Are You Ready to Buy?

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Are You Ready to Buy?

It’s fun to look at homes. Using our website, day or night can be like window shopping (in your pajamas) into thousands of homes for sale. But before you move from browser to prospective buyer, the National Association of REALTORS® (NAR), suggests that you read through this top 10 list:

10 Ways to Prepare for Homeownership

  1. Decide what you can afford. Generally, you can use this calculation;to determine if you can afford a home equal in value, or between two and three times your gross income.
  2. Develop your home wish list. Know what you want and then prioritize the features on your list.
  3. Decide where you want to live. Put together a list of three or four neighborhoods you’d like to live in, consider things like schools, parks, golf courses, future development and safety.
  4. Start saving. Do you have enough money saved to qualify for a mortgage and cover your down payment? Ideally, you should have 20 percent of the purchase price saved as a down payment. Also, don’t forget to factor in closing costs. Closing costs — including taxes, attorney’s fees and transfer fees — average between two and seven percent of the home price.
  5. Get your credit in order. Get a copy of your credit report to make sure it is accurate and to correct any errors immediately. A credit report provides a history of your credit, bad debts, and any late payments. You’ll want to update it before you apply for a loan.
  6. Determine your mortgage qualifications. What amount of mortgage can you handle? Also, explore different loan options — such as 30-year or 15-year fixed mortgages or Adjustable Rate Mortgages (ARMs) — and decide what option is best for you.
  7. Get preapproved. Organize all the documentation a lender will need to preapprove you for a loan. You might need W-2 forms, copies of at least one pay stub, account numbers, and copies of two to four months of bank or credit union statements.
  8. Weigh other sources of help with a down payment. Do you qualify for any special mortgage or down payment assistance programs? Check with your state and local government about down payment assistance programs for first-time buyers. Or, if you have an IRA account, you can use the money you’ve saved to buy your fist home without paying a penalty for early withdrawal.
  9. Calculate the costs of homeownership. This should include property taxes, insurance, maintenance and utilities, and association fees if applicable.
  10. Your real estate professional can help you with this list! If you don’t have an agent, use the ‘Meet an Agent’ tool to find someone to help you through the complicated process of buying a home.