent be more efficient. By
knowing what your financial parameters are, your agent can spend
more time looking for houses that "fit" and less time pursuing
dead ends.
3. When it comes time to write an offer, you will
strengthen your bargaining position if you have that
pre-approval. Your offer will stand out in a case of multiple
offers for the same house. Look at it from the seller's
perspective. If you had two offers on the table for your house,
one from a fully pre-qualified buyer and the other from an "I'll
get around to that soon" buyer--to which offer would you devote
the most attention?
It is important to remember that the amount of mortgage you will
qualify for is the maximum. It is the amount that the lender
feels you can afford, but it is not necessarily the amount that
you want to pay. It sometimes is advantageous to be conservative
here. Too many buyers simply rush off to the maximum level and
some find themselves strapped when it comes time to purchase
necessary items (such as draperies, additional furniture, new
appliances and lawn and garden tools, for example) or when they
forget to factor in increases in monthly expenses (for example
utilities, maintenance and repair costs).
A mortgage pre-approval is generally good for 60-90 days, after
which the lender may require an update to the credit report
and/or other exhibits within your application file. Further,
although the lender has issued a credit decision in advance,
nearly always it will reconfirm the data that led to the initial
decision. If any part of your financial picture changes - be it
credit, income, or asset related - it is critical to alert the
lender of these changes so that your pre-approval can be
reissued and/or adjusted.
Attention: All First Time Home Buyers. If you are getting
ready to purchase your first home or if you think you can't
afford to purchase your first home, don't make another move
until you have read this important information! First Time Home Buyers
Guide To Free Money And Low Interest Loans