1. HOW DO I KNOW IF I'M READY TO BUY A HOME?
You can find out by asking yourself some questions:
- Do I have a steady source of income (usually a job)?
Have I been employed on a regular basis for the last 2-3 years? Is my current
income reliable?
- Do I have a good record of paying my bills?
- Do I have few outstanding long-term debts, like car
payments?
- Do I have money saved for a down payment?
- Do I have the ability to pay a mortgage every month,
plus additional costs?
If you can answer "yes" to these questions, you are probably ready to buy your own home.
2. HOW DO I BEGIN THE PROCESS OF BUYING A HOME?
Start by thinking about your situation. Are you ready to buy
a home? How much can you afford in a monthly mortgage payment (see Question 4
for help)? How much space do you need? What areas of town do you like? After
you answer these questions, make a 'To Do" list and start doing casual
research. Talk to friends and family, drive through neighborhoods, and look in
the "Homes" section of the newspaper.
3. HOW DOES PURCHASING A HOME COMPARE WITH RENTING?
The two don't really compare at all. The one advantage of
renting is being generally free of most maintenance responsibilities. But by
renting, you lose the chance to build equity, take advantage of tax benefits,
and protect yourself against rent increases. Also, you may not be free to
decorate without permission and may be at the mercy of the landlord for
housing.
Owning a home has many benefits. When you make a mortgage
payment, you are building equity. And that's an investment. Owning a home also
qualifies you for tax breaks that assist you in dealing with your new financial
responsibilities- like insurance, real
estate taxes, and upkeep- which can be substantial. But
given the freedom, stability, and security of owning your own home, they are
worth it.
4. HOW DOES THE LENDER DECIDE THE MAXIMUM LOAN AMOUNT THAT I
CAN AFFORD?
The lender considers your debt-to-income ratio, which is a
comparison of your gross (pre-tax) income to housing and non-housing expenses.
Non-housing expenses include such long-term debts as car or student loan
payments, alimony, or child support. According to the FHA, monthly mortgage
payments should be no more than 29% of gross income, while the mortgage
payment, combined with non-housing expenses, should total no more than 41% of
income. The lender also considers cash available for down payment and closing
costs, credit history, etc. when determining your maximum loan amount.
5. HOW DO I SELECT THE RIGHT REAL ESTATE AGENT?
Start by asking family and friends if they can recommend an
agent. Compile a list of several agents and talk to each before choosing one.
Look for an agent who listens well and understands your needs, and whose
judgment you trust. The ideal agent knows the local area well and has resources
and contacts to help you in your search. Overall, you want to choose an agent
that makes you feel comfortable and can provide all the knowledge and services
you need.
6. HOW CAN I DETERMINE MY HOUSING NEEDS BEFORE I BEGIN THE
SEARCH?
Your home should fit the way you live, with spaces and
features that appeal to the whole family. Before you begin looking at homes,
make a list of your priorities - things like location and size. Should the
house be close to certain schools? your job? to public transportation? How
large should the house be? What type of lot do you prefer? What kinds of
amenities are you looking for? Establish a set of minimum requirements and a
"wish list." Minimum requirements are things that a house must have for you to
consider it, while a "wish list" covers things that you'd like to have but
aren't essential. |
