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. According to www.ginniemae.gov, loan program rules vary on the percentage of your income used for housing-related expenses. Most conventional loans allow 28 percent, with Federal Housing Administration at 29 percent and Veterans Affairs at 41 percent.
Next, research the different 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.
Knowing your monthly budget and the amount of your loan are invaluable during the next phase: determining your home preferences. Do single-family houses, condos, town houses and duplexes fit your needs and budget? Do you prefer building a home, buying a new home or purchasing an older residence? Though new homes generally cost more, existing homes may come with maintenance issues and renovation costs. What is the number of bedrooms and bathrooms you’d 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 the majority of 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 preferences and neighborhoods, and are readily accessible.
Good luck and happy hunting!