Buying a home is a complex process and, as the recent housing crisis demonstrated, requires a thorough education on the part of the buyer. First, fully understand your financial position — credit score, available savings, monthly income and expenditures. Subtracting your expenditures from your income, for instance, will yield the amount you can afford for housing.
Be sure to account for all insurance costs associated with owning a home, possible homeowner association fees and property taxes in your monthly expenditures. Overall, loan rules changed in 2015, but according to www.ginniemae.gov (Government National Mortgage Association) and www.homebuyinginstitute.com (the Homebuying Institute) loan programs continue to vary on the percentage of your income that can be used for housing-related expenses. Lenders balance debt against income to decide if an applicant will be able to repay a loan. Most conventional loans require borrowers to have no more than 43 percent total monthly debt versus their total monthly income, though there are exceptions, such as for those with significant savings. The Federal Housing Administration has a two-tier qualifying system: FHA sets its top thresholds at 31 percent front-end debt (housing expenses as a percentage of income) and 43 percent back-end debt (all debt as a percentage of income) for a 31/43 qualifying ratio. Like commercial lenders, Veterans Affairs combines front-end and back-end debt for a41 percent limit against income.
Next, research the types of home loans to determine the right fit for your financial situation and discuss your options with a lending professional. Lenders are diverse today, and not all homebuyers obtain their mortgage loans through their banks and credit unions. For example, you may choose to work with an internet lender, a mortgage broker, a homebuilder or a real estate agency lender. To determine which lender is best for you, get recommendations from friends and family members and check credentials as well as Better Business Bureau ratings.
A preapproved loan before starting your search for a home can determine your spending limits and signal any potential issues in the way of receiving a loan. For any home loan application, the mortgage company will order a credit report, so it may be good to get a free report in advance to determine your credit status and make sure the report contains no erroneous information.
To order your free annual report from one or all of the national consumer reporting companies, visit www.annualcreditreport.com, call toll free 877-322-8228, or download and complete the Annual Credit Report Request Form and mail it to Central Source LLC, P.O. Box 105283, Atlanta, GA 30348-5283. For more information, visit the Federal Trade Commission site at www.consumer.ftc.gov/topics/credit-and-loans.
Knowing your monthly budget and the amount of your loan are invaluable during the next phase, especially finding the answers to questions before the hunt for a home begins.
First, determine your home preferences. Does a single-family house, condo, town house or duplex best fit your needs and budget? Do you prefer a new home, an existing home or to build one? Though new homes generally cost more, existing homes may come with maintenance issues and renovation costs. How many bedrooms and bathrooms would you like? Do you want an attached garage? Will you live in the city, a suburb or in the country? How close to work, school, shopping or public transportation do you want to be? Answers to these questions will greatly assist your search and the next stage — hiring a real estate agent.
The ideal agent will help find your ideal home and guide you through the purchase process. First, interview potential candidates to ensure they understand your needs, know your homebuying and neighborhood preferences, and are readily accessible.
Greater Albuquerque Housing Partnership
The Greater Albuquerque Housing Partnership is dedicated to the revitalization of Albuquerque’s urban neighborhoods through the development of affordable and market-rate housing opportunities and by providing home ownership counseling and financial assistance to qualified first-time home buyers. For more information, visit www.abqgahp.org or call 505-244-1614.
New Mexico provides housing programs and incentives to help residents with home ownership. For more information, visit http://portal.hud.gov and select New Mexico from the “State Info” drop-down menu.
Six weeks prior to move
- Contact a real estate agent in the local area. Start by looking in the Advertiser Directory of this publication.
- Obtain quotes from moving and self-service companies and gather DIY estimates. Decide on the type of move best for your circumstances.
- Determine employer-covered expenses.
Four weeks prior to move
- Check the preregistration procedures to enroll children in school. Get children’s transcripts, textbook list and a copy of their current school’s grading system. Ask teachers to write descriptions of each student’s achievement level, interests and any unusual courses taken.
- Request that copies of all family members’ medical and dental records and birth certificates be sent to your new home. Don’t forget your pets’ veterinary records.
- Notify the post office of your new address and obtain a change-of-address kit. Send change-of-address cards to friends, subscription services, creditors, alumni associations, the Department of Motor Vehicles and insurance companies.
- Begin packing seldom-used items and dispose of unwanted items through charities — get receipts for tax purposes.
- Contact the IRS for forms and regulations regarding tax-deductible moving expenses.
- Transfer or arrange for insurance to cover your home, furnishings and automobile.
Three weeks prior to move
- Arrange to have appliances, utilities, newspapers, laundry, phone and cable television disconnected. Check on deposits. Set up connections at yournew home.
- Make travel arrangements.
Two weeks prior to move
- Handle bills, stocks, investments and banking transfers.
- Arrange to transport pets and plants. Some states prohibit certain plants, so research before you move.
- Clean cupboards and plan remaining meals so you can pack what you don’t need.
One week prior to move
- Discontinue delivery services such as the newspapers.
- Clean and sort items in garageand attic.
- Clean out your safety deposit box and place all valuables and documents together. If the items can’t be replaced, carry them with you.
Two days prior to move
- Defrost and dry refrigerators and freezers.
- Arrange for cash or traveler’s checks for trip expenses and payment to the mover upon delivery.
- Reconcile and close checking account. Withdraw savings.
- Conclude any financial matters relating to the lease or sale of your home.
- Pack luggage. Set aside items you will needimmediately upon arrival — a few dishes, pots and pans, towels, soap, bedding, light bulbs, flashlights and toilet paper.
- Leave forwarding address with new tenant or neighbor.
- Confirm your delivery date with your mover and provide directions to your new residence as well as primary and secondary contact numbers or email addresses.
- Pay close attention to the mover’s paperwork. You will need to sign it upon completion of loading and then unloading at your new residence.
- Supervise the movers to make sure your instructions are understood. Review any damage to your belongings noted by the moving foreman/supervisor.
- Double-check your residence for forgotten items before leaving.
- Clear and mark paths to all rooms to help the movers place the boxes.
- Supervise unloading.
- Note any damage to your boxes or furniture.
- Review paperwork carefully to make sure all your belongings arrived.