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 a 41 percent limit against income.
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. For any home loan application, the mortgage company will order a credit report, so it’s 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 in 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.
Good luck and happy hunting!
Savannah’s Department of Housing offers four programs to assist homebuyers and homeowners. The four programs focus on increasing home ownership through three home purchase programs; linking homeowners to volunteers, small grants and loans for basic home repairs; making it easier to develop single- and multi-family housing through the Savannah Affordable Housing Fund; and encouraging sustainable, energy-efficient, healthy and affordable housing. For more information, visit www.savannahga.gov/index.aspx?NID=484.
In addition, a separate Department of Housing program offers down-payment assistance to city workers who want to buy a home of their own. A long list of potential housing helpers also can be found at www.needhelppayingbills.com/html/rent_assistance_chatham_county.html.
Currently, Hinesville has two affordable housing programs for its residents. Qualifying homeowners who need to make repairs can seek out the Owner-Occupied Rehabilitation Program ( www.cityofhinesville.org/254/Owner-Occupied-Rehabilitation-Program). Single-family homes and town homes in the Azalea Street Redevelopment Project (www.cityofhinesville.org/253/Azalea-Street-Redevelopment-Project ) also are available for purchase to those who qualify for the Georgia Dream Homeowner Program (www.dca.ga.gov/GeorgiaDream/gadream.asp) offered through the state Department of Community Affairs.
Georgia provides housing programs and incentives to help residents with home ownership. For more information, visit http://portal.hud.gov and select Georgia from the “State Info” drop-down menu. In addition, HomeSafe Georgia (www.homesafegeorgia.com) can provide temporary mortgage assistance for homeowners who are unemployed or underemployed through no fault of their own. The Georgia Department of Community Affairs is a good place to check out what’s available in housing help (www.dca.state.ga.us).