June 17th, 2017 9:01 AM by Jackie A. Graves, President
it with rentals and roommates and think it's about time you took advantage of
low mortgage rates and became a first-time homebuyer? To make that happen, just
follow this simple step-by-step plan.
Do a quick search of actual
multiple listing service, or MLS, listings in your area on a number of
websites, including the National Association of Realtors.
Include taxes and home insurance
in your cost. In some areas, what you'll pay for your taxes and insurance
escrow can almost double your mortgage payment.
Compare mortgage rates now to find the right loan for you.
To get an idea of what insurance
will cost you, pick a property in the area where you want to live and make a
call to an insurance agent for an estimate. You won't be obligated to buy the
policy, but you'll have a good idea of what you'll pay if you decide to buy. To
estimate what you'll pay in taxes, check your property appraiser's website.
Just remember that exemptions and the intricacies of local tax law can create
differences between what a homeowner is currently paying and what you can
expect to pay as a new homeowner.
The upfront cost of settling on
your home shouldn't be overlooked. Closing costs include origination fees
charged by the lender, title and settlement fees, taxes and prepaid items like
homeowners insurance or homeowners association fees. Check out Bankrate.com's annual
closing cost survey to
see what closing costs average in your state.
Fannie Mae recommends that buyers
spend no more than 28 percent of their income on housing. Push past 30 percent
and you risk becoming house-poor.
Do they believe prices will continue
falling or do they think your area has hit bottom or will rise soon?
While buying a house is a great
way to build wealth, maintaining your investment can be labor-intensive and
expensive. When unexpected costs for new appliances, roof repairs and plumbing
problems crop up, there's no landlord to turn to, and these costs can quickly
drain your bank account.
the numbers make sense for you, making these additional moves at the very
beginning of the purchase process can save you time, money and aggravation.
credit or the inability to make a substantial down payment can put the kibosh
on your homeownership plans. That's why it pays to look at your
creditworthiness early in the homebuying process. Get your free annual credit
report and examine it for errors and unresolved issues. If you find mistakes,
contact the credit reporting bureau to make sure they are corrected. It's also
a good idea to get your FICO credit score, which will cost you a small fee.
pay stubs, bank account statements, W-2s, tax returns for the past two years,
statements from current loans and credit lines, and names and addresses of your
landlords for the past two years. Have all of that paperwork ready for the
lender. It may seem like a lot, but in this age of tight credit, don't be
surprised if your lender wants a lot of documentation.
preapproved for a mortgage helps you bargain from a position of strength when
you are house hunting. The institution where you bank and a local credit union
are good places to start your search.Use Bankrate's mortgage
rates tool to find
lenders offering the best rates in your area. Applying to multiple lenders in
the same month helps increase your chances of getting a loan approved at the
best rate possible without dinging your credit score too much.
you can't find a bank willing to lend to you — and in the current tight credit
market, it's possible you won't — consider getting an FHA loan. The Federal
Housing Administration has a program that insures the mortgages of many
first-time homebuyers. As a result of this guarantee, lenders who might
otherwise feel queasy about your qualifications will be more inclined to lend
to you. As a bonus, the FHA requires a down payment of only 3.5 percent from
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