10 Steps to Prepare for Homeownership
1.
Decide how much home you can afford. Generally, you can afford a home equal in value to between two and three times your gross income.
2.Develop a wish list of what you’d like your home to have. Then prioritize the features on your list.
3.Select three or four neighborhoods you’d like to live in. Consider items such as schools, recreational facilities, area expansion plans, and safety.
4.Determine if you have enough saved to cover your downpayment and closing costs. Closing costs, including taxes, attorney’s fee, and transfer fees average between 2 percent and 7 percent of the home price.
5.Get your credit in order. Obtain a copy of your credit report.
6.Determine how large a mortgage you can qualify for. Also explore different loans options and decide what’s best for you.
7.Organize all the documentation a lender will need to preapprove you for a loan.
8.Do research to determine if you qualify for any special mortgage or downpayment-assistance programs.
9.Calculate the costs of homeownership, including property taxes, insurance, maintenance, and association fees, if applicable.
10.Find an experienced REALTOR who can help you through the process.
7 Reasons to Own Your Own Home
1.Tax breaks. The U.S. Tax Code lets you deduct the interest you pay on your mortgage, property taxes you pay, and some of the costs involved in buying your home.
2.Gains. Between 1998 and 2002, national home prices increased at an average of 5.4 percent annually. And while there’s no guarantee of appreciation, a 2001 study by the NATIONAL ASSOCIATION OF REALTORS found that a typical homeowner has approximately $50,000 of unrealized gain in a home.
3.Equity. Money paid for rent is money that you’ll never see again, but mortgage payments let you build equity ownership interest in your home.
4.Savings. Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.
5.Predictability. Unlike rent, your mortgage payments don’t go up over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will rise.
6.Freedom. The home is yours. You can decorate any way you want and be able to benefit from your investment for as long as you own the home.
7.Stability. Remaining in one neighborhood for several years gives you a chance to participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity.
10 Tips for First-Time Homebuyers
1.Be picky, but don’t be unrealistic. There is no perfect home.
2.Do your homework before you start looking. Decide specifically what features you want in a home and which are most important to you.
3.Get your finances in order. Review your credit report and be sure you have enough money to cover your downpayment and your closing costs.
4.Don’t wait to get a loan. Talk to a lender and get prequalified for a mortgage before you start looking.
5.Don’t ask too many people for opinions. It will drive you crazy. Select one or two people to turn to if you feel you need a second opinion.
6.Decide when you could move. When is your lease up? Are you allowed to sublet? How tight is the rental market in your area?
7.Think long-term. Are you looking for a starter house with the idea of moving up in a few years or do you hope to stay in this home longer? This decision may dictate what type of home you’ll buy as well as the type of mortgage terms that suit you best.
8.Don’t let yourself be “house poor”. If you max yourself out to buy the biggest home you can afford, you’ll have no money left for maintenance or decoration or to save money for other financial goals.
9.Don’t be naïve. Insist on a home inspection and, if possible, get a warranty from the seller to cover defects within one year.
10.Get help. Consider hiring a REALTOR as a buyer’s representative. Unlike a listing agent, whose first duty is to the seller, a buyer’s representative is working only for you. And often, buyer’s reps are paid out of the seller’s commission payment.
What Not to Overlook on a Final Walk-through
Be sure that:
Repairs you’ve requested have been made. Obtain copies of paid bills and any related warranties.
All items that were included in the sale price—draperies, lighting fixtures—are still there.
Screens and storm windows are in place or stored.
All appliances are operating.
Intercom, doorbell, and alarm are operational.
Hot water heater is working.
HVAC is working.
No plants or shrubs have been removed from the yard.
Garage door opener and other remotes are available.
Instruction books and warranties on appliances and fixtures are there.
All personal items of the sellers and all debris have been removed.
10 Steps to Prepare for Homeownership
7 Reasons to Own Your Own Home
10 Tips for First-Time Homebuyers
What Not to Overlook on a Final Walk-through
