STEPS WHEN BUYING A HOUSE
Here are the steps when buying a house the best way and the five leading factors that will help you purchase a great home.
1. Monthly income to support a quality mortgage
2. Learn the legal home buying process for your state
3. Create a quality credit score
4. Know the affordability options in your community or state
5. Learn the importance of finding and using honest realtors, banks, or mortgage brokers
The steps when buying a house start by selling off expensive items if you find getting a quality mortgage is out of reach. That would include things that have a monthly payment, but you don’t absolutely need them. Also, sell anything you don’t need, to raise money for a down payment and escrow costs. Start a savings account only for a future home.
The monthly income to support your home mortgage must be stable. A stable income and job are the number the one step in the steps when buying a house. Make sure you have an income that will support homeownership long term. Try to buy a home based on one income if you are married.
If you are single, you should have a savings account to support 3-6 months of payments. Job stability is also important and should be a heavily weighted factor that will help you purchase a great home and keep it into the future.
USING A “BUY A HOME PROGRAM”
There is a leading “buy a home program” called NACA (Neighborhood Assistance Corporation of America-naca.com), that will guide you through the home buying process. But you can do this yourself. There are both advantages and disadvantages to using “buy a home program”. The programs are useful if; 1. You don’t know anyone who has ever bought a home, so you can use them for advice, or 2. You don’t know any quality real estate agents or mortgage brokers who will give you advice. 3. Or, If you are not willing to do your own research. All these factors must be done before you consider using a “buy a home program”.
The disadvantage of a “buy a home program” is it can take far longer than necessary. Since you are not their only client, sometimes there are long waits for information and processing. Sometimes your questions will go unanswered. Other times, you will be left confused for months. Leading information, you can find out on your own and includes 1. Your monthly take-home income 2. Your credit score 3. If homes in your area support your monthly take-home income 4. How to get a home inspected to make sure it does not have major repair issues. 5. The home purchase process for your state. 6. Understanding different types of mortgages to assure you get a quality mortgage.
LEARN THE LEGAL BUYING PROCESS FOR YOUR STATE ASSISTED WITH A “BUY A HOME CALCULATOR”
Use the buy a home calculator on my partner site, Liverichcalculators.com to see if you can afford to buy a home. Home affordability is a major factor in buying a home it will determine your ability to keep your home. Understand the many definitions that come with home buying before you start.
Those definitions include 1. The title process or escrow process depends on your state 2. Definition of a mortgage and the mortgage process. 3. Real estate available in your income bracket. 4. What is title insurance? homeowners’ insurance? and H.O. A. fees (homeowners association fees). Some homeowners don’t understand H.O.A. fees and get foreclosed on for skipping a small amount of H.O.A. fees. Most associations will add interest and penalties when H.O.A. fees are not paid on time.
When homeowners skip fees some H.O.A. management companies charge huge fees for nonpayment, and attorney’s fees to collect the payments. Always stay current if you have H.O.A. fees. The “buy a home calculator” will calculate the principal and interest of a mortgage for a given home cost. You must add on interest and taxes, as well as H.O.A. fees. Most of this information can be found on real estate sites like Zillow, Rein, and Realtor.com
CREATE A QUALITY CREDIT SCORE AND USE MY “BUY A HOME VS. RENT CALCULATOR”
If your credit score and income or savings are too low to purchase a home you can use a “buy a home vs. rent calculator” to determine if it is time to buy. It is crucial that you know the right time for you to buy.
When you use the “buy a home vs. rent calculator” and it indicates your income is far lower than your monthly mortgage, it is not time to buy. You will need to 1. Save more money for a larger down payment 2. Get a better job or 3. Start selling and stop wasting money on things you don’t need.
Buying a home is worth it if you understand how to buy within your income and purchase a quality home by getting it inspected. With a home comes a tax deduction and building equity. After your mortgage is paid off you will live mortgage-free.
Sometimes realtors or mortgage brokers will push you into homes you can’t afford, so they get a sale and commission. When you do your homework, you know your absolute budget, you can stay strong and stay within your limits. Using the “buy a home vs. rent calculator” will prevent you from wasting time looking for a home you can’t afford.
AFFORDABILITY OPTIONS: HOW TO BUY A HOME IN FORECLOSURE
Learning how to buy a home in foreclosure is crucial before your venture out in that direction. If you have a friend or family member who is on the verge of foreclosure that is your best option. When going to the open market for a foreclosure home it is harder now. The competition for foreclosure homes is huge.
If the home is foreclosed on because of a small lien it will be taken up quickly. But foreclosed homes that need large repairs or have large liens can be dangerous to buy. The repairs can be more than the value of the home. Say if a home has tax liens or judgments in a lawsuit, the home can have liens in the millions and be worth only hundreds, you just bought a major headache. Liens can transfer with a home, and you may not be able to get proper title insurance.
When you buy a home in foreclosure it can be far more expensive than purchasing a lien-free home. Most foreclosure homes are only sold “sight unseen” some are auctioned at the courthouse. Because of this, massive research must be done on the home first to avoid disastrous surprises.
A common practice for people who lose their home to foreclosure is to destroy the inside, this alone could cost hundreds of thousands to fix. In today’s homebuying climate, understanding “how to buy a home in foreclosure” is crucial.
AFFORDABILITY OPTIONS IN YOUR STATE OR COMMUNITY
Affordability options in your community or state could include moving from a high-income city to a more affordable suburb or rural suburb. Also, if you can transfer a job, move to a more affordable state. But, a word of caution, sometimes it is hard to buy a home in an affordable state. Some states that don’t have state income tax have other horrendous fees added to utilities or maintenance of the city.
Currently, there are companies called R.E.I.T.s or real estate investment funds, also called hedge funds. These companies are buying affordable housing sites unseen with no inspection. One company in Canada has purchased 130,000 homes under $350,00 in the U.S. according to a recent 60-minute interview.
When young first-time homebuyers move to these states, they find that affordable homes are being gobbled up by these companies. Make sure you have a job and purchase a home before you move out of state to a seemingly more affordable state, with hidden costs.
LEARN THE IMPORTANCE OF FINDING AND USING HONEST REALTORS, BANKS OR MORTGAGE BROKERS
Who you use for real estate and mortgage transactions, makes a difference? Dishonest agents will rush you through the process to choose a home in bad condition. And a dishonest mortgage broker will sell you a bad mortgage. A bad mortgage consists of the one you don’t understand, or consists of a no-documentation loan, or interest only. Verify the background of a broker you are interested in. Surf the web for bad reviews. Ask friends and family for recommendations of quality brokers.
In interest-only loans, you only pay the interest, for example for 30 years, not the principal. After 30 years, you start on the principal. There are many such bad loans, this is only one type. This makes no sense because the home is not yours in 30 years if you are not paying on the principal. The loan should read 10-year, 15-year, 20-year, or 30-year fixed, paying interest and principal. At the end of the 10, 15, 20 or 30 years the loan will be paid off. This should be verified.
SUMMARY OF 5 LEADING FACTORS THAT WILL HELP YOU PURCHASE A GREAT HOME
There are five leading factors that will assist you in purchasing a great home. Each suggesting the purchase of a great home is not easy. When you use these steps when buying a house, the most important step is recognizing the income you need to get a quality mortgage.
It is important to do a lot of research about the home buying process before you start to look for a home. Homebuyers can use a “buy a home program”, but those programs are sometimes very lengthy and confusing. One such program is NACA.
All the work can be done by you if you are willing to put the work into it. Every state has a unique home buying process that is fully available to you by doing google searches or other research.
The use of calculators will tell you how much you need for a down payment and monthly principal and interest. Use a “buy a home calculator” to find out what you can afford. Another calculator to use is the “buy a home vs. rent calculator”. A rental may be a better option for you until you get your credit score up and save enough money for a down payment and escrow costs. It is not a good idea to buy a home until you have a long-term stable job.
Lastly, make sure you have vetted your real estate agent and mortgage broker. Do searches to see if they have multiple bad reviews or licensing problems. Ask friends and family for quality broker recommendations. If you follow these steps when buying a house, your journey will be smooth.