Checklist For Buying A Home

Checklist For Buying A Home



So you're ready to buy a home, but are you armed with the knowledge you need? Do you know about credit score requirements? Are you familiar with flexible standards on Federal Housing Administration loans? Whether you're a first-time homebuyer or an experienced owner, buying a house requires a checklist that will make things much easier. Here is a 6 item list, including tips on two types of savings you need, plus advice about what's more important than buying a house for its resale value.

Strengthen your credit score

"It's a brave, new world with respect to credit requirements for mortgages," says John Ulzheimer, president of consumer education at smartcredit.com and formerly of FICO, which pioneered credit scoring. One old rule still applies: The higher your credit score, the lower your down payment and monthly payments. Improve your chances by: pulling your credit reports and ensuring you're not being unfairly penalized for old, paid or settled debts. Stop applying for new credit a year before you apply for financing. And keep the moratorium in place until after you close on your home. We can pair you with an experienced lender to help you determine the amount of house you can afford. They can even help you rebuild your credit. Shoot me an email me at chris@joepetnoteam.com or call 615-995-9986. I'll have a trusted lender get in touch with you immediately.

Figure out how much house you can afford

The buyer's mantra: Get a home that's financially comfortable. There are various rules of thumb that will help you get an idea of how much home you can afford. If you're using FHA financing, as almost one-fifth of buyers get FHA-insured loans, your home payment can't exceed 31% of your monthly income. But, with some mitigating factors, FHA will let you go higher. For conventional loans, a safe formula is that home expenses should not exceed 28% of your gross monthly income, says Susan Tiffany, director of consumer periodicals for the Credit Union National Association. Before you home shop, calculate the mortgage payment for the home in your intended price range, along with the increased expenses (such as taxes, insurance and utilities).

Save for down payment
 
Depending on your credit and financing, you'll typically need to save enough money to put anywhere from 3.5% to 20% down. Rural Development loans are also available on certain homes and they require no down payment. If you're using FHA financing, then you need a score of 500 or higher. And in the 500 to 579 range, if you can find a lender, you'll have to put 10% down instead of 3.5%. One exception: Veterans Affairs loans, which require no down payment. Improve your chances by: Along with banking your own money, search out down payment assistance, Tiffany says. Often it's location-based or tagged to a certain type of buyer, like first-timers, she says. So do an Internet search with the city name, then the county name, along with word combinations such as "down payment assistance," "first-time homebuyers" and "homebuyer's assistance." We can help you with finding assistance! We can also negotiate to have the seller pay a portion or all of the closing costs.

Build a healthy savings account

This is over and above your money for the down payment. Your lender wants to see that you're not living paycheck to paycheck. If you have three to five months' worth of mortgage payments set aside, that makes you a much better loan candidate. And some lenders and backers, like the FHA, will give you a little more latitude on other factors if they see that you save a cash cushion. That money will also help you with maintenance and repair issues that come up when you own a home. While repairs are sporadic, items such as a new roof, water heater or other big-ticket items can hit suddenly and hard. Improve your chances by: setting aside money every month. A good rule of thumb: on average you'll spend 2.5% to 3% of your home's value annually on upkeep, repairs and maintenance, says Joseph Gyourko, chairman of the real estate department at the Wharton School of the University of Pennsylvania. If you're buying a $250,000 home, aim to bank $520 to $625 per month.

Get preapproved for a mortgage

For serious home shoppers, "the No. 1 thing is they better have everything in order," says Dick Gaylord, past president of the National Association of Realtors. That means that, before the real home shopping begins, you want to get financing in place, he says. And the preapproval process is "much more extensive" than it was a few years ago, he says. “That documentation around income and assets is very essential, more so than in the last five years," he says. Improve your chances by: getting financing in place "before you walk through the first house.” Otherwise, he says, "How do you know how much you can afford?" We specialize in helping you figure out how much house you can afford before we go out shopping.

Buy a house you like

If you're buying today for yourself and your family, you want a home that will make you happy for the next few years. Depending on how much you put down, and how much you have to shell out to sell and relocate, short-term ownership can be a pretty expensive proposition. Our goal is to put you in a house you LOVE!!!








Parts of this article by Dana Dratch


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Phone: 615-566-4663
Dated: February 12th 2014
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