If you are thinking about buying a home, now is probably the best time in a long time that you can get into one. But first there are a few things you need to know and how it works.
Why I am letting you know this?
Mainly, I have been where you are and I don’t like paying rent anymore than the next guy. And I sure as hell don’t want to pay someone for information I know that is out there.
Some people out there (vultures) will charge you anywhere from $19.99 to $199 dollars for the information I am about to give you or more (so you can get rich! Please don’t fall for that mumbo jumbo), what amazes me is that people pay it!
I have nothing to gain or nothing to lose but you do and I don’t want to see that happen to another person or them to get taken advantage of. I have had good and bad experiences and don’t want others to go through the pains I had to.
If someone would have told me about what I am about to tell you it would have saved me a lot of money, time, stress, and worry. I decided to do something that is not only helpful but absolutely free, no charge, not a cent, one dime.
I have been ripped off, taken advantage of, told no and no again and to be honest it made me angry and bitter and almost cost me my family and my career.
So if you are ready to move on please read on. If not, best of luck to you and God bless you.
Here we go:
Like everything else in life there is a process and steps that have to be followed. When you look into the house market it can be very fun and exciting and strange and stressful –example a house may list for 100,000 dollars but when you go to look at it someone has already made a bid for $160,000 -before you get your hopes up, look at what you’re getting and how much house you can afford, just because it lists at that price doesn’t mean it will sell for that.
First of all understand the math (Yuk! I know me to).
Basically (and this is a estimate only) for every 100,000 dollars a house cost your payment is around 1% of that or $1,000, if you are paying 800 in rent and the payment is 1,000 dollars that extra 200 bucks can hurt, you will need to add property taxes, and PMI (Private Mortgage Insurance) if you don’t have 20% for a down payment.
You may have to pay homeowner dues, water, garbage, etc. Expenses you may not have as a renter in an apartment building or condo. Remember you paying a mortgage not rent and that things go with it.
So that 1,000 a month payment is now 1200 or 1400 dollars depending on interest of the loan, the area and what is tied up with it.
There are mortgage calculators out there is one I like to use
http://www.calculators4mortgages.com (also has tons of other information, great website)
So what is your first step in buying a home.
Get your credit report. If you are like most people they take this for granted and assume their credit is ok. DON’T.
Credit Agencies make mistakes and those mistakes can be costly to you. Now I am about getting free stuff so here is a website that will give your free credit reports, however you will have to pay (around 7 to 10 bucks) for your credit report go to www.annualcreditreport.com it will ask for some information pertaining to you and once complete will walk you through the rest.
Print them off, compare them to each other (not all your items you have on credit will appear on all credit reports). I will show you how to get rid of the bad stuff later on your credit report.
Here is another one I like www.quizzle.com , this site is a soft query of a credit report from Equifax.
Not only will it give a score it will help you set up a budget.
I highly recommend this if you are a first time buyer and or don’t have a real idea of how your money is spent each month. Hey trust me I have lived pay day to pay as much as the other guy.
You might surprise yourself on how much money you really spend on nothing. I know I was.
Before you even go look at a house, talk to a real estate agent, or lender, or anything else. Research the area you would like to buy a house in.
How close are the schools? What are the other home values around the neighborhood? What is the crime rate? How far is my commute to work? How close to downtown will I be? How much house do I really need?
If you have never owned a home before there are things you are going to need. If you have lived in an apartment for a long time you may not own a lawnmower or trimming tools or other things like that. Remember there are some things you are going to have to purchase along the way. So plan ahead (I am also providing a home tool kit must have list for you here to, it is not inclusive but it will help get you started and in the right direction).
There are a lot of websites out there, I like to use a couple of them at the same time, one to see the listing and two to see the value of the house I am looking at or interested in. One I use the most is www.pmz.com and the other is www.zillow.com note: you will hear good and bad about the Zillow.com website because it gives and estimate of the property value based on the current market and some businesses and people don’t care for that much. (I usually add or take away 25% and it usually in the ball park).
Now that you know what you want and know that your credit report is good to go. Here is the next step. Get PREAPPROVED FIRST before looking at a house. No sense in going to look at a $200,000 home and to be told later that you do not qualify (theirs that stress factor again).
Once you are PREAPPROVED you have money in the bank so to speak and sellers and lenders are more apt to go with you and or your offer because of it. Also be careful here because there is another little phrase that is out their called “PRE QUALIFIED” it will get you nowhere.
Once you are preapproved you will be given a certificate as proof for the seller and lender and your real estate agent.
Here is what a PREAPPROVAL is defined: A Pre-Approval can let you know how much you can borrow.
The Pre-Approval is a process of pre-qualifying or determining how much money a prospective home buyer might be eligible to borrow before he or she applies for a loan. When you pre-qualify (done before you are pre-approval), you will be asked for information about your credit, assets and debts. Based on the information you provide and the loan type you want, it will be calculated on how large of a loan you might qualify for.
You should have the Borrower’s and Co-Borrower’s information as well as work and income history for the previous two years. You will also need to provide simple information about your debts and expenses.
Now your set, money in your pocket (so to speak), credit report is good to go. Now what? You will need to find a good Real Estate Agent; you want one with experience and knows how the system works. Talk to your friend and family that have bought homes recently for references.
There are thousands of them out there and all of them want to help you. They will help you by letting you “in” the house first of all, and second will have all the information necessary for the home and will walk you through step by step on doing the offers and paperwork (and there is a lot of that).
Recap of steps:
- Credit report – You need to know what it says, even you have never been late on bill in your life it mean the difference of 1 or 2% on a loan. (I will show you how to do payment calculations later, some websites have them but they do not give you the full load).
- If you are a Veteran get your Certificate of Eligibility from this website (you will need your DD 214 or other service documents (you must be on active duty for 180 consecutive days to qualify).
- Research Area your interested in – Go to www.pmz.com (or anyother real estate company you like) and www.zillow.com (copy the address from real estate site into zillow site and click go, a small box will pop up click on house info and scroll through site to see the estimate and other details of the home you are looking at. Like, when did it last sell and for how much, what is the “zestimate” (approx value), what year was it built, is it a foreclosure or a Bank Owned home
- Get PREAPPROVED for a loan. Most lenders and Real Estate Agents will love you for this because it makes their jobs much, much easier knowing they have a client that is already qualified for a loan.
- Find a Real Estate Agent – Check with your friends that are home owners they will put you in touch with someone that helped them and that they liked but remember the choice if yours.
- Look at homes (don’t settle on the first home you look at). Why? You want to look a variety of homes, what does one house have the other don’t, does the room flow from the kitchen to the living room? What is the storage space? Are there any water links under the sinks?
Here is a basic checklist:
- Bathroom(s) – Is it big enough for you and your family?
- Kitchen- How big is it? Does have a refrigerator and/or stove already? If so how big is the refrigerator and what type of stove is it gas or electric?
- Living room or Great Room – Is it big enough for your 50 inch Flat screen TV and all your furniture –will the room be cramped?
- Garage –Is it finished or unfinished? Does it have shelves or no shelves?
- Closets –Is there a linen closet? Coat Closet? Walk in Closet in the Master Suite or other bed rooms?
- Bedrooms – How big are they will they fit a good size bed and all of my kids toys and clothes?
- Check for leaks under that sink in the kitchen and all the bath rooms.
- Laundry where are the laundry hook ups? Is their adequate storage for supplies?
- Electrical plug ins-Is their one on every wall in every room of the house, will you able to plug in lamps, stereo, entertainment center without causing power outages or flipping a breaker.
- Where is the breaker switch? In the garage or outside on the side of the house?
- Water heater? How new or old is it? Does it meet current home code standards?
Get the idea –just look around, it is ok to question things that are not fixed or missing. It all depends on how much work you want to do to the house and what your future plans you have, as well what effect it will have on the purchase price of the home. It’s a huge investment to your future – you have the right to be as picky as you want to be.
Paperwork you need to have handy and ready to go for PREAPPROVAL of loan:
- DD 214 if a Veteran (or other military documents proving service, orders, etc) if you do not have the Certificate of Eligibility.
- Last two years of taxes
- Last 3 to 5 months of paystubs (LES’s if military) for you and your spouse if married
- Credit reports, and letters explaining anything that is incorrect on the report and receipts for things that have been paid off.
Ok quick reference of what you need to do:
- Credit report
- Pre Approval of loan
- Real Estate Agent
- Search for Home
- Ask Questions
- Make offer
- Move In
- Get the basic tools
Here is a tip for you. Write each of the above items down as a task (or on a to do list) and put a date next to it. This will help you manage your time and you will be more apt to comment to it if you put a date down.
Oh wait you think your credit is bad and no on the planet will look at you and the computer will catch on fire when your numbers are put in. It’s Ok been there to. Here is what you do go to www.primerca.com and find someone who works for them in your area and have a FREE financial Analysis done, not only will it let you know where you stand, it will give you a get out of debt plan and cost you nothing out of pocket.
Others out there that read this and you are already home owners please add to this as well as make any comments you like or dislike about the above information or better yet anything I missed out on that others can really use.
I just want people to know that they can buy a home and to make sure that they don’t get taken advantage of in the process.
All the information I have given you is truly from my heart and on my own free will. There is a lot of help and assistance for down payments etc. and I hope that you take advantage of every one of them.
Remember if you get in a home before the December deadline of this year (if it has not been extended yet) you get $8,000 as a home buyer credit on your taxes.
Others have made thousands if not millions from what I have written here. I am not being paid by someone to tell you this information nor is it made up. This is what I have learned from the school of hard knocks and it is my greatest wish that you have success in your life and be able to have the home and happiness that you deserve.
Best of luck!