Owning your own home seems to be the ultimate achievement for most individuals. In order to successfully purchase your first home it is important to keep in mind some home buying tips to make the process easier. Such a large purchase requires careful considerations to make sure you are prepared before, during and after the home buying transaction. Items like good credit, paying off debt, pre-qualification, finding the home and closing the deal are all steps which can either go smoothly or become deal breaking obstacles.
Nothing prevents the home buyer from contacting a local real estate agent and stating "I want to buy a house". And while there are sure to be transactions which go down this way it isn't the best way to purchase a home. There are a number of steps which take place prior to even contacting a real estate agent. First and foremost is determining whether or not you even afford a home or if you even qualify.
A thorough understanding of your personal finances will help determine how much home you can afford and under what terms. Mortgage companies will scrutinize every detail of your financial history to determine whether or not you are an appropriate risk for a mortgage. This includes not only length of employment and monthly income but also debt to income ratios and credit history. Be sure to obtain a copy of your free annual credit report so you can correct any misinformation or explain any black marks which could adversely affect your ability to qualify for a mortgage.
Your debt to income ratio must also be below a certain threshold which means if you are carrying a lot of credit card debt or have a current auto payment then you may not qualify for as much home as you like if at all. When seeking a mortgage, try to pay off as much debt as possible prior to looking to purchase a home. It is always recommended to carry little to no debt prior to purchasing a home and then once the home is purchased then add an auto payment afterwards.
Once your finances are squared away then you can accurately determine how much home you are able to afford. Also, if your credit has been cleaned substantially it will result in a lower mortgage rate. Once these steps are done then you can consider looking at actual properties for sale. At this point you can consider local real estate agents as well as your current financial institution to get the ball rolling for the eventual home purchase.
You will want to find a good real estate agent because they will be able to take the initial steps in the process. This includes working with your mortgage company on pre-qualification as well as beginning narrow your home selection. The two really work together because pre-qualification will determine the mortgage amount available which will influence the realtors' selection of available properties. It may also be necessary at this time to go with a different mortgage lender if the closing costs or points are unacceptable and the competition is offering better terms.
A good real estate agent will also provide valuable insight into various neighborhoods and whether or not homes your looking at have issues which may be deal breakers. They will also be able to guide you on what additional paperwork is necessary such as proof of income or various tax returns which will be necessary at closing. In addition to guiding you on the process they also provide contacts for home inspections and title companies which can make will process as smooth as possible.
Once a home is found and your loan has been approved then comes the closing. A lot of preparation and paperwork goes on behind the scenes. At the end of the day you can be involved as little or as much as you like in the process. At this point you will be required to make a final closing payment as well spend a significant amount of time signing numerous documents including but not limited to the mortgage as well as paperwork to be filed with the state.
First time home buying can be very exciting and also a little nerve-racking. The more informed you are about the process the more prepared you will be should anything unexpected happen. Purchasing your first home is a big step in life not to be taken lightly. Do all of your research, ask lots of questions, get your finances in order and work with a good real estate agent and mortgage lender. Once all of these are in place the home buying process will go as smoothly as possible and you will be well on your way to living in your dream home.