Do The Basics
It is every American’s dream to own a home. It is a big decision to make, and probably one of the largest financial investments of your life. You would, of course, wish to gather as much information as you can about buying homes, especially if it is your first purchase. While trying to gather information, you could land up with a list of questions that need answering:
· How much could you afford to spend on the house?
· Would you need an estate agent to help you?
· Would you need an appraisal?
· Is a home inspection really necessary?
· Where could you get a good mortgage deal?
· Where could you get a good credit?
· How much will other expenses, such as for appraisal, home inspection, closing costs, be?
· How much should you offer for the home?
How much you should spend on the house depends on what your income from all sources is. Normally the home you have in mind should cost between 1½ to 2½ times your annual income. You need to have some cash for down payment. Depending upon the loan amount approved, your down payment could be anything between 3 percent to 20 percent of the value of the home under consideration. If you happen to be a veteran, or a person on active military duty, you may qualify for mortgage loans with zero down payment.
Things To Do
Remember that your past credit history will affect your ability to have a mortgage loan. If you have a problem with your credit, try to improve upon your score. Get your self a copy of your credit report from any of the three main Credit Bureaus:
- Experian (formerly TRW), Texas (www.experian.com)
- Equifax, Atlanta (www.equifax.com)
- TransUnion, California (www.transunion.com)
If there are errors in your credit reports, have them corrected before submitting your application for the mortgage loan.
It is always advisable to have an appraisal and an inspection of the home you wish to buy, done. This to ensure that you are paying a fair and right price for the home, and that there are no underlying defects in the structure and otherwise, of the home. Repairs, which were not detected at the time of the purchase, could cost you a heavy price, making the whole deal unaffordable.
Though you may have a real estate agent to help you through the process of buying a home, there is no harm in learning about the mortgage process. You need to get yourself pre-approved for a mortgage loan even before you start looking for your dream home. Your income tax returns for the last two years will be all right as proof of income.
Find out the types of mortgages available and which are best suitable for your financial situation. Normally, 28% of your monthly income should cover the mortgage payment, insurance premiums, real estate taxes and other home related expenses.
Have these basics done before you decide on the type of mortgage loan you require, and decide on the home.
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